No one starts a card program thinking they could go to jail if they do not adequately monitor their customers. Unfortunately, that is precisely what can happen to those who do not take the Know Your Customer (“KYC”) process VERY seriously.
An experienced compliance team is crucial to handle all of the KYC processes that are mandatory for a payments program. This is important as it which really simplifies your entry into the payments industry. This team would utilize proven policies and procedures to provide transaction monitoring, bank reporting, fraud monitoring, and training. A compliance team is there to keep a handle on the bad actors trying to enter your card program.
They should also manage disputes, chargebacks, fraud, account takeover, and other suspicious activity. A proactive compliance team will research all prospective vendors, clients, and potential account holders as well. This is all part of handling the KYC process, which simplifies things for a card program, to allow a payments business to focus on acquiring account holders.
As part of the KYC process at Cascade, we do extensive due diligence on all of our clients. This process includes specific elements that can vary based on the situation and the nature of the business. The process delivers detailed and comprehensive information, provides transparency, and enables us to limit the amount of operational, legal, or reputational risks for ourselves, our clients, our banks, or our network partners.
A mature compliance team should also ensure that the clients and their consumers are not in any screening list or any specially designated national list, per the Office of Foreign Assets Control (“OFAC”). OFAC is a part of the US Department of the Treasury, and it is their job to administer and enforce economic and trade sanctions based on US foreign policy and national security. This screening should be completed during the enrollment process and on an ongoing basis to ensure no cardholders end up on an OFAC watchlist.
Enrollees must also comply with the Customer Identification Program (“CIP”), or CIP requirements, which includes KYC. Suppose enrollees do not have exact matching information to check their identity. In that case, they can still pass their identity check if they can provide documentation that proves their identity. Your compliance team should handle that process, as well as handle all-cash transaction reporting and suspicious activity reporting to maintain compliance with federal guidelines. They also must maintain compliance with the card programs sponsoring bank or banks.
The team must also manage all of the compliance reporting, including assisting in any police investigations, advocating for customers involved in identity theft, account takeovers, and fraudulent transactions in general. Overall the goal should be to protect your card program, and yes, it is a lot!
Don’t have a compliance team that can manage all of that? Cascade provides a complete package to handle all of the above tasks and has policies and procedures to keep your program compliant with all applicable rules and laws. At the end of the day, this means that our clients can rest assured that we have their back, and they won’t have to worry about compliance – that is our job.