Effective Digital Cross Border Compliance: Challenges of regulatory divergence, national differences and beyond

Digital cross border compliance is crucial to a regulated company with operations in several markets across the globe. But meeting such requirements entails challenges of regulatory divergence, national differences in digital prerequisites, diverse online identification methods and beyond.

Cross border compliance in the digital era   

The goal of most entrepreneurs is to have their business present in many markets and to continuously capture more market shares. Before the digital era, expanding the business was too expensive for most SMEs. Back in those days, the larger enterprises captured and dominated the bigger markets since it was costly for smaller businesses to get started, let alone to get bigger or to expand operations cross border. Today, affordable digitization is rewriting the rules of competition and we’re past the point where utilizing the latest technology is confined to big businesses that flex their economical muscles. The expanding reach of digital technologies and changing customer behaviour has fundamentally altered the prerequisites of doing business globally. A widespread digital-first mindset along with better connectivity amongst consumers and the growing reach of online platforms all make it easier for companies to enter new markets quickly on reasonable investment capital. But with this comes the emergence of an increasingly complex and stringent regulatory environment where companies within regulated industries with operations in several markets across the globe face regulatory divergence. There are differences between countries as it obtains to regulation, assuredly they are based on AML laws (Anti-Money Laundering) and KYC requirements (Know Your Customer), but there are national variants. Regulated companies that provide services and products from their home jurisdiction into other countries must comply with the rules of the host country.

What further complicates cross border compliance is the fact that almost every country is at different stages of digital transformation, are adopting various national digitization strategies and have diverse prerequisites regarding how the identity of its citizens can be verified online. In some countries, a citizen can utilize their verified electronic identity to access public and private online services. In those cases, it is optimal for an international online service provider to integrate with that national eID scheme for smooth identity verification of customers from that specific country. Whereas individuals in some other country need to submit a photo of their physical ID document along with a selfie or video for online identity verification. This means that the customer onboarding, due diligence, and monitoring will be done differently due to the various prerequisites for identification and according to the legal frameworks and regulatory interpretations specific to each country. Also, regulators are increasingly monitoring commercial activity across international borders, and their demand for reporting and information is growing all the time.

An automated KYC process to master cross border compliance

An effective KYC solution for cross border compliance must be dynamic enough to adapt to country-specific identification conditions and regulations and be adjustable to meet evolving regulatory requirements. A regulated company that’s unable to manage cross border compliance efficiently may face fines, penalties, and unnecessarily high operating costs, as well as the risk of missing out on significant business opportunities. Companies need to digitize and automate their KYC processes to be competitive and to efficiently master the divergence in national regulatory compliance across international borders. Utilizing an automated KYC process improves operational efficiency, reduces fraud, lowers costs, enhances the user experience, and increases customer acceptance rates. But companies that operate across international borders are often compelled to utilize numerous providers and services to apply several compliance solutions that in combination constitute regulatory compliant KYC processes bespoke for each specific country and region. This is costly, resource-intensive, and time-consuming as it entails technical and administrative complexity to implement and manage numerous different compliance solutions, workflows, and processes from multiple providers and touchpoints. Under such conditions, compliance workflows will require extensive maintenance if any changes or optimizations need to occur in said flow, due to for example legislative changes. In practice, the negative business effect of this is as unavoidable as the task of going through the entire software development lifecycle to accommodate said changes. Organisations seeking to operate securely across international borders must carefully consider how to render their fragmented setup of compliance solutions more coherently while aiming for the highest possible standards when choosing technology providers. In fact, for any company, the highest possible standard would be the option of choosing the one and same supplier to accommodate all their cross border compliance needs.

ZignSec enables cross border compliance worldwide

ZignSec is your one-stop-shop providing a comprehensive range of compliance solutions that when combined constitute complete KYC processes in accordance with global and local regulations. Companies that are connected to our all-in-one platform can pick and choose from an aggregate supply of expedient compliance solutions. We continuously add new technical solutions that facilitate organizations to stay ahead of regulatory changes. Accordingly, our clients don’t need to expend time and resources finding various KYC focused technical providers or adopt several service agreements to fulfil cross-border compliance. ZignSec compiles the best compliance solutions for each market and enables connected organisations to combine these into processes and workflows tailored for each specific country – all via a single interface to our API or our No Code Compliance Manager. Our No Code Compliance Manager is a web tool that enables connected organizations to build workflows while connecting them with their choice of compliance solutions. If the regulatory framework changes, which it does from time to time, our clients can rapidly alter, optimize, and roll out their KYC processes and workflows without the need for complicated coding to remain regulatory compliant. Companies utilizing the services of ZignSec secure and streamline their processes for customer onboarding, due diligence, and monitoring across international borders as they can meet the KYC requirements for each market with ease.

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    Effective date: January 1, 2020

    This notice explains ZignSec’s approach to cookies and other online data collection technologies.

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