Client onboarding is a critical first step in understanding who financial institutions are doing business with and assessing potential risks. This know your client (KYC) process helps firms meet anti-money laundering (AML), counter-terrorist financing (CTF), and broader compliance requirements, while also preventing fraud.
According to Moody’s, depending on the product, jurisdiction, and risk appetite, onboarding may range from low-touch checks to in-depth due diligence.
At its core, the onboarding process involves verifying a person or entity’s identity to develop a risk profile. This not only supports regulatory compliance but also enables financial service providers to operate with confidence, knowing they have transparency around individuals or corporate structures they engage with.
While the fundamentals of onboarding apply across all client types, there are key differences between business-to-consumer (B2C) and business-to-business (B2B) onboarding. In B2C settings, speed and efficiency are paramount. These processes are often fully automated using digital datasets and straight-through processing (STP) to confirm identities.
B2B onboarding, however, involves a far more complex process known as know your business (KYB). It requires uncovering ownership structures and identifying ultimate beneficial owners (UBOs) through national registries, sanctions lists, and PEPs screening. While data collection can be automated with AI-enabled tools, human intervention is typically needed to make informed decisions during enhanced due diligence (EDD).
To streamline onboarding while managing risk effectively, institutions can adopt a five-point strategy. This includes setting clear expectations for clients, offering tailored and low-friction experiences, collecting documentation efficiently through digital workflows, moving towards perpetual KYC for ongoing monitoring, and maintaining a feedback loop to improve the process continuously.
Despite best efforts, client onboarding is not without challenges. Accessing accurate data from trusted sources is a common hurdle, particularly when operating across jurisdictions with varying regulatory frameworks. There’s also no universal standard—clients expect different experiences based on the product and region, so onboarding must be tailored accordingly to avoid drop-offs and support retention.
Key considerations for robust onboarding include evaluating regional compliance, understanding client expectations, aligning processes with product-specific risks, and maximising operational efficiency. Each of these factors contributes to a risk-aware, customer-centric approach.
Data quality underpins all successful onboarding. Real-time identity and verification (ID&V) solutions, such as Moody’s Maxsight, can reduce touchpoints by integrating structured and unstructured data into one seamless process. This enhances customer experience, reduces onboarding time, and supports regulatory compliance. For B2B onboarding, where ownership data may span jurisdictions and formats, Maxsight helps decode complex control structures and provides transparency on UBOs.
Unstructured data—like media reports used in negative news screening—adds further context, especially for customers in high-risk jurisdictions. Moody’s tools analyse global media to flag reputational risks, enriching due diligence efforts beyond traditional checks.
But compliance doesn’t stop at onboarding. With corporate structures and customer data constantly evolving, perpetual KYC (pKYC) ensures near real-time monitoring. By automating alerts for changes in sanctions status, PEP status, or media coverage, pKYC enables faster responses to emerging threats.
Moody’s technology is central to enabling this continuous risk oversight, providing the data and tools that allow compliance teams to act swiftly and with confidence.
In today’s regulatory landscape, onboarding isn’t just a compliance box-tick—it’s an opportunity to deliver a smooth, secure customer journey. Moody’s customer onboarding software helps banks and FinTechs automate workflows, integrate global data sources, and manage risk across jurisdictions. The platform enables KYC and KYB orchestration tailored to product types, customer segments, and regulatory requirements, while also supporting perpetual monitoring for long-term risk management.
With the right tools and data, financial institutions can transform onboarding into a strategic advantage.
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