In global business, as part of compliance, it is essential to have a so called “Know Your Client” (KYC) policy in place.
For debt collection agencies that operate in international B2B collections, it is important to understand the nature and background of its clients and the debts the agency handles.
Often the debt collection agency’s client is the creditor of an outstanding debt, but not always. Sometimes, the debt collection agency represents another, foreign collection agency and hence the client’s client is actually the original creditor.
How does this affect a debt collection agency’s KYC policy?
Definitions of KYC and KYCC Policies
Let’s first define KYC.
As per Wikipedia, KYC is the process of a business verifying the identity of its clients and assessing their suitability, along with the potential risks of illegal intentions towards the business relationship.
KYC also enables businesses to better understand their customers, the kind of business they run, and the transactions they carry out.This helps company to mitigate risk.
Information a company may look for to receive from their clients includes:organization charts(containing the full legal name, the registered address, description of business activities, and extract from a formal register, like the Chamber of Commerce); details of the Ultimate Beneficial Owner(s) (UBO(s)); the source of funds and / or wealth of the client and its UBO(s); and public office or government position(s) held by the UBO(s).
In addition, there is also Know Your Client’sClient (KCC).KCC is a verification process that identifies a client’s client activities and nature.
Global B2B Debt Collection: KYC, KYCC & Key Case Information
Debt collection agencies operating in international business, should have a KYC policy in place, which stresses the understanding not only of the client and their business activities, but also the specific cases or sorts of claims the debt collection agency is hired for to collect.
In addition, in those cases in which a local debt collection agency acts on behalf of another, foreign debt collection agency, it is important to know their client’s client and their business activities; and therefore, have a KYCC policy in place as well (as part of the KYC policy).
Finally, the international debt collection agency should understand the nature of each case it handles. Key case information may consist of: a detailed breakdown of the debt; the full legal name, registered address and business activities of the debtor, as well as key contact persons (which may include the signatory parties or owners); and all supporting documents in connection with the claim, including but not limited to, contracts, invoices, order forms, order confirmations and (relevant, email) correspondence.
In international B2B debt collection it is important to implement a KYC policy. Since in international collections, the debt collection agency often acts as third party as representative of another, foreign debt collection agency, such policy should include KYCC verification. Also, part of the compliance process should be to receive and verify certain key information of the case(s) the debt collection agency will handle.
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