Foreign exchange and CFDs brokerage Pepperstone signed a partnership deal with iSignthis for its products Paydentity and Payment Gateway. The agreement between the companies includes both the UK and the Australian subsidiaries of the brokerage group.
The products are providing a new platform for payments and automated identity verification also known as the know-your-customer (KYC) procedure. Some payment providers are assisting brokers with an integrated solution that is addressing a number of fraud concerns and regulatory requirements.
An automated KYC procedure dramatically reduces the time needed to onboard new clients and can allow the brokerage to optimize customer support costs.
The iSignthis solution is implementing a cascading KYC process, which uses public UK data from credit reference agencies, electoral roll and government public access data. As a result, the FCA’s requirements are strictly adhered to and the brokerage can focus on its business.
For clients outside of the UK, Paydentity states that it is using a database of potential verified bank customers.
Client on-boarding and retention have become key issues for brokers operating in regulated jurisdictions especially across the EU. Regulators have pledged to curtail direct sales activities of brokers and therefore eliminate a key tactic that some companies have been using to onboard clients who do not have sufficient understanding of the financial markets.
The FCA and other EU regulators such as the Belgian FSMA, Cypriot CySEC, Dutch AFM, French AMF, German BaFin and Spanish CMNV announced material measures to reform the retail FX and CFDs industry.