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Chana R Schoenberger
Q. My company operates in several countries where regulation means we must keep
records detailing who our customers are and what their financial position is.
We need to ask customers sensitive questions and have to decide whether or not
to do business with each person, based on whether we feel they are above-board.
How can we do this without offending our clients? We're especially worried
because even a few negative comments posted on the Internet about our company
could be disastrous for our business.
You re not alone. Such know your customer laws are now the norm for banks,
financial institutions, and many other companies that deal with money around
the world. These rules exist to fight money-laundering, terrorism, and other
crimes that involve capital flows. These required questions could include how
many customers do you have? or who is your biggest customer? . This means you
have to nose your way into your customers business, even if you phrase it
politely.
Robert Rubinson, a professor of clinical theory and practice and the director
of clinical education at Maryland s University of Baltimore School of Law, in
the US, suggests stating upfront why you re asking for these details.
One approach that I share with my law students when I teach professional
responsibility, is to be transparent about why such questions are being asked,
he said. Consider telling potential customers that your company is required by
law to make these inquiries.
If you give them assurances that you re merely following the regulations
governing your industry, they are more likely to worry less about the details
or to be turned off by your questions.
These customers are unlikely to be offended when a company is simply adhering
to law and not voluntarily probing in a potentially intrusive way into the
customer s business practices, he said.
In some cases, there s nothing you can do to avoid upsetting customers. Some
may feel these financial details are crucial to their negotiating position as
they hammer out contract terms with you, and they won t want to give up their
advantage. To allay these concerns, you might wish to tell them how your
company will use the data you gather from them, what department will have
access to it, and how it will be stored.
If you have a privacy policy or other procedures setting out how you handle
sensitive customer data, you can point them toward it. You may be legally
restricted in how you use the information, which could help them feel more
comfortable. Certainly you can assure them that you won t use the information
to give you an edge in negotiations with them or their competitors (unless, of
course, that s your business model, in which case don t lie).
As for those customers who really are doing something suspicious, you d rather
them walk off in a huff now than later.