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2014-04-22 05:22:16
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.