Mention the word ‘compliance’ in any setting, and you will see attention dwindling. Mention terrorism, money laundering, drug trafficking and human slavery, and you’ve got an audience.
Yet the two are closely connected. Financial institutions have to comply with stringent identification policies to ensure that they don’t end up facilitating money launderers and assisting global crimes. It’s a massive issue, and a headache that has hindered financial sector players for decades.
Enter the fintech startup DocFox, which is tackling this challenge head on. The company has developed an easy-to-use web application that helps customers submit their FICA documents electronically - with just a few taps. Customers can upload copies of their proof of identity and address documents, or submit documents using their smartphone camera.
DocFox CEO and co-founder, Ryan Canin (27), started the company around four years ago with the vision of facilitating open access to financial services, while simultaneously filtering out global financial fraud and criminal activity.
The major challenge, he explains, is that compliance has typically been at odds with business and sales. But compliance is hugely important.
“If you leverage technology, you can have the best of both worlds,” insists Canin.
Locally, the South African Financial Intelligence Act (FICA) governs financial compliance, and it brings South Africa in line with similar legislation in other countries designed to uncover the movement of monies derived from unlawful activities.
As Canin explains, FICA is part of know-your-customer (KYC), the process of a business verifying the identity of its clients. KYC policies are used globally to prevent identity theft, financial fraud, money laundering and terrorist financing.
“With the latest amendments to FICA, South Africa is shifting to a risk based approach, whereby you treat everybody based on the risk they pose from a money laundering perspective – and our technology is designed to facilitate that process with ease.”
He notes that the DocFox mission is threefold: helping clients to manage compliance risk; reducing cost and operational efficiency; and facilitating open access to new markets via digital channels.
“It’s become a really interesting space, and a really active space,” says Canin. “Traditionally, banks have not been open to using digital and cloud-based solutions. Yet they are now becoming more open to technology and to opportunities in the regtech sphere…”
Canin says that as a startup, one of their biggest initial challenges was around credibility, given that they’re working in such a high-risk sector where operating licenses are on the line. Early on in the DocFox journey, however, the company partnered with global law firm Norton Rose Fulbright, which gave the startup instant credibility in global markets.
The law firm has worked with DocFox to codify FICA legislation into intelligent decision engines that assess what is required for every application in a simple, secure and compliant way.
Local clients include Liberty, AFGRI (a leading agricultural services company), Change Financial Solutions, TreasuryOne and Vunani Securities.
“Our focus is anyone in financial services - from fund managers to financial advisers, forex traders to credit providers,” says Canin. “We cover everyone from the smallest of entities to the largest. So if you’re on-boarding 3 people a month, or 3000 people, we have a solution for you.”
DocFox recently signed on two banks in South Florida, United States, which is a high-risk jurisdiction for financial services. The company has also secured global partners and prestigious U.S. investors to facilitate its global ambitions.
“It’s an exciting time for us, and we’re growing very quickly. The market is excited about the product, and things are moving fast in terms of adoption.”
Over the next three to five years, the company will be looking to extend its footprint in the U.S. and enter the European financial services sector.
“Our aim is to facilitate linking the different continents, and reduce the complexity within trading and financial compliance across borders,” says Canin.
Given the high stakes involved, as well as the fact that financial compliance regulation is changing quickly, DocFox is certainly one to watch this year.