Onboarding new investors as trading in physical commodities takes off

Trading in physical commodities is attracting new investors each day. Efficiency is key to getting them onboarded quickly and compliantly.

Posted by: 
Alexis Fox-Mills
May 18, 2021

May 18, 2021

The world has been turned upside down by the Coronavirus and nearly every aspect of our daily lives is different. I say nearly every, as there are a few things about daily life that remain constant - our need to eat, drink, make money and, obviously, spend a lot more time online.

Trading and investing in the essentials.

This need for the bare necessities and to find investments that are less or inversely impacted by market volatility has drived increased trading in physical commodities.

This trend has meant significantly more people and businesses have registered with online trading platforms – some of the most popular sites, like Plus500, have thousands of active customers and saw significantly higher levels of new applications throughout 2020.

Market forces

Supply and demand, along with market sentiment, are what drive prices in physical commodities trading, and Covid-19 triggered a fundamental shift in these areas. The price of coffee, oil, grains and precious metals have all seen price volatility and there are no signs this will stop any time soon.

Online commodities trading

The sharp rise in the price of Gold at the beginning of the Covid crisis and the subsequent price fluctuations have offered all market participants significant returns if they are able to pick the short term highs and lows.

The proliferation of online retail platforms means speculators and hedgers alike have better access than ever before. Many are looking to commodities platforms that have democratised physical commodities trading, including the likes of Goldex, one of our favourite customers.

Commodities trading is now accessible to anyone. Whether large or small investors, all new applicants need to go through a KYC or KYB process to validate who they are; that they aren’t acting nefariously; and that they meet risk and compliance standards.

With trading in commodities taking off, online platforms need a way to complete KYC/KYB, AML and other compliance checks quickly, without friction or added risk, and (most importantly) digitally!

Through automated customer due diligence processes that run compliance checks on individuals or businesses, trading platforms can secure new investors while ensuring they don’t open themselves up to the risk of money laundering and other types of fraud.

Enter PassFort

Firstly, the PassFort platform is a SaaS solution, so everything is set up and delivered in the cloud, no need for physical deployment of any software elements nor expensive consultancy.

With a simple API, it is quick to deploy PassFort and integrate it with the other systems you use - a CRM for example.

Then, with our Smart Policy builder, you create automated compliance workflows around one central risk-engine to meet the compliance requirements of the product and relevant jurisdictions. Then, you start onboarding and ongoing risk monitoring.

PassFort is different to other solutions in that it uses a central risk-engine to orchestrate workflows. This is instead of a less flexible rules-based model. The risk-based approach means it is faster and less complicated to configure different policies and workflows around jurisdictional regulations for trading globally - with different audiences and product types accommodated.

PassFort’s smart Policy Builder creates automated workflows that maximise Straight Through Processing (STP) of customer due diligence checks. But, if an application can’t or shouldn't achieve STP for any reason and compliance professionals are needed for Enhanced Due Diligence (EDD), they can complete tasks, escalate issues, collect documents and communicate with customers directly from the platform.

PassFort can be integrated with many leading global data providers to carry out any number of identity, fraud, risk and compliance checks. There’s no need to manage and operate point solutions, the whole due diligence and risk management process can be aggregated through a single source of truth.

Due diligence on investors doesn’t start and end at customer onboarding either. You can also use PassFort to manage ongoing risk and off-boarding. If something changes in a profile, you can re-run KYC and KYB checks any time and control your exposure to risk – which is especially important during these ongoing times of uncertainty, which create opportunity as well as challenges.

Get in touch

With more people and businesses interested in physical commodity trading right now, trading platforms need a KYC, risk and compliance solution that is efficient and adaptable.

Get in touch, we can show you how PassFort could support your business.


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