The leading knowledge platform for the financial technology industry
The leading knowledge platform for the financial technology industry

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Using Artificial Intelligence to Know Your Customers, not your Criminals

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By Hugo Chamberlain, smartKYC.

How can just searching for ‘adverse media’ on your customer mean you are getting to ‘know’ them at all? In this article we ask, are we really harnessing the full power of KYC technologies?

With an abundance of mounting regulations, it is only natural that Know Your Customer screening has been solely about searching for red flags, predominantly for anti-money laundering purposes. It is, however, important to remember that Know Your Customer activities should encompass the whole subject on which the search is being performed; the Customer.

Customer knowledge should never be the exclusive preserve of the compliance function, nor should it be a process designed solely to provide reasons not to do business with an individual or company. Instead, smartKYC advocates a holistic approach, whereby technology-led relationship intelligence is used to good effect at all stages of the customer journey. Our over-arching belief is that KYC is about identifying the opportunities as well as the potential risks a relationship represents and using everything you can know about a customer to increase satisfaction and loyalty, and deepen wallet share.

Having a 360 degree view of the customer, from an intelligence perspective as well as a process perspective, reduces the (very real) risk of duplicated effort and critical data loss, but more importantly it enables better customer engagement and the provision of higher quality advice. It will also help your organisation function better, fostering real alignment between compliance and relationship managers (RMs) and put an end to siloed technology investments.

Before automated AI solutions like smartKYC existed, this process of garnering a 360 degree customer view may have seemed overkill and too costly. Different departments within a financial institution may also only be interested in particular information about a specific customer pertinent to their own investigations. For instance, compliance may only want to be alerted to financial crime; integrity departments may only want to be alerted to ethical, social or governance issues; and sales and marketing may only be interested in so called ‘green flags’ or sales triggers.

Three different departments may end up researching the same client using different people and search strings.

Harnessing the powers of AI and using its tools like federated search, machine learning and natural language processing means that effectively one ‘machine’ can search for all information on all clients at a fraction of the time and cost.

Furthermore, as AI can contextualise what is occurring in media snippets, alerts can be sent to defined departments depending on the alert category.

For example:

‘Client X has been arrested for money laundering’ alert the compliance department

Vendor Y is rumoured to use slave labour in its supply chain’ alert the integrity department

Client Z has just sold their company for £50 million’ alert the sales department

This relationship intelligence on the customer or indeed vendor, can be harvested and monitored at every stage of the client lifecycle.


At the prospecting stage, sales and marketing departments are alerted to specific lead opportunities as defined by the business. These lead triggers could include a breaking media reference to a specific type of liquidity event, a material change at a corporate registry, such as a new director appointment, or a new share allocation.

A traditional adverse news KYC check can also be run at the same time as an initial risk check and to deter a sales person from wasting anytime on the ‘unonboardable’.

At Onboarding

A full enhanced due diligence check can now be launched to adhere to the institution’s compliance policies.

The customer may onboard themselves and register for an account through the bank’s website and therefore is not yet known to the sales team. A search for sales’ indicators can then also be conducted at the onboarding stage, alerting the sales team to any insightful information on the client that could lead to upselling the customer.


If the potential client has indeed been onboarded successfully, AI software can then be set to monitoring mode.

Monitoring can be periodic, whereby a full refresh of the client file is carried out at intervals determined by risk policy. If, for instance, it has been determined at onboarding that a client has a footprint in a high-risk jurisdiction and operates in a high-risk sector, monitoring might be more frequent than would otherwise be the case.

However, the industry is now trending towards a more proactive approach whereby all clients are monitored in real time, so that the business can respond quickly to new developments. If a client is disqualified as a director, has new charges brought against them or is cited as a sanctioned individual, a rapid response may be key to a regulatory defence. Ignorance will of course be no defence at all.

Though yet again, this should not be all about risk. The business benefits of looking for positive developments are myriad, such as news of a company’s international expansion, which might represent an opportunity to generate further business from the client. At the very least, having a nice reason to pick up the phone, like a marriage or positive press, can do wonders for relationships.

It is easy to fall into the trap of always thinking about KYC in the negative or believing that sifting all the thousands of potential information sources out there is an un-winnable battle. But performing continuous and all-encompassing KYC checks has been and should always be imperative to running a successful business.

All businesses regardless of industry, exist to serve the needs of their customers. The time has come for KYC to not just be there to spot the bad actors but to step centre stage and play a starring role in its own right.

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