By Wayne Johnson, CEO & co-founder, encompass corporation.
At the heart of any strong Know Your Customer (KYC) or Anti-Money Laundering (AML) programme is data. The ability to access and analyse information in a methodical way that ensures customer records are complete, accurate and, crucially when it comes to AML, compliant with the latest requirements, is vital. Data is the foundation for any solid AML/KYC programme and the emphasis businesses place on the ways in which they handle the data has a significant bearing on the rest of their output and success, particularly in terms of establishing an effective workflow.
In recent years, regulated firms have increasingly turned to technology, and specifically automation, to reduce the burden of dealing with many of the manual tasks associated with compiling customer data. As regulation evolves alongside an organisation’s geographical footprint, so do the data requirements. Having consistent, reliable access to comprehensive data on companies and individuals gives you and your compliance team confidence that you will be able to meet KYC requirements on a global scale.
However, sourcing new data sets and redesigning policies connected to these can be complicated and time consuming. If relying on manual data gathering, accessing new sources will add significant time to the KYC discovery process, stretching what can be limited resources even further. Adverse media screening is another example of regulation impacting data requirements. Regulators now expect firms to identify negative news relating to prospective or existing clients and an increasing number of organisations now rely on premium news databases and internet searches to fulfil this expectation.
Relying on humans to complete the data-centric KYC process also leaves firms open to error. As is the case with any duty undertaken manually, there is an added level of risk. Inaccuracies and gaps can often be missed through unintentional mistakes. By using a technology solution, such as encompass, this problem is quickly eliminated, as automation ensures consistency and accuracy, while employees are free to work in other important areas.
Intelligent Process Automation
In an effort to save time and money, and devote skilled resources elsewhere within the business, organisations are turning to Intelligent Process Automation (IPA) to do the heavy manual work that comes with carrying out full and thorough KYC checks. IPA reduces the time, cost and risk involved in these activities, while enabling firms to provide a better experience for clients and complicitly demonstrate compliance to regulators.
Keeping up with an evolving regulatory landscape, and changes to your organisation’s risk profile, mean that the ability to quickly and easily integrate new sources of data into your AML/KYC processes is increasingly important. A key issue for many regulated firms is the time taken to integrate new sources into existing customer lifecycle management or onboarding platforms. If IT resources are stretched, this work can take a back seat, leaving KYC teams with disjointed processes and workflows. Technology can ease this burden too, and encompass has existing integrations to the widest range of global data sources for KYC, allowing customers to ingest all of their trusted sources into existing platforms with just one integration.
Global information sources
In order to make informed decisions, the information at your disposal, and how you access it, is key. Compliance teams must trawl through reams of data as part of the KYC discovery process. From the new EU beneficial ownership registers to ever-changing sanctions and Politically Exposed Persons (PEPs) lists, the data sets are growing exponentially. There is no doubt that maintaining the ability to integrate global information sources, and being able to check multiple datasets at the click of a button, gives financial institutions a structured and ultimately successful way to manage the data deluge. Obtaining and understanding the full picture on clients through strong KYC processes is vital and, when performed in the correct manner, goes a long way towards reducing the possibility of falling victim to fraud and other financial crimes, while also safeguarding against fines and reputational damage.
When looking at your approach in relation to potential and existing clients, there are many factors to be taken into consideration in order to make sure the right measures are in place, with time and cost management being two of the most important. In the demanding environment within which most firms now operate, technology solutions that are able to integrate various data sources and automate KYC discovery and analysis are invaluable when it comes to pushing a business forward and promoting compliance.