The first step in protecting yourself from the risk of money laundering and financial crime is to have a comprehensive understanding of your customers. All you need is a KYC solution to tackle this.
The complexity of contemporary financial crime and legislation, however, is increasing the workload on compliance and operations teams. Do manual KYC processes no longer work in this difficult environment? Your company may be ready for an automated KYC solution if one of these four things holds true.
Automated KYC solutions are required
The amount of time and money spent on ensuring KYC AML compliance has increased along with the complexity, breadth, and depth of the relevant anti-money laundering (AML) regulations.
Spending on compliance increased by 20% between 2020 and 2021 as a result of the pandemic’s combined effects with rising cybercrime and regulatory burdens. As long as KYC is still a manual process, this number will probably continue to rise.
Financial institutions (FIs) face numerous issues as a result of their reliance on manual KYC processes, including sluggish service, the possibility of human error, excessive expenses, and a bad client experience. Due to this, a lot of FIs are increasing their investment in automated RegTech solutions that can automate crucial steps in the KYC process and boost productivity and customer satisfaction.
Why businesses are utilising RegTech
More compliance departments are using RegTech, especially automated KYC solutions, to keep up with the rate of change. By utilising these platforms’ intelligent process automation and streamlining data collection and visualisation, analyst teams are better equipped to make informed judgments and concentrate on in-depth study.
RegTech helps banks integrate customers more quickly, with less risk and friction from the customer, while also cutting operational expenses and overheads.
Important indicators that your company requires an automated KYC solution
Automated KYC solutions eliminate some of the major obstacles organisations experience in maintaining compliance by streamlining and accelerating the onboarding and continuing KYC process for FIs. Following are four crucial indicators that your company may be prepared for an automated KYC solution.
1. High onboarding abandonment rates
The onboarding process is your first opportunity to introduce a new client to your service. However, it takes an average of 32 days to onboard a corporate customer because of the complicated AML and KYC standards. Significant portions of this time are devoted to crucial customer due diligence (CDD) tasks, yet lengthy onboarding procedures can result in lost sales, as seen by the recent abandonment of digital bank applications by 63% of consumers.
Encompass, an automated KYC solution, may help you enrol customers more quickly while also enhancing data quality and risk management by cutting the time spent gathering data and documents by up to 98%.
2. Problems with compliance capability
The fundamental components of risk management for banks include periodic or event-driven KYC verification updates and remediation, which are crucial for maintaining compliance. They entail re-screening and rewriting profiles in accordance with any new regulations, as well as reviewing and updating customer information. However, for time-strapped compliance teams, conducting continuing onboarding due diligence while manually analysing all pertinent customer profiles is a major difficulty.
By accessing external data sources through a single integration to a KYC automation platform, automating KYC remediation and refresh means organisations can quickly and easily execute updates, ensuring speedier compliance and risk mitigation.
3. Missing or incorrect information for corporate structure unpacking, screening, and UBO verification
Modern automated KYC systems connect directly to a variety of data sources, allowing you to quickly and easily determine complex ultimate beneficial ownership (UBO). This significantly increases ROI by enhancing efficiency and frees analysts to concentrate on more difficult KYC investigations.
Screening customers against pertinent third-party data sources to identify risks, such as politically exposed persons (PEP), sanctions lists, and negative media, is another crucial aspect of KYC at onboarding. However, this procedure may be time-consuming, ineffective, and inefficient without access to trustworthy, current information.
4. Non-standard techniques
Manual KYC procedures are fragmented, can lead to needless customer outreach, and frequently cause misunderstandings between teams and departments, raising the possibility of risk exposure. The lack of a single process to iterate on, not only limits efficiency and effectiveness but also hinders any ongoing increase in performance.
When using an automated KYC solution, policies and processes carry out consistently. It can follow and trace using a real-time updating digital KYC profile.
Principal advantages of utilising an automated KYC solution
Operational and compliance teams confront significant KYC and AML difficulties, which address by RegTech solutions like Encompass. Teams can shift resources from data processing and collection to more high-value duties by streamlining and automating the most time-consuming data collation and analysis part of KYC.
Principal advantages provided by Encompass are:
- Automated corporate data collection from a variety of free and paid data sources gives you access to more leading KYC data suppliers than any other solution.
- Verifying client data and identity via electronic identity verification and worldwide corporate registries.
- Using automated searches to locate ultimate beneficial owners can simplify and compile complicated ownership systems.
- PEPs, penalties, and negative media coverage of preferred data suppliers.
- Live generation of a complete audit trail for complete accountability and traceability.
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