Managing risk through a customer’s lifecycle and solving compliance channels is becoming ever more important as more of the world moves into digital.
In a recent post by PassFort, the company outlined the benefits of using perpetual KYC (pKYC) to help to ensure compliance
The KYC concept – which has been around since the early part of this century – helps banks prevent financial crimes like money laundering and fraud. Since then, KYC practices have been embedded into almost every regulated institution as a way to identify risk early on in the customer lifecycle.
PassFort said, “So far, KYC systems and processes can be set up and operated in whichever way a firm chooses, so long as it ensures compliance with the relevant regulations for the jurisdictions it operates in. Monitoring the changing picture of risk across a customer base is challenging. But, adequate and appropriate risk monitoring is a key component of any anti-money laundering compliance strategy.”
The firm highlighted that many regulated businesses have a mandate to monitor risk and report suspicious activity to prevent money laundering and financial crime from going undetected. However, this is very complex and time consuming – a time where pKYC can come in.
PassFort commented that the pKYC approach brings automation to continuous risk management across an entire customer base – leaving only the most complex and nuanced investigations to humans. It also arms them with risk data that helps them identify potential issues and make decisions about how to deal with them.
The company said, “Perpetual KYC uses automation to track and highlight circumstantial changes to a customer’s risk profile on a constant basis. If firms look at risk across a business entity at a point in time, for example, they may uncover risk too late or obtain a picture that changes the next day. With pKYC there is no longer a need to focus on reviewing customers at set times. If a risk arises it’s flagged, investigated, and any necessary action can then be taken.”
Financial institutions are using a combination of automation, AI and people-power to conduct pKYC and solve the challenges of handling a changing risk landscape. This approach, the firm claims, can be more efficient and cost-effective compared to large remediation tasks, and is a sustainable way to meet compliance challenges each day without adding a huge amount of resource into a compliance team.
PassFort concluded, “Manual KYC processes can be slow and prone to error, with data scattered and held in different places, often not ‘clean’ and sometimes out of date or irrelevant. Automation enables a constant throughput of clean, accurate, real-time data to feed into due diligence activity.
“Perpetual KYC means firms can be proactive instead of reactive; constantly and consistently monitoring risk and maintaining compliance.”
Read the full post here.
Copyright © 2018 RegTech Analyst
