After noticing the pitfalls of traditional onboarding, Know Your Customer set out to transform the KYC and KYB process to one that was more efficient, provided a better user experience and delivered more robust compliance.
Know Your Customer was launched back in 2015 when Claus Christensen and his fellow co-founders encountered the difficulties involved with onboarding new corporate customers to financial products first-hand.
According to Christensen, at the time, financial institutions were struggling to meet newly expanded anti-money laundering (AML) requirements through their existing manual and paper-based processes, especially in the Know Your Business (KYB), or KYC for business field.
“We noticed that this situation was extremely costly and unsustainable, as AML requirements were steadily increasing across jurisdictions and clients’ expectations were beginning to shift towards digital and seamless experiences also in financial services,” Christensen said.
There was a huge opportunity to bring to the market a RegTech solution that would solve this problem. “We wanted to provide a better user experience, stronger compliance, and more efficiency, and that’s what we set out to do when we founded Know Your Customer.”
The rise of RegTech adoption
In recent years, there has been an evolution of financial regulators’ attitude towards RegTech adoption. According to Christensen, as AML requirements grow more stringent, regulators’ understanding of RegTech and its ability to foster on-going compliance has also intensified.
“From calls to caution and restricted sandbox initiatives, regulators are now openly promoting the use of RegTech. We have seen this across multiple countries, but the Hong Kong Monetary Authority, the Monetary Authority of Singapore and the Financial Conduct Authority in the UK are the most prominent examples,” he said.
These regulators, Christensen continued, have introduced special grants to de-risk RegTech implementations for companies, provided comprehensive practical guidance to inform compliance teams’ strategies and set up annual surveys to establish a RegTech adoption benchmark and foster innovation growth year-on-year.
Until recently, Christensen said there was a feeling that regulators preferred traditional approaches. However, the reality is that they are now actively encouraging regulated institutions to embrace technology and automation. “Regulators have realised that greater RegTech adoption is the only way to ensure effective and continuous controls, thus better protecting the overall financial system.”
As a result, today’s compliance teams are encouraged to embrace technology and digitise, but also to conduct vendor due diligence on new providers.
“The learning curve is often steep, which is why it’s important for companies to work with experienced providers that are able to safely bring existing policies to life through configurable workflows, flexible risk engines and multi-step reviews,” Christensen said.
Meeting demands
Know Your Customer supports companies by making it easy for them to build a KYC and KYB process that is well balanced across the needs of regulators, customers and internal teams.
To help meet regulators’ requirements, Christensen said the company provides the widest coverage of live company registry connections in the industry so that compliance teams can be sure that the information and documents they are relying on in their investigations are official and always up-to-date.
“We place so much importance on these live sources, since in our experience, compliance outcomes rise and fall with the quality of data and documents consumed by the processes,” Christensen said.
To satisfy customers’ demands for better onboarding experiences, Christensen said the company has embraced a “radically different” approach to the standard process. Instead of asking customers for the required KYB documentation through an endless chain of emails, Know Your Customer’s system first goes to the official source, the company registry, to download documents and extract company and shareholder information from them automatically.
Finally, to help internal compliance teams be more efficient, Christensen said the company leverages automation, optical character recognition, artificial intelligence, and natural language processing. “Our objective is to consistently take care of any tedious tasks that do not deserve compliance officers’ time and attention, so that they are free to dig deeper into the very intricate cases they encounter or build up the compliance function to the strategic role that it deserves to have,” he said.
Earlier this year, Lambert Smith Hampton, a property consultancy, partnered with Know Your Customer to accelerate and expand the company’s RegTech offering.
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