With more people digitally onboarding that ever before, the risks surrounding this process have become clearer and in the spotlight.
A recent post by PassFort has explored how companies can mitigate risk when onboarding new customers by cutting human error, improving handling capability and accessing reliable data.
While it is unlikely that the process of money laundering will ever be completely removed, increased regulation and cooperation both on an international and national can help to stem its impact. A key way to achieve this, the company stresses, is through a robust customer onboarding process.
In order to perform KYC process, regulated firms are required to collect information about a customer to verify they are who they say they are. The data collected during such a process include things like names, addresses and ID numbers as well as a financial history and sources of funds. At the end of this process, a FI should have enough information to make an accurate risk assessment and whether to onboard them or not.
However, undertaking this process manually can increase the possibility for risk, opening up the possibility for data to be missed or entered incorrectly or for compliance controls to be ignored or incorrectly applied. There is also a risk that a ‘good customer’ may enter information incorrectly, misunderstanding what is required. By validating and verifying data across multiple data sources, these risks can be mitigated.
PassFort detailed, “Different data sources or data providers can be brought together through a series of automated checks that creates a fuller picture of risk and which results information in one place. Then, if need be, a compliance or KYC analyst can review the profile, ask for more information, and make a final risk-based decision about whether to onboard. “
What are some of the benefits of automation for reduce onboarding risk? The first key one, PassFort claims, is reducing human error.
The firm said, “Automation reduces the need for manual checks with different providers and removes the need for data entry. Therefore, staff no longer risk inadvertently inputting errors or omitting key information. The process is standardised with a series of checks which creates efficiency and reliability.”
The second benefit is improving handling capability. PassFort detailed that when volumes of applications for a new financial product are high or there is a peak in demand, automation can help FIs handle the influx of customers without compromising on speed and accuracy. The company said this reduces the risk of errors being made simply because of the pressure caused by more KYC activity taking place.
The final benefit is accessing KYC data from multiple sources. PassFort commented, “Automation makes it easier to pull KYC, AML and other compliance data from different sources, this can help reduce the gaps in information and create a fuller profile of risk related to a new customer or account. Plus, with the right solution, this can create a 360 degree customer view, which can be reviewed anytime and shared with auditors and regulators when needed.”
Find the full post here.
Copyright © 2022 RegTech Analyst
Copyright © 2018 RegTech Analyst