The past 15 years have seen an ever-escalating focus on compliance, driven by the imperative to counter money laundering and terrorism. Financial institutions, for example, are putting ever greater resources into implementing and managing new regulatory provisions, while governments are also ramping up the effort to combat these deepening threats, placing the burden on financial institutions to adopt unparalleled customer due diligence standards. One consequence of this is the investment many organisations should be making in KYC – ‘Know Your Customer’ – technology.
This report on KYC from CEB TowerGroup analysts is designed to inform you about the emerging market trends; in addition it will provide insight on BAE Systems NetReveal CDD/KYC solution in this space.
This report highlights strongly the need for financial institutions to invest further in this technology to both gain a competitive edge, and to stay compliant with multiple regulations such as the USA Patriot Act, the International Money Laundering Abatement and Anti-Terrorist Financing Act, the 4th EU Money Laundering Directive, and Beneficial Ownership.
The report highlights that banks today are using outdated compliance systems:
- 62% of IT Execs believe that KYC technology spend will need to increase in 2017 (Source: CEB 2016 FSI Survey.)
- Only 5% of compliance customers believe that their current system provides insight into 100% of their data. (Source: CEB 2016 Financial Crimes Showcase Survey.)
- 51% of Executives Rated KYC Technology “High Value” or “Very High Value” (Source: CEB 2016 FSI Survey.)
- Ranked 10th – on average at least 10 new products, including mobile banking apps and supply chain finance will have been added to the mix since the company invested in KYC, indicating this should be renewed
KYC plays a critical role in allowing the bank to perform initial risk assessments for new customers as part of a risk-based approach. However, this report makes it clear that despite the recognition by banks of how effective KYC solutions are, some have failed to keep pace with how these systems have developed and matured. KYC solutions deliver high value not only by maintaining compliance, but also in increasing customer satisfaction as the threats they face accelerate.
As part of the NetReveal suite, the BAE Systems CDD/KYC solution provides financial institutions with simplified and enhanced due diligence capabilities for onboarding and ongoing monitoring, accounting for changes in customer risk, and highlighting where changes in risk scores come from. The CDD/KYC solution integrates information about the customer from a variety of sources, such as validation and verification, reference data, and known sanction and PEP lists. It can provide real-time and near real-time customer risk assessment. Compliance analysts can add, modify, or delete risk factors that are out-of-the-box with the product, and workflows are configurable to business processes. The solution also includes new functionalities pertaining to management of beneficial ownership – which improves efficiency of on-going due diligence, the customer exit process, and the effectiveness of KYC risk-scoring for corporate customers – enhanced due diligence.