6 reasons to ditch manual KYC management
For those who don’t wish to invest heavy budgets in a KYC process, I was sharing in my previous article recommendations on how to improve manual management while warning on the other hand that this approach is very limited. Indeed the collection of public information is really time consuming, the verification of particular status (PEP, UBO, etc)) requires repeated exchange with other departments, not to mention that KYC data completeness needs to be checked with a four eyes principle.
Luckily Digital transformation can greatly reduce KYC processing times, improve the quality of KYC checks and optimise the process landscape overall. If we look back at the traditional KYC process I shared last week, we can notice that most of the phases can benefit from digitization.
6 phases that can be digitized
Client identification & verification:
Modern systems allow now to retrieve and check ID using biometric and video based solutions.
General / Enhanced due diligence:
This phase can rely on name, details, website and adverse media screening. The whole customer network can be quickly visualised.
Acceptance / Rejection:
Workflow tools can be implemented to automate either the rejection or the acceptance of customers and thus according to specific criteria. This could help detect fraud patterns.
On-going performance of the general / enhanced due diligence:
Here again the adverse media, the sanctions and the red flags can be screened
Event-based / Periodic updating:
Dedicated workflow could be put in place to standardise data and document retrieval while specific requests could be completely digitally carried out.
Identification of dormant accounts:
A rule engine could be set up to easily identify all inactive accounts.
With the rising complexity of KYC compliance, it becomes obvious that the digitization of the process is something inevitable. This new approach not only helps increase the KYC check efficiency and speed through continuous monitoring and data updating, but it also lowers the error rate and reduces false positives. If indeed investments must first be made, the paperwork cutback and the better compliance will support the ROI