Your Guide to
Effective KYC

Initiation

Whether the customer is existing or net new, the initiation process for setting up an account starts with collecting essential information through a client portal or CRM application. This step establishes the foundation for Know Your Customer (KYC) requirements by gathering accurate customer details to correctly kickstart a more robust onboarding process. Getting this right from the start is crucial to prevent inaccurate account opening requests, client friction, wasted resources, and business delays. More importantly, initial KYC procedures are essential for preventing fraud, money laundering, and other financial crimes, thereby establishing a secure and trustworthy banking relationship. A "smart start" isn't just a best practice; it's how all new accounts should begin.

Profile Enrichment & Verification

Financial institutions need to find the right balance between gathering necessary information from potential customers and providing a positive and seamless experience. Data enrichment is crucial for expediting the onboarding and new account opening processes. However, many firms struggle with collecting and analyzing both internal and third-party data. The current processes are manual, time-consuming, and prone to human error. To address these challenges, financial institutions should leverage the latest technological advances to orchestrate and automate the collection of intelligence required for a single comprehensive customer profile. Automated data-driven processes can enable firms to capture essential customer information, verify identity and documentation, adhere to regulatory requirements, and gain a better understanding of the customer. This can result in streamlined operations, expedited onboarding, and faster processing times.

Screening

Customer risks can be extensive. Accurate screening utilizing the latest technology quickly identifies known customer risks. Not correctly identifying parties on watchlists, especially relating to sanctions, can result in serious regulatory repercussions. Without the right customer information, screening can result in high false-positive rates, inaccurate hits and ultimately avoidable risk.

You must screen all prospect customers, quickly and accurately across multiple global screening lists, identifying risks such as adverse media, politically exposed person status and sanction status, amongst other risks.

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Risk Assessment

Customer risk scoring plays a critical role in determining how the relationship will be managed. If not done correctly, it can adversely impact downstream decisions, causing financial institutions to onboard bad actors or fail to identify suspicious activity in a timely manner. Incorrect risk scoring decisions can also adversely impact customer experience and business revenue potential.

Appropriate risk assessment models leverage comprehensive customer intelligence gathered and your organization’s risk appetite to dynamically and accurately determine customer risk scores. Risk scoring should be multidimensional, taking into account customer information, relationship information, transactional and behavioral information.

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Acceptance & Activation

Many functional areas are required for customer acceptance and account activation. From back office compliance to legal, credit and other functional areas. Incorrect decisions can result in wrongly refusing, offering restricted or inappropriate financial services to satisfactory customers and unintentionally providing financial services to criminals.

A consolidated view of all information must be easily accessible so fast, informed and accurate decisions can be made when determining if a potential customer should be accepted. This decision should be balanced against providing fair and exceptional customer experience for legitimate customers.

pKYC: Continuous Monitoring

Customer circumstances and behaviors change necessitating perpetual KYC (pKYC), also known as continuous monitoring. Static, periodic reviews introduce unnecessary risk into an organization, by not factoring in risk changes for potentially several years, if at all.

Creating an interdependent relationship between multiple data points, including screening, transactional and third-party sources, risk and compliance teams can transform KYC , moving it from siloed and static to connected and fluid. pKYC continually assesses material changes in customer information, including risk factors and updates customer risk scores and profiles with identified changes as they occur, ensuring always accurate customer profiles and assessments. As a result, the customer is always offered the right products and services, therefore helping organizations maximize revenues whilst minimizing risk.