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Whilst financial institutions are increasingly relying on technology to enhance the processes for conducting customer due diligence, know-your-customer (KYC) processes remain largely manual.
Hemali Mehta, Director at Exiger, explains why in Reuters’ Regulatory Intelligence, saying: “The screening process in several financial institutions…requires a due diligence analyst to manually enter each relevant name into multiple screening tools and then to assess each result generated from the screening and thereafter send a summary of such results to the business for their views, with potential escalation to other subject matter expert teams”.
In response, innovative financial institutions are relying on screening tools that “take into consideration a financial institution’s financial crime risk framework and are able to carry out a few important functions…[to] enable a comprehensive KYC review of customers in a timely and cost-efficient manner”.
Some of these functions include the ability to search through configurable sources and generate results, review and remove irrelevant or duplicative results, risk classify and rank relevant results to enable the KYC review to be focused on risk assessment, and maintain a detailed audit trail of the results for easy reference and explanation to regulators.
Hemali also adds insight on how screening tools add value during the planning phase of a KYC remediation: “This could be done by screening the population in scope for remediation at the outset, to identify pockets of riskier customers who can then be accorded priority… There is operational efficiency to be gained through tech solutions so that financial institutions can focus on the key risks and the limited resources they have at hand can be redeployed to focus on higher risk customers”.
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