Know Your Customer (KYC) requirements must incorporate knowledge of the customer’s nature and purpose of account activity and results of customer risk profiling. This KYC process informs decision-making during ongoing monitoring of any subsequent red flag alerts.Â
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Before a customer can be onboarded, a business must meet Know Your Customer (KYC) legislative requirements. Thus, a company must validate customers are who they say they are. While this can be achieved through identity verification, KYC is more than identity verification and screening. Anti-money laundering (AML) compliance requires businesses to determine AML risks. Consequently, companies must know those customers with increased vulnerability to commit a financial crime.
Unquestionably, the process of Know Your Customer begins with quality data. Thereupon, quality data informs customer risk profiling and provides knowledge of the nature and purpose of the customer’s underlying business relationship. Subsequently, the business can make informed decisions whilst undertaking ongoing monitoring.
Therefore, under risk-based principles, Know Your Customer policies must result in knowledge of higher-risk customers. Â
Customer risk profiling should result in risk ratings for individual customers. The risk ratings must rely on adequate data to enable results to be reasonable. Once risk ratings of customers and clients are assigned, a business is in a better position to dedicate resourcing to higher risks. This does not mean lower-risk customers can be ignored. Â
Ongoing monitoring protocols must incorporate all customers, regardless of the risk rating assigned. Ongoing monitoring results should identify activity from lower-risk customers when the account activity is high-risk. Â
AML360’s compliance platform automates ongoing monitoring and organises alerts in priority order. Rules are easily modified to ensure quality reporting.
If your business is using manual processes, this will increase compliance costs. Further, manual systems are unlikely to result in streamlined monitoring and reporting. Thus, ageing alerts or red flags are likely to increase regulatory risk. Accordingly, to meet anti-money laundering compliance obligations, businesses should adopt AML regulatory technology.Â
AML regulatory technology (AML RegTech) improves risk management, reduces time and improves cost efficiency.
AML360 RegTech provides automated customer risk assessments to ensure Know Your Customer processes are reliable and effective. Thus, your business gains compliance confidence and protects brand quality.
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