How effective are your KYC protocols for financial crime compliance?

In the first half of 2021, banks and financial institutions accrued over USD $1.9 Billion in AML fines, and current data shows no signs of the trend slowing down. With the EU introducing a new authority designed to finesse AML supervision throughout Europe (and likely play a role in influencing global KYC and anti-fraud legislation) for 2023, the push for institutions to evaluate their KYC practices and adjust is greater than ever.

As a market leader in KYC and CDD compliance, iComply is here to ensure that your organization has everything you need to stay on top of evolving legislation and protect your customers, as well as your assets. Below, we’ll take a closer look at some of the top reasons KYC protocols fail and how you can avoid common mistakes that banks, institutions, and other businesses make when it comes to compliance.

1/ Lack of Proper Planning

It’s no secret that setting up KYC protocols can be a time-consuming process. With so many different details and regulations to meet in order to stay compliant, one of the biggest factors that cause KYC and CDD programs to fail is a lack of overall planning, execution, and clear communication between technical, business, and compliance teams. In order to protect yourself when it matters most, proactivity, knowledge, and choosing the right partner are essential to avoid fines and costly failures.

2/ No Proper ID System and/or Unreliable Data

The foundation of KYC is gathering integral identification and verification data that allows you to move forward confidently. In the absence of a vetted program or process that gathers the right kind of information, you leave yourself (and your customers) exposed to significant risk. Missing or incomplete data can allow criminals to operate under the surfaces, circumventing KYC, AML, and CFT regulations and putting you in the firing line for hefty fines as a result.

3/ Weak Processes

As with any major security protocol, having a streamlined and clearly defined process for your operations is essential. Without clear objectives and checkpoints, and by relying on manual audits instead of vetted software (more on that below), your team is set to run into inevitable drawbacks that can cost you heavily.

4/ Relying on Manual Evaluation

Traditional KYC practices are tedious, relying on the manual collection and processing of information. While there are elements of today’s KYC, AML, and CDD that can be handled by individuals, the realities of human error and the sheer scale of requirements are far too significant to ignore. Fact fatigue from reviewing file after file, inconsistent evaluations, and a lack of overall communication between different teams can lead to confusion and missed exceptions that costs more time and money on top of exposing your company to higher risks. Streamlining your KYC process by implementing vetted software is one of the best ways to make your information collection and review more efficient, more reliable, and more time effective in the process.

Learn how iComply makes KYC compliance easy here.

5/ KYC is a Just a Checkmark

If you’re viewing KYC and CDD purely as a to-do list instead of a valuable asset that gives your company the tools to succeed, you’re setting yourself up for some dangerous lessons. In today’s rapidly evolving market, it’s simply not enough to prioritize KYC purely for quarterly objectives or to view best practices as a “regulatory burden.” KYC, AML, CFT, and other anti-fraud legislations are in place to protect businesses, prevent the exploitation of vulnerable parties, and safeguard against numerous other pitfalls. Failure to comply with jurisdictional standards not only results in major fines but also creates unnecessary targets for criminals and shines a bad light on your organization.

Make KYC Easy with iComplyKYC

As one of the most versatile and full-scale solutions available on the market, iComply is proud to offer our clients access to a versatile suite of modular KYC and CDD software designed with superior data quality, compliance, and efficiency. Our platform can be set up in minutes and configured to match workflows with the unique regulations of your jurisdiction, meaning minimal downtime and seamless integration.

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