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KYC Onboarding and Robotics
KYC Onboarding and Robotics
In recent years, there has been an exponential growth in the global attention given to terror financing and money laundering.This has led to a revolution in the global financial regulations to keep up with the increased criminal activities. Financial institutions now have to comply with these regulatory requirements to avoid reputational damage, sanctions, and hefty penalties.
Financial institutions have to know their customers, the nature of their activities, and the level of money laundering risks their customer is exposed to. All this to monitor their account activities. As a result, KYC onboarding has become a fundamental practice for every financial institution.
Quick KYC OnboardingClients go for the most friction-free onboarding process when it comes to joining an institution. The account opening, product or service purchase, has to be done fast and efficiently, which in turn creates a challenge of remaining
compliant and meeting the customer’s needs. For this reason, you will need systems and processes to be user-friendly, while still being able to get all the necessary KYC onboarding information.
KYC Onboarding ProcessThe KYC onboarding process includes customer identification, customer due diligence (CDD), and ongoing monitoring.
Customer IdentificationCurrently, identity theft is so widespread that anyone conducting any financial transaction needs to verify their identity. A customer identification program is designed to limit terrorist financing, corruption, money laundering, and other illegal undertakings. The minimum requirements for customer identification are the name, date of birth, address, and identification number.
Customer Due DiligenceCDD is a critical step that helps to protect yourself against terrorists, criminals, and money laundering. There is the Simplified Due Diligence (SDD) done on very low-risk accounts, and then the basic CDD done to all customers for identity verification and risk assessment associated with them. Finally, there is Enhanced Due Diligence (EDD), which is focused on PEPs or very high-risk clients to understand their activities and mitigate accompanying risks.
Ongoing MonitoringOngoing monitoring is a critical part of an institution’s risk mitigation strategy. Checking your customer once is not sufficient: monitoring needs to be an ongoing process. If the activities become unusual, the financial institution is required to file a Suspicious Activity Report (SAR).
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RoboticsIn the last few years, Robotic Process Automation (RPA) has found increased usage across industries as it can execute repetitive, manual, rule based processes - using a simple, non invasive desktop solution. Equiniti tools can seamlessly integrate with RPA and help Financial institutions achieve end to end automation of KYC processes. These ‘bots’ can process many high volume manual tasks such as extracting data from scanned documents, querying disparate internal and external systems for customer information and leverage artificial intelligence to identify patterns in customer activity.
Below are some examples of specific KYC tasks that Bots can help automate:
RPA can also automate the processing of structured and unstructured data associated with one-off KYC remediation projects. These bots are easy to install, work 24/7 and free up human workforce to focus on more interesting and intellectual tasks. Equiniti recognizes the potential of robotics and has partnered with ‘RCloud’, a London based RPA consultancy to implement robotic solutions for its KYC/AML projects.
KYC Task What Bots/RPA can do?
Data Collection and Customer Identification Program (CIP)
• Bots can collect basic customer information from multiple sources e.g. Name, Date of Birth, Date of Incorporation, Proof of Address or Proof of Identification
• They can validate accuracy and completeness of all customer data • They can process continuous updates to key fields and trigger prompts for
customers to update information or provide attestations
Customer Due Diligence and Decisioning (CDD)
• Bots can log into and run searches across multiple Public & Government domain• They can perform KYC checks - validates identity, address & credit rating• They can perform AML checks - validates source of funds/ wealth• Bots can complete Risk Assessment, scoring and decisioning• Bot can sends completed scoring and any high-risk flags to CSR for approval
Ongoing AML Monitoring • Bots can conduct periodic reviews depending on customer risk rating e.g. High Risk annually, Low Risk every 3-5yrs
• They can search internal and external data sources for outstanding KYC or AML items
• They can validate that KYC and AML covenants are met/maintained• They can send high risk alerts to CSR for review
Account Closure • Process Account closure – execute required workflow tasks and update all downstream systems
• Send require notifications
Preventing Money LaunderingAn efficient KYC onboarding process should put a stop to whitewashing.
This is because it exposes the level of risk a customer carries as well as their likelihood of being involved in illegal or corrupt activity. The key here is not just relevant data, but a good analysis and being able to pick up on “red flags”. Where technology supports this process, we still rely on human intelligence to make decisions for us. But what if technology and mankind could be brought together to ensure we utilize the best of both worlds?
Equiniti KYC Solutions allows for fast processing and automation whilst giving human analysts the tools and process to ensure consistent and precise analysis. Through new technologies such as robotics, clients can be assessed, filtered and guided through the process that corresponds with their risk level as well as their value to your organization. We are reaching the era of Risk and Value based compliance.
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