Don’t sleepwalk into a KYC arms race - Part 4: Keep it simple

Welcome back to our fourth blog on why the time has come to opt out of the Know Your Customer (KYC) arms race.

If you were to actually print out everything a KYC analyst has to know to be able to perform KYC at a bank it would weigh a significant amount and waste a lot of trees! When you include all the relevant policies, procedures, ‘how to’ guides, reference manuals, local addendums, policy clarifications and guidance emails, it can make the complete works of Shakespeare look like a short story.

This isn’t done on purpose. Most of these documents are created to help people performing KYC and clarify complex areas. But as banks evolve, split up or combine departments, more often than not, they can end up with a confusing mess of guidance. This is usually where we see problems arise. The more complex the process the more chances of it going wrong and the more unlikely it is to address the financial crime risk.

In our experience, banks can help prevent this situation by:

  1. Simplifying KYC requirements and standardising them across the bank.
  2. Having one source of policy, procedures and guidance, avoiding numerous different versions saved to hard drives.
  3. Ensuring there are robust and reliable processes in place for rolling out any new guidance across the entire firm. Everyone needs to be on the same page.
  4. Leveraging technology to operationalise policies whilst maintaining a single source of the truth.

Our financial crime team have a vast amount of experience and knowledge on simplifying and standardising KYC. We know what requirements are necessary in today’s modern world and what has evolved as part of the KYC arms race.

Ultimately, if you can keep it simple, it makes the whole KYC process a lot easier to follow, will result in a reduction in errors made in the process and improve analysts’ quality!

Next week, we will dive into every regulators’ nightmare… the tick-box exercise…

Missed the previous blogs about KYC? Catch-up on the series below:

Don’t sleepwalk into a KYC arms race

Don’t sleepwalk into a KYC arms race - Part 2: Time is money

Don’t sleepwalk into a KYC arms race - Part 3: Risk based approach

Imran Farooqi | Partner
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