Last Updated on January 29, 2022 by rida
Over the past few years, regulatory authorities across the United States, EU, APAC, and the Middle East have imposed approximately $27 billion in economic fines against monetary institutions for AML and KYC compliance and other regulatory authorities. In the present’s increased company and regulatory landscape, companies should not be involved with making acquisitions but also being capable to accurately recognize who they’re dealing with, which implies authenticating user’s identities and compliance with KYC and AML compliance.
When a monetary institution develops the latest company partnership with people or companies without entirely knowing their history and present company dealings, it can present them to great prosecutions, regulatory penalties, and company repute.
How have these AML and KYC compliance affected the user experience?
The issue with Know Your Customer and Anti Money Laundering laws is that they have the potential to make something as easy as opening a bank account a tiresome and cumbersome experience for regulated companies. While measures differ, the banking sector takes an average of twenty-four days to finish the user onboarding procedure and many argue it’s only getting worse as laws persist to rise.
Therefore the dire to be critical is vital, particularly in red-zone companies like finance, KYC, and AML compliance obstacles often develop a less desirable user experience, which interprets to abandoned users and lost amount.
Why the delay?
Expensive KYC and AML penalties are usually the outcome of some of the challenging differences related to CDD and EDD. Customer due diligence procedures are vital for Know Your Customer and include recognizing your users and understanding their actions, which enables you to evaluate their risk profile. Enhanced due diligence is extra data that is required for high-risk users and gives a more comprehensive knowledge of your user to further bypass illegitimate risk. From there, your user risk assessment can be adopted to recognize how much due diligence is required.
Listed below are the specific problems related to both customer due diligence and enhanced due diligence and why they must be taken seriously to fight costly penalties.
- In-depth and comprehensive: Enhanced due diligence laws must be “in-depth and comprehensive” which needs significantly more proof and extensive data.
- Rigorous Documentation: The thorough enhanced due diligence procedure must be written in detail, and regulatory authorities should be able to have instant authorization to enhance due diligence reports. This requires more analysis when it comes to how information is obtained and verifying the reliability of those data sources.
- Rational Assurance: Enhanced due diligence requirements call for “rational assurance” when assessing a know your customer risk assessment. This implies that the expert authorized for making a “go” or “no go” choice must have done all the necessary evaluation steps and exercised expert skill and difficulty in approaching their evaluation about whether a new client is who they claim to be.
- Special Care for Politically Exposed People: Individual care must be given to politically exposed persons since they’re examined as higher risk because they are in situations that can be possibly misused for money laundering.
Thankfully, enhanced due diligence and customer due diligence procedures can be streamlined and digitized through enhanced use of AML and KYC compliance. The fastest method to do so is by performing an online IDV procedure, which includes using a government-authorized identity document such as a passport and driving license and a front-image selfie. Combining IDV technologies also involved an approved liveness detection to make sure the applicant is physically available and not deceiving the software with a picture of an innocent or 2D or 3D image. The result is great compliance, as well as quick user onboarding times.
Therefore, the present regulation panorama might seem like a lot of loopholes to survive through, AML screening is an efficient means of guarding your business and users alike. While these problems might prove tiresome, there are intelligent technologies that can be used to enhance ease of availability and smooth the required knowledge of your customer and anti-money laundering checks.
By doing so, businesses can avoid the hefty penalties related to misregulated KYC and AML compliance while also giving a smooth customer experience. Using customer due diligence and enhanced due diligence procedure communicates to clients, and potential users, that your concentration is on the legitimate company. Thanks to rising IDV and anti-money laundering screening technologies, banking users can now recognize themselves from any place in the world.