Smart KYC by Aura Masciopinto

The Smartest Way to Ensure Rapid On-Boarding, Client Loyalty and Cost-Effective KYC Compliance

FACING UP TO THE KYC CHALLENGE FOR MANY COOs AND COMPLIANCE OFFICERS, ‘KNOW YOUR CUSTOMER’ (KYC) COMPLIANCE IS AN OPERATIONAL CHALLENGE THAT HAS BECOME A DAILY CONCERN. Who is your client? What is their line-of-business and the source of their wealth? Who do they liaise with, both socially and professionally, and are all of their financial associations reputable and legitimate? KYC costs can easily spiral and the likelihood of human error can sky rocket, posing a very real risk of non-compliance. Many wealth managers and private banks have yet to achieve KYC compliance, as evidenced by the number and scale of fines imposed by the regulators in recent times. Maybe they did perform all of the necessary checks, but when challenged by the regulators were unable to prove that their due diligence was accurate and thorough. A very costly oversight.

Multi-Language Accuracy. Searching data sources that return multi-language, multi-alphabet results requires expensive linguistic analysts to interpret which sources are relevant and linked, and which can be discarded.

Regulatory Risk. Despite increasingly stringent KYC regulations, there is still no definitive set of requirements that wealth managers must satisfy in order to ensure compliance. As a result, wealth managers are extending identity searches wider than ever before, and storing an ever-increasing amount of due diligence data in order to mitigate risk.

Sophistication of Money Launderers. Evidence that your clients and their funds are entirely legitimate is increasingly hard to find. In some cases, individuals can yield clean searches, even when their businesses do not. Failure to identify a connection between the two increases business risk. Business analysts are now spending more (expensive) time searching for KYC data manually, and looking for these interrelationships, than assessing business risk.

New and Rapidly Expanding Data Sources. Social media enables wealth managers to dig deeper into a prospective client’s relations with business associates, friends and political affiliates, in real time. This can generate huge quantities of data – much of it irrelevant – which must be documented and assessed prior to an on-boarding decision being made. Add to this data collected from other established sources, such as Dun and Bradstreet, LexisNexis, online news feeds, Google, and other search engines, and the requirement to store and track immense amounts of data is apparent.

High-Volume Data Storage. The sheer volume of data that you must store in auditable form is vast, and rising. With more sources to check, more wealthy people emerging and more clients requiring background checks, your IT resources will soon be stretched to the limit. More on-premise storage means higher costs, and lower profits.

Auditability. When identity checks are processed manually, the audit trail is unreliable. If the regulators knocked on your door, could you prove beyond any reasonable doubt that all necessary checks have been performed, and could you demonstrate why specific items or irrelevant information has been disregarded?

When Relationship Managers are empowered to validate identities and on-board clients quickly and efficiently, they are rewarded with profitable clientadvisor relationships that are built on trust and loyalty. What else keep COOs and Compliance Officers awake at night?

Top KYC Concerns

Wasted Manpower. The number of man-hours required to discover every piece of information relating to every new client, transform it into a meaningful form upon which your firm can assess risk, and then ensure it remains current over time, is enormous. Whether you undertake this work internally, or outsource it to specialist search professionals, the amount of legwork involved in manual processing is immense. Speed of On-Boarding. Your relationship managers and business development executives rely upon rapid on-boarding to satisfy clients and meet business revenue targets. The longer the KYC due diligence process takes, the more frustrated everyone becomes.

Manual KYC checks are labour-intensive, costly and fraught with risk, even for the largest of wealth management firms and private banks. If you are a small wealth manager, subject to exactly the same regulatory controls as your large corporate peers, the time and cost associated with KYC compliance can, in itself, risk business continuity.

A BEST PRACTICE APPROACH TO KYC COMPLIANCE SMARTKYC IS A BEST PRACTICE ANTI-MONEY LAUNDERING (AML) SOLUTION THAT ENTIRELY AUTOMATES THE CLIENT VALIDATION PROCESS FOR WEALTH MANAGERS NEEDING TO GATHER, ANALYSE AND STORE KYC COMPLIANCE DATA.

Key Features INNOVATIVE YET COST-EFFECTIVE SEMANTIC SEARCH smartKYC’s semantic and federated search capabilities, combined with intelligent techniques for reducing false positives and duplicates, generate results that are relevant, precise and reliable. The semantic search process is entirely automated and every step in the process is tracked to ensure a reliable, well-documented audit trail. smartKYC quickly and efficiently collects the broadest set of information possible, about every client, and then organises it into a meaningful form that business analysts can use to assess business risk and accelerate the on-boarding process. To perform this task manually would take many man-weeks. Your business analysts are more productive; they have more time to spend analysing anomalies and mitigating risk than conducting routine searches. ELIMINATE UNRELATED AND IRRELEVANT INFORMATION smartKYC quickly and easily removes ambiguity from the KYC search process. When prospective clients have a common name, or one associated with a high profile individual (a celebrity for example), the amount of irrelevant data returned from a routine search is substantial. smartKYC applies automated business logic and intelligent sense checks that disambiguate client searches, returning only those results that are most likely to relate to the client you are investigating. This process saves many costly man-hours analysing irrelevant results. MULTI-LANGUAGE, MULTI-ALPHABET SEARCH smartKYC provides a fast, cost-effective method for you to interrogate and analyse multi-language or multi-alphabet data sources. Search results are automatically sensechecked, in their original language, compared with each other to eliminate irrelevant connections and then grouped into a meaningful form for business analysts to assess. The need for multiple, multi-lingual business analysts is greatly reduced.

AUDIT TRAIL smartKYC maintains a scrupulous audit trail to satisfy your Board and the regulators that your clients’ funds were legitimate on the day you on-boarded them, and that nothing has changed to make you doubt that belief over time. Using smartKYC, you can demonstrate that you have taken all appropriate steps to ensure that your firm complies with AML and KYC legislation, and that your decisions to on-board clients are free of subjectivity. smartKYC entirely automates the search and primary analysis process, enabling you to trace every search, action and decision, and record evidence concerning the reasons why any individual was accepted or rejected as a client of your firm. This level of tracking and due diligence is impossible when KYC checks are performed manually.

DEFINITIONS

Semantic Search improves search accuracy by understanding the searcher’s intent and the contextual meaning of terms, locations, variation of words, synonyms, generalised and specialised queries, concept matching and natural language queries, to provide relevant search results in the entire searchable data space. Disambiguation identifies which meaning of a word is used in a sentence, when the word has multiple meanings, to generate more relevant search results. SCALABLE PROCESSING AND ARCHIVAL smartKYC is provided as a hosted solution, enabling you to scale your KYC activities quickly and cost-effectively, as business requirements change. In addition, massive quantities of KYC data can be archived in the cloud, with low total cost of ownership and airtight security. While some wealth managers will opt for a 100% hosted or on premise solution, many will choose a hybrid mix: the cloud for KYC information relating to new clients, as most of this information is sourced from the public domain, and an in-house KYC store for personal data that relates to on-boarded clients. Both options are fully secure and reliable, the choice is yours. SEAMLESS INTEGRATION WITH YOUR IT INFRASTRUCTURE smartKYC’s open interface allows seamless integration with other technology solutions used to power your business. Whether you are looking to integrate your KYC processing into core business work flows or map it onto your existing hosting infrastructure, smartKYC has the flexibility and agility to integrate quickly and seamlessly into your wider IT environment.

About smartKYC smartKYC is a global supplier of Anti-Money Laundering (AML) and Know Your Customer (KYC) software solutions for wealth management firms and private banks. Headquarted in the UK, with development facilities in Europe and North America, smartKYC invites all prospective clients to engage in a Proof-of-Concept prior to purchasing our solution, to prove value and demonstrate results.

Want to learn more? Register for more information www.smartkyc.com

Contact us For best practice advice on your KYC process and more information on the smartKYC proof-of-concept process email us advice@smartkyc.com