It’s not that easy to KYC

Know Your Customer (KYC) programs as a risk management tool aren’t all that easy to implement. One bank improved their KYC process and simultaneously saved $1.4 million.

It sounds pretty straightforward. Banks should know who they are doing business with in order to halt illegal activities. But Know Your Customer (KYC) programs as a risk management tool aren’t all that easy to implement. Quite often, they are at the polar opposite end of delivering superior customer service — a differentiator that all banks are trying to capitalize on in this competitive market.

Let’s assume you want to open a new account at a private bank. Before the institution of the U.S. Patriot Act in 2001, you could probably have just walked in the front door, showed the teller or bank officer a passport, driver’s license or even a utility bill, and voila! Your new account was up and running.

It’s a much different picture today. Anti-money laundering protocols now mean that the bank needs to know the origin of your money. For example, how did you acquire your savings, and can you prove that it came from your hard work? Off the top of your head, could you list all of your assets and attach a dollar amount to them? Remember that small parcel of land you inherited from Aunt Edith — exactly how much is it worth?

After this interrogation, which will include a discussion of your family and your politics, you MAY be approved for a bank account. By this time, you are probably frustrated and out-of-sorts; after all, aren’t you supposed to be the client, and shouldn’t the bank be falling all over itself to get your business?

The key to adhering to KYC regulations and mitigating the impact on customer service is rapid customer onboarding. This is an agile business practice that uses technology to eliminate manual compliance checks. By leveraging integrated data collection and search, banks can keep approval decisions on the fast track and ensure that the data is simultaneously submitted to its risk management and fraud detection programs.

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Richard Paxton

CEO of the Alacer Group. Sharing the latest news in financial crimes and best practices that enable financial institutions to prevent money laundering.

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