The power of end-to-end KYC process solutions for AML compliance

By Rachael Coyle | November 9th 2021
The power of end-to-end KYC process solutions for AML compliance | Encompass blog

For financial institutions, robust and effective KYC and AML processes are the foundation of effective risk management. However, the growing operational burden of compliance has increased the need for an end-to-end KYC process.

After KYC due diligence at onboarding, banks need to update AML and KYC regularly throughout the customer lifecycle. Therefore, many banks are looking to develop an end-to-end KYC process to ensure long-term AML compliance.

In this article, we explore how banks can implement a closed-loop KYC solution, from initial onboarding to ongoing monitoring and remediation.

Why banks need to streamline their KYC processes

KYC and AML screening and monitoring are essential protection for banks to manage risk and shield the organization from fines and personal liability. However, ever more complex KYC regulation has put new responsibilities on banks that increase the time, cost and pressure involved in remaining compliant.

To avoid costly AML breaches and speed up customer onboarding, banks are turning to RegTech and automation software to streamline onboarding, bolster compliance and enable an end-to-end KYC process.

Slow onboarding is leading to corporate customers abandoning the process

Complex AML and KYC requirements mean that it takes an average of 32 days to onboard a corporate customer. Much of this time is spent on critical customer due diligence (CDD) activities, but slow onboarding processes can lead to lost business and exposure to risk. In the last year, 38% of UK businesses have deliberately abandoned an application for banking services due to ‘slow due diligence processes’.

AML regulations are making compliance teams’ jobs more difficult

Recent regulations such as the EU’s 5th Money Laundering Directive (5MLD) demand increased transparency about who really owns companies and other financial entities. For compliance teams, this not only increases the depth, breadth and volume of data they need to gather on prospective customers, but also requires that this is kept up to date throughout the customer lifecycle through ongoing KYC or remediation.

Increased complexity leads to more risks

The increasingly complex regulatory obligations for fighting financial crime put a growing burden on teams to maintain up-to-date customer profiles, alongside the existing workload of onboarding new customers. For teams with limited resources, this can lead to lengthy delays and an unmanageable workload. Out-of-date information can have major consequences, with regulators levying almost $1bn ($994m) of AML fines in 17 major actions during the first six months of 2021.

Manual KYC is not sustainable for an end-to-end KYC process

For banks to maintain profitability while remaining compliant, it’s now vital to move beyond manual KYC processes. Legacy workflows for end-to-end AML and KYC compliance expose businesses to unnecessary risk, while also limiting efficiency and customer experience.

The benefits of implementing an end-to-end KYC process solution | Encompass blog

The benefits of implementing an end-to-end KYC process solution

Implementing an end-to-end KYC process that’s efficient, comprehensive and auditable brings various benefits. It enables a holistic approach to AML compliance that adds value from initial onboarding, to ongoing monitoring and remediation. It also requires digitization. Let’s dive into the different benefits below.

Simplifies KYC process management

A digital KYC workflow creates a single, consistent KYC process across the firm. In this way, banks can simplify process management for teams while iteratively improving efficiency and success.

Reduces human error

Using intelligent process automation and data integrations, businesses can use software to regularly retrieve, analyze and update high-quality data from trusted global KYC data providers, saving analysts crucial time and eliminating human error. Enabling them to focus on more valuable analytical work.

Increases team efficiency

Automation tools reduce time spent on KYC by up to 98% by streamlining previously manual processes for data retrieval and document collection. Making it easier to scale your onboarding and compliance functions as needed.

Minimizes the risk of non-compliance

By using software, KYC policies and definitions can serve as a digital instruction set controlling automated processes, reducing the risk of human error, missed data or steps.

Improves the customer onboarding experience

The ability to conduct the required due diligence quickly and effectively can be the difference between winning and losing a valuable client. An end-to-end KYC process streamlines your customer journey to enable faster, more effective onboarding.

Case Study

Digital transformation for Know Your Customer at Santander

How the Encompass platform delivers end-to-end KYC process automation | Encompass blog

How the Encompass platform delivers end-to-end KYC process automation

KYC Data Sources | UBO Verification - Visualisation & Control | Global Primary & Premium Data | EncompassEncompass is a market leader in empowering financial institutions with KYC automation on demand. Our platform enables banks and firms to automate key KYC and AML compliance tasks and significantly improve straight-through processing based on your internal policies and processes.

We empower you to operate an end-to-end KYC process through cutting-edge automation, offering the following capabilities:

  • Smart automation to manage data processing, structuring and transferring between systems.
  • API connections to instantly transfer information between platforms and teams with full security and control.
  • Data sourcing from trusted KYC data sources to streamline UBO verification, corporate structure unwrapping and building of a KYC profile record.
  • Ongoing monitoring for changes in customer risk profiles to catch opportunities for information review.
  • Creation of a full audit trail to prove end-to-end AML compliance to regulators, dynamically tracking every KYC/AML action for real-time updates.

As banks are increasingly embracing RegTech to bolster compliance and improve efficiency, the end game is to future-proof systems and processes for regulatory change. A state of perpetual KYC is the goal. Encompass enables perpetual KYC through holistic KYC automation solutions.

To find out more about how we can help you create a tailored end-to-end KYC process, explore our KYC automation platform features or get in touch with Encompass to discover how our market-leading platform can help you future-proof your KYC activities.

Explore our KYC automation solutions

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