Legacy client data: the risk hiding in plain sight

For more than a decade, financial institutions have invested heavily in strengthening onboarding controls. New clients are scrutinized, ownership structures mapped, and documentation verified. In turn, the front doors are well guarded. However, across the industry, a quieter problem has been growing behind the scenes.

By contrast, large populations of existing clients, often labeled low risk, inherited through acquisition, or onboarded many years ago, remain largely untouched. Records go unrefreshed, ownership changes go unnoticed and documentation expires.

Banks do, of course, have trigger detection mechanisms to ensure client profiles remain current. However, how effective and comprehensive are those triggers in practice, and what about the files where no trigger is ever activated? What began as a pragmatic, risk-based decision over time becomes something else: uncertainty.

Increasingly, regulators are paying attention.

From point-in-time KYC to continuous accountability

In response, supervisory expectations are shifting. Increasingly, regulators are less interested in whether an institution had the right policies in place at onboarding. Instead, they are focused on whether it can demonstrate ongoing oversight across its entire client population.

This is no longer about periodic checks or box-ticking. Instead, it is about evidence.

• Can you show that your client data reflects reality today, not assumptions made five or ten years ago?
• Can you independently validate what you hold, at scale, without relying on manual effort or mass customer outreach?
• Can you demonstrate control, consistency, and auditability across millions of data points?

Taken together, these questions expose an uncomfortable truth: the hardest KYC challenge is not just onboarding. It is everything that comes after.

Why legacy KYC client data has become a strategic risk

While risk-based approaches have helped banks focus resources where they matter most, however, over time, they have also created blind spots.

Lower-risk populations may go unreviewed for years. Legacy portfolios often reflect outdated data standards. Acquired client books can also bring unknown data quality and inherited accountability. The result is a growing gap between what firms believe they know about their clients, and what they can prove.

As a result, when remediation programs are triggered, by regulatory findings, internal reviews, or new regulatory expectations, that gap becomes painfully visible. Manual review does not scale; internal teams are overwhelmed; timelines extend; costs rise and confidence erodes.

In this context, for senior leaders responsible for operational resilience, regulatory outcomes, and transformation, this is no longer a tactical compliance issue. It is a strategic one.

A different way to approach KYC review

Against this backdrop, Encompass has developed EC Review.

Specifically, EC Review is a structured, scalable review and reconciliation capability. It has been designed for financial institutions that need to review, refresh, and remediate KYC data quickly. This can be across existing client populations, at scale, with control, and without reinventing their operating model.

It is a curated KYC service that combines automation with expert oversight, enabling financial institutions to batch, verify, review, and resolve large volumes of client profiles through a secure, auditable platform. Crucially, EC Review does not replace judgment or interpret regulation. Instead, it focuses on something more fundamental: independently validating client data against authoritative sources, with full transparency and data provenance.

Powered by the Encompass EC360 platform, EC Review securely ingests client records in bulk. Through this process, it sources relevant public data and documentation in real time, reconciling this information against existing records to identify gaps, inconsistencies, and remediation needs. Structured outputs are delivered as flat files or directly into CLM and KYC platforms, enabling straight-through processing or a prioritized, risk-based workflow that direct analyst investigation to the cases that matter most.

• No blanket re-onboarding
• No black-box automation
• No unnecessary customer outreach.

Just trusted data, delivered in a way compliance and risk teams can stand behind.

Designed for today’s regulatory reality, and tomorrow’s expectations

Beyond its operational capabilities, what sets EC Review apart is not just its scale, but its intent. It is deliberately evidence-led and deterministic, designed to support regulatory accountability rather than obscure it. It augments existing CLM and KYC platforms rather than forcing banks into new tooling models, and it reflects a broader shift in how leading institutions are approaching KYC,. Not as a series of periodic events, but as an evolving, defensible view of client risk.

As regulators continue to move towards expectations of continuous oversight and demonstrable data quality, the ability to systematically review existing client populations becomes a strategic capability, not a remediation exercise to be endured.

From remediation to readiness

In practical terms, EC Review helps institutions move from reactive clean-ups to proactive control. It reduces the operational burden of large-scale reviews, shortens remediation timelines, and gives senior leaders confidence that the data underpinning risk decisions is accurate, current, and defensible.

In addition, it creates a clear pKYC readiness use case. By working through changes identified in aged client files ahead of a pKYC go-live, institutions can materially reduce the volume of unexpected remediation triggered at launch. As a result, instead of discovering data gaps and structural inconsistencies at the point of transition, firms enter pKYC implementation with cleaner, validated records. This de-risks delivery, smooths operational impact and prevents transformation programs from being overwhelmed by legacy issues.

Ultimately, it brings visibility to the risk that matters most: the risk you did not know you were carrying.