Imagine this. A new customer at a mid-sized bank transferred funds overseas. This was just another day for the compliance team at the bank, just another box to check in their Know Your Customer (KYC) process. But when a sharp-eyed analyst flagged subtle inconsistencies in the paperwork, little did she know that it would uncover a web of fraudulent accounts, money-laundering trails and massive regulatory risks.
While this is a hypothetical example, it’s all too plausible in the modern financial landscape. In an era where financial transactions take place in milliseconds, financial crime compliance cannot afford to be static. The rules of the game have changed and so must the onboarding universe.
the old playbook isn’t enough
Traditional onboarding, that the mid-sized bank used, is a relic from another age. It was built for a world where the risk was static, not a moving target. Collect a few documents, run a basic background check and move on. It was a simpler time. But today’s financial criminals are like digital chameleons — they use shell companies, synthetic identities and rapid account switching to stay one step ahead.
The result? Institutions face mounting regulatory scrutiny, reputational risk and the very real threat of being used as conduits for money laundering. In 2024, global financial institutions spent over $214 billion on compliance, yet close to 47% still cited onboarding as their weakest link in anti money laundering (AML) frameworks. The cost of a single KYC review climbed by 17% in 2023, while regulatory fines for compliance failures reached nearly $5 billion worldwide. Why? Because the old playbook is reactive, not proactive. It’s about ticking boxes, not connecting dots.
Onboarding is no longer the one-time hurdle that it once was. It’s a living, breathing process. The best institutions now treat onboarding as the foundation of risk management, not just a regulatory speed bump. This expanded onboarding universe is built on three pillars — continuous due diligence, advanced risk management and seamless digital integration.
Continuous due diligence: Ever had your bank ask you to confirm a recent transaction or update your details, even after opening your account? That’s ongoing monitoring in real time.
AI-powered risk scoring: Some advanced platforms even use Machine Learning (ML) to cross-reference customer data across multiple datasets like global watchlists and transaction histories. This system spots patterns and hidden connections that the manual review tends to miss.
Perpetual KYC (pKYC): Instead of reviewing customers every couple of years, leading banks now update risk profiles in real time. If a customer’s risk status changes, so does their monitoring level, almost instantly.
The evolution of onboarding is not just about ticking regulatory boxes (though fines are getting steeper every year), it’s a strategic imperative for business growth and resilience. Integration of ongoing monitoring into the onboarding process allows financial institutions to proactively manage high risk customers, adapt to new, emerging threats and maintain a competitive edge. Besides preventing financial fraud, automated workflows streamline customer journeys, drastically reducing onboarding time and improving customer satisfaction.
Technology alone is not a panacea. The effectiveness of these modern solutions depends on rigorous data quality checks, regular algorithm audits and a culture of regulatory compliance across the organisation. Some institutions are now adopting fairness metrics and independent bias testing to ensure that these systems remain transparent and equitable. Continuous training and collaboration with industry partners further enhance the ability to detect and respond to new financial crime typologies.
The business case for expanding the onboarding universe is more than compelling. Institutions that invest in advanced compliance frameworks report fewer regulatory breaches, lower operational costs and improved customer trust. In our everchanging reality of accelerating digital transformation, the ability to onboard customers securely and efficiently will define the leaders of tomorrow’s financial sector.
how can Infosys BPM help?
Financial institutions face the complex challenge of preventing financial crime, maintaining robust security measures and navigating diverse regulatory requirements across multiple jurisdictions — a task that extends far beyond traditional KYC processes and demands a comprehensive approach to customer onboarding. Infosys BPM has a holistic approach to managing financial crime compliance, combining advanced technology and expert advisory services. Our comprehensive solutions leverage market-leading platforms and strategic technology partnerships to address many pain points.
