Financial Services

Enhancing digital transformation in AML/KYC operations to combat financial crime

Banks and other financial institutions spend a lot of time and resources on combating financial crime. These include various customer due diligence measures to aid KYC fraud prevention, as well as the incorporation of several anti money laundering (AML) processes. Even with all these systems and precautions in place, financial institutions continue to face fines, sanctions, and other penalties from regulators, stemming from inefficient KYC and AML processes that fail to comply with established norms. Aside from the financial detriment, these inefficient processes are extremely labour-intensive and hamper overall productivity, can lead to excessive government scrutiny, and affect customer experience.

To overcome these hurdles, leading financial institutions are now exploring newer approaches to customer due diligence and incorporating actionable new-age policies across customer on-boarding and screening procedures. This blog will examine how banks can use modern digital technology to simplify KYC fraud prevention and AMC processes to combat financial crime.

The first step in incorporating modern financial crime prevention measures involves restructuring the four primary elements of the customer due diligence process mentioned below.

  1. Policy and risk management
  2. Processes and services
  3. People and organisation
  4. Data, technology, and analytics

Let’s take a closer look at each of these factors and what can be done to improve their effectiveness in financial crime prevention.

Policy and risk management

Current KYC and AML processes are based on existing company policies and are crafted in accordance with prevalent regulations and laws. By recognising the relationship between the policies that govern these KYC and AML processes, data requirements, related processes, and the available technology, financial institutions can better ascertain the impact of policy updates on existing KYC and AML practices. This knowledge can ensure consistent compliance with established regulations, even in the face of sudden policy changes.

Processes and services

The majority of banks today have comprehensive systems in place to closely monitor their customers throughout the relationship. Leading financial institutions are now taking steps to minimise customer outreach and are enabling customers to manage their own profiles through tailor-made due diligence portals. They also incorporate publicly available data from third-party sources to verify customer information.

People and organisation

Rather than have relationship managers spend time manually collecting and reviewing customer data, financial institutions can now avail the services of dedicated delivery centres. These centres offer round-the-clock access to talent pools at a reasonable cost, enabling banks to source the expertise needed to efficiently gather and examine customer data and keep employees focussed on their core duties.

Data, technology, and analytics

Outmoded data storage and retrieval systems limit an organisation’s ability to efficiently search and access relevant information due to inconsistencies and data silos. Instead of relying on these outdated systems, banks can develop data models and dictionaries to aggregate data and create a single source of truth for requirements and business regulations. They can also use their KYC and AML data to reveal specific customer insights, leading to better decision-making and relevant product offerings.

By modernising and optimising these core components of the customer due diligence process, banks can continue to offer excellent customer experiences while also keeping regulatory bodies satisfied with contemporary financial crime prevention measures.

Customer due diligence transformation focus areas

Financial institutions must focus on the following three areas for a successful end-to-end transformation of the customer due diligence process.

  1. Reducing the cost of KYC compliance by optimising KYC business operations:
  2. Factors include centralising all data, sourcing the relevant expertise when needed, and leveraging modern digital technology to automate and streamline KYC processing to save time, ensure more efficient processes and gather accurate customer data.

  3. Improve the customer experience:
  4. Simple and effortless KYC data collection processes can provide customers with smoother experiences. This can be achieved by offering self-service KYC portals and gathering relevant customer data from publicly available third-party sources.

  5. Managing risks and ensuring compliance with relevant laws and regulations:
  6. Banks can focus on financial crime prevention with regular examinations of KYC data, from which they can glean valuable insights. Additionally, evidence-based and auditable KYC processes and customer segmentation to better assess risk factors can help with KYC fraud prevention.

For organisations on the digital transformation journey, agility is key in responding to a rapidly changing technology and business landscape. Now more than ever, it is crucial to deliver and exceed on organisational expectations with a robust digital mindset backed by innovation. Enabling businesses to sense, learn, respond, and evolve like a living organism, will be imperative for business excellence going forward. A comprehensive, yet modular suite of services is doing exactly that. Equipping organisations with intuitive decision-making automatically at scale, actionable insights based on real-time solutions, anytime/anywhere experience, and in-depth data visibility across functions leading to hyper-productivity, Live Enterprise is building connected organisations that are innovating collaboratively for the future.

How can Infosys BPM help?

With deep industry knowledge and extensive experience with several global banks, IDC Marketscape has rated Infosys BPM as a leader in KYC and AML business process outsourcing. The suite of Anti Money Laundering financial Services offers round-the-clock support from domain experts and includes features such as transaction monitoring, watch list filtering of politically exposed persons, relevant news and sanctions, remediation support, and more. Reach out to know more about how Infosys BPM can help banks combat financial crime.

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