Increased regulatory scrutiny, rising compliance costs, tech-savvy financial criminals and recent sanctions events have challenged firms — even those with effective screening and due diligence programmes in place — to stay compliant with KYC/AML regulations.
- Financial criminals are becoming ever-more adept at concealing their illicit activity, and the result is that financial crime continues to flourish.
- Compliance with anti-money laundering (AML) and know your customer (KYC) regulation is mandatory, regardless of how complex or challenging.
- As a single source of content, software and support, Refinitiv can offer unsurpassed quality assurance that boosts efficiency and lowers costs, while supporting our clients as they strive for better regulatory compliance.
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Financial criminals are becoming ever-more adept at concealing their illicit activity, and the result is that financial crime continues to flourish.
According to INTERPOL’s inaugural Global Crime Trend report, financial and cybercrimes are the world’s leading crime threats and also those projected to increase most in the future.
Based on a survey of the organisation’s 195-country membership, money laundering ranked as the number one crime threat.
In the fight against financial crime, regulatory agencies across the globe are continuing to focus their attention on ensuring compliance with anti-financial crime regulation, leading to specific directives and regulations such as the 6th EU Anti-Money Laundering Directive (6AMLD).
The sanctions landscape also continues to evolve, with the recent war in Ukraine seeing new sanctions measures take centre stage and create a need for firms to re-screen their customer base and investment holdings.
Sanctions inflation stands at 10.7 percent annually since 2017 according to the Refinitiv Global Sanctions Index (GSI).
Organisations are bearing the compliance cost of the growing and complex regulations. Emerging fintechs are managing rapid customer and product growth alongside their effort to maintain regulatory compliance.
Other financial institutions are under pressure to reduce their operational spend, challenging them to stay abreast of regulations while managing budget cuts to their compliance departments.
Against this backdrop, compliance with anti-money laundering and know your customer regulation is mandatory, regardless of how complex or challenging.
Any breach, even if unintentional, can have significant consequences from fines and penalties to potentially substantial reputational damage.
Can you outsource KYC processes?
Increasing compliance costs and evolving regulatory requirements have placed a great deal of cost and operational burden on regulated firms.
Many organisations fully appreciate the importance of a robust, risk-based compliance programme but are looking for ways to take out costs from their KYC processes while maintaining compliance.
Even where cost is not a factor, questions should be asked to ensure the integrity of the overall programme and the customer due diligence process.
- Is a lack of skilled resources hindering the due diligence effort and negatively impacting customer onboarding?
- Is the team struggling to keep up with a growing volume of ongoing screening alerts, potentially exposing the company to new, as-yet unidentified risk?
- Have recent regulations caused a need to re-screen the entire customer base despite insufficient resources?
- Has a recent acquisition resulted in the need to screen a large volume of new customers and there aren’t enough resources on hand to handle the bulk of new names?
Answering any of these questions with temporary resources is not cost effective and can result in a lack of proper governance.
An effective managed service model can help.
Managed services is the practice of outsourcing the responsibility for maintaining, and anticipating need for, a range of processes and functions.
When applied to KYC functions, the service removes the burden of screening, remediation, and ongoing monitoring by outsourcing these processes to a single, trusted vendor, enhancing efficiency and ensuring a better customer experience and higher overall rates of compliance.
This enables firms to strike a balance between focusing on quality of compliance expenditures and controlling costs, thereby reducing the total cost of ownership and freeing up departments to focus their efforts on other important activities, such as tracking and implementing regulatory change.
Five benefits of choosing a KYC managed screening service
Firms choosing a managed screening service should expect the following benefits of the programme.
- Single supplier – A single supplier covers three vendor screening management areas: data, software, and service. A single point of contact streamlines the scoping and service delivery process and reduces cost.
- Fast turnaround – Positive and possible matches are escalated to clients as the resolution team identifies them, allowing for quicker analysis of potentially high risk cases.
- Immediate alerts – Helps prevent in-progress heightened risk transactions as part of the vendor screening and management process.
- Swift implementation – Readily trained resources that can start projects quickly, alleviating screening backlog and boosting compliance.
- Efficiency – Free up time and achieve certain compliance actions with fewer resources, lowering total compliance cost.
Partnering with a trusted provider
Refinitiv’s KYC Managed Screening Service delivers a quality solution that leverages our market-leading World-Check Risk Intelligence database of heightened-risk individuals and entities, as well as advanced screening software with proven success in name-matching.
Our service aligns screening with the client’s risk-based approach and offers an outsourced model with strong quality assurance processes.
Services include initial screening, ongoing monitoring, and bespoke screening project requests. It can also bridge the gap when transitioning from another platform to the World-Check One screening solution, offering screening services as needed until the migration is completed.
Where additional potentially hidden risk is identified or suspected, Refinitiv’s Due Diligence reports deliver detailed information and comprehensive insights, including accurate risk ratings, to help regulated entities pinpoint potential risk and make more informed decisions.
Available for both companies and individuals, these reports can be ordered in addition to the KYC Managed Screening Service.
Whether you are seeking on-demand outsourcing or a managed model that utilises ongoing monitoring services, as a single source of content, software and support, Refinitiv can offer unsurpassed quality assurance that boosts efficiency and lowers costs while supporting our clients as they strive for better regulatory compliance.