KYC – Know Your Customer. One of the acronyms we encounter most often working in the Governance, Risk, Compliance & Financial Crime space, and the first line of defence a new customer reaches when they join a new Bank, Building Society or other Financial Services business. In an increasingly digital world, the work of KYC is adapting and changing quickly. With new, innovative FinTech products and platforms appearing every month, the process of screening and onboarding customers, ensuring they are who they say they are and reducing the risk for the company, needs to happen remotely, quickly and at a larger scale than ever before.
There’s never a time when KYC is not important – any business that holds and transfers money can potentially be misused. Reviewing and confirming who a customer is and what they have done in the past is the foundation of a robust anti-Financial Crime plan, reducing the risk of fraud, corruption, money laundering and terrorist financing. But right now, KYC is perhaps more important than ever, in no small part because of the continual shift toward digital-first and digital-only banks and services.
Financial Services has always been a sector at the forefront of technological advances, and the FinTech explosion of the last 5 years is a testament to that – but new tech creates new challenges – and requires new solutions. A digital-only bank that needs to verify who a new customer is entirely through an app face very different challenges to a building society onboarding a new customer face to face. These new platforms need innovative solutions, and many digital identity verification providers have sprung up to meet that challenge. Technology is also a weapon of financial criminals, however, and new developments create new tools for them to commit fraud, which have to in turn be met by new deterrents and defences from the Financial Services world.
So technology is crucial, but a state-of-the-art KYC function cannot rely on that alone – having skilled, knowledgeable staff is still absolutely key. This is a big part of the demand for good KYC professionals rising this year – the job market. As we know, across Financial Services and across all sectors, we’re in a very much candidate-led market, with businesses needing to compete fiercely to get the very best people, who right now will have their pick of multiple opportunities – if they’re willing to move.
And hiring those KYC superstars needs to be part of a business-wide approach to compliance – the final piece of the puzzle. With the ongoing regulatory drive towards senior leadership having personal responsibility for creating positive compliance cultures, KYC needs to be carefully thought about and integrated. We’ve seen regulations in the UK and elsewhere get more and more intensive, with firms being expected to go beyond box-ticking, to consistently meet high standards of KYC screening. Failure to do so can not only enable fraud, but can subsequently lead to large fines from regulators and the associated reputational damage in the eyes of the public.
For some businesses, KYC has perhaps been an undervalued exercise focused on simply gathering the necessary identification and checking against watch lists and sanctions registers – and that’s simply not going to cut it anymore. For some businesses this will need a ground-up rethink of the approach to compliance in the business – how can they become proactive and not just reactive? For others, this will be the next step in an ongoing process to stay on top of regulatory requirements and deliver a top-tier Compliance and Anti-Financial Crime service that gives both the company and its customers’ peace of mind.
Whatever stage you’re at right now, Kind Consultancy can help. We focus exclusively on Governance, Risk, Compliance & Financial Crime roles within Financial Services, and connecting businesses to excellent KYC talent has been a core part of what we do ever since our inception. If you’re looking for game-changing KYC professionals – whether you need a full team of contract KYC Analysts to complete a project by a tight deadline, or you’re looking for a permanent Head of KYC to guide your department for years to come, get in touch on 0121 643 2100 or e-mail firstname.lastname@example.org for a confidential conversation.