Completing KYB processes when KYB data is missing

How do banks and other institution complete robust corporate due diligence when the KYB data simply isn't there? Using the right solutions means automating checks if possible and making manual work slick as an otter.

Posted by: 
Ray Ryan
  |  
Sep 8, 2021

September 8, 2021

It's a simple truth that it is easier to source reliable Know Your Business (KYB) data in some jurisdictions than it is in others. This is the kind of data used for corporate due diligence; that helps financial institutions or regulated businesses verify the legitimacy of a corporate customer.

Essentially, KYB data is needed in order to understand a corporate structure and to verify its ultimate business owners (UBOs) - ensuring they are who they claim and aren’t involved in money-laundering or other types of organised crime.

KYB data isn’t a consistent commodity in different areas of the world though. Not because certain countries are trying to hide information (or you would hope not anyway), but because regulations, company filing, corporate registries, media agencies and so on are simply different in different places.

This variation across regions doesn’t, however, make the job of financial institutions or compliance teams any easier in a global digital economy. After all, you could be trying to onboard a new corporate client anywhere in the world.

The question then becomes, how do you complete KYB processes, which can be detailed and involved, when the KYB data is patchy or missing altogether? And how do you make customer onboarding more efficient to start realising revenue from these valuable new accounts?

Expectations of automation

First off, it’s worth saying that when it comes to corporate onboarding you are unlikely, if ever, going to be able to achieve 100% automation of the process. In fact, it’s probably unwise to aim for straight through processing (STP) in corporate onboarding. You would be opening yourself and your company to more problems. Some level of human judgement and intervention will always be needed to interpret data and build a picture of risk.

What you can do though is garner as much data as possible through automated checks and then bring in compliance professionals to complete the due diligence process. This makes KYB more efficient, controls risk, and makes the most of your resources.

Multiple datasets

Secondly, think creatively about how to acquire the KYB data you need. This might mean integrating several data providers who have strengths in different regions or with different types of datasets. For example, you might choose global agencies to help with sanctions and adverse media screening of UBOs.

If you are looking for business data on a firm incorporated in the UK, acquiring data is going to be fairly straightforward and your chances of successfully getting address information and UBO data will be pretty good. If you are onboarding a customer in Africa, you might need to cast the net more widely. It doesn’t mean data isn’t there, it just means you need to think more carefully about how you source it.

Clunky KYB

When manual KYB processes become difficult and cumbersome is when somebody in the financial institution is tasked with onboarding; they make a list of documents needed; that list is emailed to the customer (not very secure, but let’s ignore that for now). Then the compliance team goes through all the documents returned, and there is often then some back and forth exchanges because something is missing or signatures are needed etc. Finally, the documents are put in a draw (literally) or in an online archive, hopefully filed away brilliantly.

Doing KYB this way is laborious and not very 21st century. In fact, it’s also pretty haphazard, not very secure, and a pain when it comes to audit or review and remediation.

Make the most of manual

The plain truth is, sometimes data will be impossible to source and automated KYB checks a non-starter. What this means is, you need to make the very best manual KYB process imaginable – slick as an otter.

The focus then becomes about using a single online solution, not for straight through processing or automation, but for document collection, customer communication and case management in order to control the manual activity.

+ Decide what information needs to be collected from customers

+ Request that information (without going back and forth)

+ Communicate with customers digitally and securely

+ Store the communications and documentation online

+ Result decisions made based on the data gathered

+ Renew checks to ensure ongoing compliance

Following this path in a single solution, you have de-emphasised the importance of sourcing the KYB datasets automatically from a global provider. Instead you have used your digital solution to build trust effectively and efficiently with the corporate customer themself.

Summary

In many instances, when you are carrying out KYB activity across different regions of the world automatic access to data just isn’t going to be an option. With leading providers, you can access PEPs, Sanctions and Adverse Media information to help build a picture of a corporate structure and its legitimacy. But data is not always going to be available, so find a way to make manual processes more efficient. Then you can still onboard accounts in a timely way and build trust with your new customer.

With a single solution, the corporate client is going to understand what they need to provide in terms of documentation. They will understand they need to validate the business and its owners, and you will have a method of communicating that reduces friction. Plus, with the right solution the documents and the onboarding history will be secured and auditable.

Single SaaS solution

PassFort is a single SaaS solution that makes KYB more efficient to execute. We have the ability to provide a case management system, automating compliance policies and data checks where possible, but bringing in compliance professionals to manage manual tasks more effectively.

Design forms to request documentation and communicate with clients directly through one platform. Then have those documents returned and stored in the same place. Access information quicker for decision-making and for audit purposes. Then when future checks are needed or ongoing monitoring takes place, everything is accessible and stored against the customer’s profile.

You can bring more structure to due diligence, efficiency to manual work, and make the most of automation that is available (even if the KYB data is missing).

Get in touch with the team anytime to discuss your KYB processes and how we can help you make them slicker.

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