How to Execute Effective KYC

KYC processes can be complex depending on factors like who is being onboarded, where, and for which product. So how do you execute KYC most effectively?

Posted by: 
Alexis Fox-Mills
Mar 24, 2021

Executing effective KYC

Failure to establish and execute the right Know Your Customer (KYC) procedures for your business and its customers can cause inefficiencies and those cost money.

Your compliance teams may not be operating at full capacity or engaged doing the right things. Your customers might be dropping out of the onboarding process, which means lost revenue. Or, you could be opening yourself up to additional and unnecessary risk.

Any delay, friction or poor customer experience around compliance can also cause reputational damage, and in a competitive financial services' market reputation is everything.

So how do you execute the most effective KYC procedure for your business? How do you ensure your approach is right for day one and that it can be evolved over time to meet your changing compliance needs?

We have created a new report that highlights 6 areas to consider when it comes to executing effective KYC.

1. Check understanding

It sounds obvious, but it's really important to check everyone involved in executing your KYC procedure understands it fully. There can be lots of jargon used in compliance, and perhaps the team employed in the onboarding process aren't seasoned compliance professionals. Sometimes sales people can be involved in KYC and need to understand how to execute effectively.

So, it's key to check understanding on an ongoing basis - no shame, no silly questions.

It's also important to keep learning around compliance active. This can relate to educating the business when compliance procedures change, or it can relate to personal development. With new regulations coming on stream all the time having a team member take the lead on understanding and interpreting that can be truly valuable for your business.

2. Cross-team communication

Financial crime prevention is everyone’s business - it’s not something that sits inactive in the KYC policy. Compliance is a companywide action; its a behaviour and company culture plays a huge part in the fight against financial crime. This makes communication across different disciplines and teams crucial.

An example of cross-team communciation around KYC could be sales speaking with compliance regularly. This can help ensure an understanding and agreement around risk. It's not feasible to accept no risk, yet it's not wise to accept too much. If all parties speak, this becomes easier to execute in practice.

3. Increase transparency

Being clear on what is involved in the KYC procedure will obviously aid execution, but so will being able to help teams understand where cases are in the onboarding or risk management process.

Increased transparency about where a customer is in the onboarding journey provides context for teams to manage new customers and it can reduce friction both cross functionally and with new customers.

The right system can be helpful when it comes to knowing exactly what stage a customer journey is at.

4. Technology with the human touch

Technology can play a really useful and active role in effective execution of KYC procedures. It can digitise compliance processes, speed up onboarding and automate data checks, many of which used to be manual.

However, technology can't and shouldn't do everything. There will always be a role for human intervention in the most effective KYC procedures. This could be when managing higher-risk profiles or it could be when completing corporate onboarding, where manual reviews are essential.

Having technology that enables humans and optimises what they can achieve is the goal.

5. Freeing up customer-facing teams

Automating KYC processes allows compliance colleagues to focus on different and arguably more important tasks, rather than carrying out manual checks and sending endless follow-up emails.

Having a KYC workflow process that's automated makes completing compliance tasks more efficient, which means firms can hire people who are able to delve into the more interesting aspects of risk management.

6. Embrace change

Change is the only constant in risk management. You might get your KYC policy right on day one, but you will always need to change and evolve it in the days to come.

New regulations. New product launches. New threats. Entering new jurisdictions. A better form of tech emerges. There are endless reason why you can and should embrace change.

The most effective compliance policies are alive. And with the right regtech you can make frequent changes to the way they are executed.

Get the report

Get your copy of the full report, which has lots more useful information about executing effective KYC. The paper is available for download now.

This paper is part two in a series of three designed to help you establish, execute and review effective KYC. If you would like to get the other parts in the series, please go to the Resources/Reports area of our website.

Get in touch

We would love to talk to you about your KYC processes and procedures to understand what you're doing now, and to see whether there's a way PassFort could help make them even more efficient in the future.

Please get in touch anytime and we can arrange a chat.

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