KYC Utilities: Gaining traction
Know-your-customer (KYC) obligations are placing increasing demands on banks as regulators continue the fight to stop money laundering, terrorist funding, and halt tax evasion. FX-MM’s Peter Garnham looks at how institutions are looking to utilities to make their systems more efficient without surrendering the control that would leave them facing major fines from regulators.
The banking industry has been held to performing KYC activities for its retail, private, and corporate customers for quite some time, certainly at the on-boarding of these clients. But, there is a more recent trend in that greater pressure is being placed on the re-examination of existing clients with more frequency and rigour.
Robert McKay, Executive Vice President Product at Accuity says this renewed focus on KYC activities of a bank’s financial counterparties has risen in the wake of the financial crisis. Further, he says, newer regulations such as the recently enacted EU 4th Directive on Anti Money Laundering (AML) and tax compliance regulations, such as FATCA in the US, are driving KYC processes across all bank customer segments to closely examine customer accounts.
“The reaction in the banking industry to these trends is to seek ways to keep up with these regulations while still driving the costs of performing KYC down,” says McKay.
