5 Key Takeaways You Should Know on KYC & AML Compliance

The growing demand for more stringent compliance regulations and stronger AML frameworks are driving investments in KYC and KYB technology solutions for financial institutions. These new technologies are playing a key role in modernizing the AML systems and processes at banks across the nation. Last week, we hosted the second of four NUMA Industry Panels, about how new compliance regulations for financial institutions are driving regulation technology and KYC/KYB solutions. The panel was moderated by our Entrepreneur in Residence, Raphael Schmideg, and featured one of our startup leaders, Susan White, Director of Business Development in the Americas at kompany, along with Fabien Legland, Director of Technology at BNY Mellon and Rachel Woolley, Global Director of Financial Crime at Fenergo.

Here are 5 key takeaways from the discussion:

Takeaway 1: Major shift towards dynamic KYC/KYB regulatory solutions within the industry.

Susan highlighted three main advantages that RegTech startups can offer financial institutions, vis-à-vis new compliance regulations:

1. Reduced risk by implementing dynamic/perpetual KYC solutions to get real-time notifications of any changes in customer statuses.
2. Client experience improvements due to more efficient registration methods.
3. Increased revenues for companies as a result of risk mitigation tactics.

Seeing as companies have incurred high costs associated with customer onboarding solutions, they should adopt more nimble regulatory technology systems to integrate with their legacy systems. This will ultimately lead to both improved client experience and higher profit margins for the firm.

Takeaway 2: As a result of the constantly changing regulations, banks have found themselves in a never-ending game of catch-up.

Each financial organization has its own internal governance regulations; however, they must constantly be thinking of both current and future requirements. Fabien stressed the importance of having all employees feel a sense of responsibility and commitment to follow legal compliance regulations. It needs to be a company effort to identify any gaps or areas for improvement on a continuous basis.

Takeaway 3: The global pandemic has caused a major shake-up throughout an industry that was deemed to be work-from-office-only.

The most common misconceptions surrounding the banking industry involve those regarding manual technology solutions. Financial services companies must learn to leverage new technological solutions in order to get ahead in the marketplace and stay competitive. Technology is advantageous in all industries, and especially to Finance, since it increases growth opportunities and boosts user experience.

Takeaway 4: Financial institutions need to be reactive rather than proactive with their AML and KYC/KYB solutions.

It is important to understand and comply with new legislation requirements in real time, or risk significant expenses of remediation projects, as Rachel highlighted. However, financial institutions should never jump to implementing new technologies for the sake of checking off a box. Rather, they should do their due diligence in order to leverage the right RegTech platforms for their business needs.

Takeaway 5: Financial institutions can attain a competitive advantage through implementing these new innovative technologies.

Corporates should focus on the company’s core business model for generating advanced internal solutions. Partnerships with technology solution providers may add significant value through increasing automation opportunities. Even though the area of RegTech and KYC solutions are fairly new, and have therefore been faced with some initial resistance, they should be seen as an opportunity to drive business forward.

Technology generates revenues, and during this time of great uncertainty, businesses need to be forward-thinking in order to come out of the pandemic on top.

Thank you to our moderator, Raphael, our startup leader Susan, and our guest speakers, Rachel and Fabien, for sharing their thoughts and advice on how RegTech is driving KYC and AML compliance legislation.

Learn more about kompany here!