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3 Reasons Why Big Data is the New Trendsetter for KYC/AML Regime

Big data remains one of the hottest debates in the corporate sector with its groundbreaking applications for enterprises. Numerous users engage with businesses these days on the internet — and properly addressing their needs is no child’s play. Managing the onslaught of customer data on a daily basis can often become a challenge for corporate entities, especially those operating with smaller revenues. This is when smart analytics tools powered by big data come in handy to meet business needs and to reach goals in the long run.

As a matter of fact, the surge in digitisation over the years has increased criminal attention towards the financial sector which means that organisations are now more prone to cybercrime instances. Along with the threat of bad actors comes challenges like protecting data privacy of online users. With big data analytics, businesses are able to keep intact privacy and data protection while complying with AML/KYC regulations.

The Role of Big Data in Corporate Industry

Big data is a collection of tools and methods through which large data sets can be classified and analysed to make informed decisions. For enterprises, especially those operating in the financial sector, there are certain obligations that define how customer onboarding procedures should be carried out. Know Your Customer or KYC is one mandatory requirement along with Anti Money Laundering (AML) regulations which are important to ensure secure and streamlined customer onboarding procedures.

Big data when paired with automated KYC solutions enables companies to predict customer behaviour and perform streamlined identity verification by banking on regulatory technology (RegTech) trends.

Towards Effective AML/KYC Compliance

According to Forbes, 24 days is the average time traditional banking procedures take to onboard a single customer. This is because of complex KYC policies in banking frameworks that ultimately lead to non-compliance

and administrative fines. In 2020, nearly 10.4 million USD were levied in fines and penalties by financial regulatory authorities for deficiencies in the legal financial system. Following are listed some benefits of employing big data tools in daily corporate operations to maintain AML/KYC obligations.

Due Diligence of Customers

Businesses need to develop proper procedures whether they need to verify customers or need to establish business relations with partner entities. To cater to the needs of due diligence requirements, businesses need to develop policies and procedures for carrying out KYC verification of potential clients. Authenticating customers reduces the chances of criminal figures associating with business that could result in money laundering and other financial crimes such as terrorist financing and cross-border trafficking.

The heightened popularity of big data is creating better opportunities in customer verification systems through which businesses are better able to tackle synthetic identity fraud and impersonation theft much more effectively.

Processing High-risk Payments

Transaction monitoring systems have seen a new dawn of revolution with smart solutions powered by artificial intelligence models. These allow better tracking of customer behaviour so that suspicious and high-risk transactions leading to monetary crime can be timely taken down. Pattern recognition paired with substantial information generated using automated data analysis can allow corporate entities to combat financial crime better.

Suspicious Activity Reports (SARs) created by automated AML software not only reduces false positives during verifications but also flags unusual transactions carried out by high-risk customers, ultimately eliminating the need for manual human-based checks.

Automated Watchlist Screening

When we talk about performing Enhanced Due Diligence (EDD), big data tools come with the utility of filtering out insignificant information, instantly and effectively. State-of-the-art data analysis software incorporated in automated AML solutions enable companies to carry out comprehensive screening of customers against different watchlists and sanctions lists designated by the UN, OFAC and related financial regulatory watchdogs. Now, adverse media screening is possible through which high-risk customers can be categorised according to the risk rating assigned to them during the onboarding process.

Global Regulations & Digital Privacy

When it comes to maintaining AML/KYC compliance, there are certain challenges like protecting data privacy of customers as well as maintaining compliance with global regulations. Shufti Pro’s CEO, Victor Fredung spoke to the US Congress where he emphasized the need for a universal framework when it comes to verifying customer data through their ID documents.

Identity verification service providers can incorporate smart technologies like artificial intelligence, machine learning, and big data to eradicate the gap between data privacy concerns and meet compliance requirements, ultimately allowing them to provide seamless services to customers.



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Candice Spencer

Candice Spencer


Researcher, Fraud Preventer, Traveller, Reader, Writer, Thinker :)