The Importance of KYC Remediation and Why You Should Be Doing It
In recent months, many firms were fined for non-KYC (Know Your Customer) compliance. As a result of these fines, it is now more important than ever to ensure that your company has strict compliance procedures and policies in place so you are not subject to the same fate as some of those other unfortunate companies. This post will explain why compliance matters and how to avoid penalties.
What are the 3 components of KYC for financial institutions?
The 3 components of KYC for financial institutions are collecting, assessing and verifying information.
KYC (Know Your Customer) helps to identify customers across multiple institutions in order to minimize fraud. It also provides a higher level of protection for both companies and consumers from fraudulent transactions. Why should it be done routinely?
To collect the information you need a CRM which is in your systems.
Digital forms to record client data and enforce a digital KYC process. This tool will help you to reach client data
Digital signature to let your client sign documentation.
A customer data file to store identification documents and offer digital self-service solutions with the client portal. This tool combined will facilitate customer remediation as they will support compliance efforts to collect all data.
What is the KYC remediation process?
In the financial sector, the KYC remediation process is when an institution becomes aware of a client’s active involvement in financial crime, and they have to update their KYC records.
In order for the bank or any other type of institution to continue doing business with that customer, they must remediate that account by either updating their risk assessment score or terminating it altogether.
Enhanced due diligence can be needed when a client is in an elevated risk category. Research has shown that companies which have a KYC remediation process are more likely to be compliant with anti-money laundering regulations, as they will most likely terminate the account of any customer who poses a high risk. This can help them avoid hefty fines and penalties from regulatory bodies.
What is AML remediation and how it can detect financial crime?
AML remediation means anti-money laundering. Here the principle is to collect enough data points via transaction monitoring to spot an anomaly. Money laundering is the process of covering up the money trail to disguise where it came from. The aim is to prevent illegal activity like terrorism financing, drug trafficking, and tax evasion as well as prevent criminals from accessing funds they’ve obtained illegally.
Money laundering can now apply to a crypto wallet. A crypto wallet is a wallet with cryptocurrencies. Cryptocurrencies protect the identity of the owner by not revealing the identity of who is behind any transaction to protect them from possible identification.
Maintaining a clean customer and business profile, and authenticating customers with KYC/AML information will help you jump ahead in complying with regulations as well as deterring fraudsters from targeting your company. AML is changing – so we built with InvestGlass an automation tool you can change yourself.
What do KYC remediation analysts in financial services do?
Banks or independent advisors can start KYC remediation projects with pre-existing solutions provided by Fintech. Fintech is companies that have been regulated to provide KYC/AML or remediation services. They can work with your company to execute the project by providing all of the tools and knowledge needed in order to start a successful KYC Remediation Project.
Complex remediation cases made simple
With InvestGlass CRM we offer a pre-built compliance KYC process within a secure cloud solution with a dozen fintech specialists. The solution is perfect to tackle terrorist financing, with artificial intelligence filtering low-risk customers from high-risk clients. An approval process is key for improving the risk management process and will remove future remediation headaches thanks to teams’ tasks dispatcher.
Watch more about KYC remediation.