Global KYC: Cost center or profit opportunity?

On Thursday, February 23, 2023, the ACAMS NY Chapter hosted a virtual webinar titled, “Global KYC: Cost center or profit opportunity?,” which was sponsored by AML Partners. The discussion was moderated by Susan White (Executive Board Member, ACAMS New York Chapter ) and included the following panelists: Frank Cummings (Chief Executive Officer, AML Partners LLC); Jim Richards (Founder and Principal, RegTech Consulting LLC); Ashfaq Zaman (Money Laundering Reporting Officer, Mashreq); and Patricia Sullivan (Global Head of Financial Crime and Compliance Business Control & Oversight, Deutsche Bank).

The event began with a technology-focused discussion around how global firms effectively leverage technology to help streamline and automate onboarding processes. Panelists discussed benefits of leveraging technology and also advised that in order to implement the appropriate technology, financial institutions must have a strong understanding of their data, including differences in data categorization across the institution. For example, some global financial institutions may not even have a consistent internal definition of “customer.” When it comes to choosing a vendor, financial institutions should base their decisions based on the quality of the data and the data sourcing (in addition to the services offered). It’s critical for the requestor to know what type of data is needed and know the plan for the eventual data use.

Panelists also discuss best practices for the use of data analytics, which can be used very effectively to review downstream activity (e.g., correspondent banking nesting activity), and artificial intelligence. When adopting artificial intelligence, financial institutions should be very well informed about how the models have been trained. The technology should be introduced carefully and in isolation to avoid unintended consequences (e.g., the technology being used maliciously against the firm). In general, the use of artificial intelligence requires very strong data, which most financial institutions don’t have. Panelists discussed that the best (and perhaps only) KYC-related use case for artificial intelligence is for name screening.

A key theme of the discussion was how KYC and business processes can most effectively complement each other and ultimately improve client experience. Automation, for example, can be leveraged to ensure that clients don’t have to share the same information with multiple departments within a financial institution. Additionally, credit outreach and AML/KYC refresh should ideally be coordinated so that clients aren’t contacted for the same information multiple times. Ultimately, the panelist takeaways covered the theme of how financial institutions can reduce the cost and increase the profit of KYC programs – this includes by: improving automation and eliminating duplicative efforts; leveraging technology to increase centralization of processes; and aligning interests with business functions.