One of the best ways to protect your financial institution from criminals is to prevent them from gaining access to your system. Many of the perpetrators of financial crime try to infiltrate banking, financial services, and insurance (BFSI) companies by pretending to be legitimate customers. As such, these financial institutions need to carefully screen their customers to ascertain that their prospective clients are exactly who they claim to be in their application for banking products and services.
Customer due diligence (CDD) and know your customer (KYC) solutions are specifically designed to help BFSI companies verify the identity of the clients that they deal with. Financial institutions take on a certain level of risk whenever they work with a client. A CDD or KYC program can help you determine whether or not the risk that your client brings is within the limits accepted by your financial institution. In addition to serving as a first line of defense against financial criminals, CDD and KYC solutions facilitate compliance to regulatory requirements, and their addition to an overall anti-money laundering (AML) program can help your BFSI company save on hefty fines and reputational losses caused by being used in criminal activities.
If you’re in the market for strong CDD and KYC solutions that will complement your current AML program, an option with the following features will help you ensure the integrity and security of your financial organization.
Prospective customers come with different levels of risk. While some of these customers only need to go through the bank’s standard verification program before they can be cleared, others will have to go through a more thorough process before they can be vetted properly. Knowing the level of risk that a person or organization brings with them can help your financial institution determine the degree of scrutiny that these prospective customers should be subjected to. A modern KYC or CDD solution that is capable of processing applications according to the level of risk provides your company with a two-fold benefit. By matching the customer’s risk level to the proper vetting process, a program can speed up application processing without allowing suspicious entities to get through the cracks.
Every now and then, KYC and CDD solutions can turn up with false positives due to poor customer or watchlist data. These false positives, in turn, will have to be reviewed individually and cleared of their issues, and this process can take a lot of time and manpower. To improve the efficiency of your screening process, you need to choose a KYC or CDD solution that can reduce the number of false-positive results. There are products in the market that do this through the use of advanced data preparation techniques and algorithms. Some solutions have the capability of detecting and rectifying inaccuracies such as misspellings and misfielded information from data sources, and this can be more effective in matching entities and reducing the likelihood of coming up with false positives.
Having the capability to screen customers at the point of entry can be a game-changer for BFSI companies, as it puts them in front of the competition in terms of processing time and customer engagement. If they can look up customers as they come in, front office staff members can assist in verifying the identity of the people they are transacting with, check information that may not fit the records in the bank’s databases, and provide a more accurate timeline of when the customer can receive the result of their application, for example. This allows financial institutions to provide customers with a more convenient and meaningful experience while keeping the cost of doing so at a minimum.
Your new KYC or CDD program should be able to take over from the old solution immediately as well as implement changes rapidly in the future. As much as the solution should provide your financial organization with plenty of options, it should also come with a standard checking program that can be deployed from the get-go and screen customers that have less complex vetting requirements. This will allow your organization to prevent bottlenecks and buildups in the application process and provide immediate relief to your company in case your old KYC or CDD solution was not able to keep up with your screening requirements.
From time to time, your organization will need to look back on specific cases to determine how your screening processes can be made more effective and efficient. Having access to a KYC or CDD solution with reviewing capabilities will help you see areas for improvement in your processes in a snap. This can speed up your review and the introduction of changes and decision-making guidelines to your AML team, allowing you to respond to ongoing threats or detect more high-tech infiltration methods used by financial criminals.
Going Beyond Security: The Added Benefits of a Modern KYC or CDD Solution
On top of improving your screening strategies, reducing your processing time, and strengthening your compliance efforts, the right KYC and CDD solutions can also play a key role in providing a better customer experience. To enjoy these benefits, make sure that your choice of KYC or CDD solution has all the features mentioned on this list.