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Enterprise risk management

South Africa is feeling the pain of KYC

Two recent Thomson Reuters surveys revealed the real-world KYC challenges experienced on a daily basis according to financial institutions and corporates operating in the global Anti Money Laundering (AML) environment.

The surveys targeted financial institutions (FIs) globally with 772 responses, of which 101 respondents were based in South Africa as well as corporates, of which 822 individuals responded, with 116 based in South Africa. More on survey methodology can be found in the full report, along with deep insights.

South African KYC challenges according to Financial Institutions and Corporates

South African financial institutions scored higher than the global averages on the challenges they are facing in conducting know your customer (KYC) and customer due diligence (CDD) processes.

What do you consider are the challenges in conducting a KYC / client due diligence process?

South Africa Global
Lack of people resources 45% 36%
Lack of time available 45% 33%
Volume of regulatory change 43% 34%
Lack of effective technology 34% 21%
Lack of knowledge of evolving regulation 30% 22%
Lack of ability to access good quality customer identity data 20% 17%

Corporate clients are beginning to have negative KYC experiences as the result of the increasing demands made by financial institutions.

Top KYC experience complaints from corporates

49 percentDifferent banks ask for different documents and information – no common standard in place. 34 percentConcerns about security around who was viewing my personal documents. 30 percentDelays and paperwork cost time, money and resources.

South African financial institutions spend an average of US$30 million on KYC processes each year and 13% spend more than US$50 million.

Over the past 12 months, the budgets required to complete KYC processes have escalated.

18 percentThe increase in cost to on-board a new client. 17 percentThe increase in cost to perform client due diligence.

In the next 12 months, the budgets required for KYC and client on-boarding will continue to rise.

17 percentThe increase in the cost to on-board. 14 percentThe increase in the cost to perform client due diligence.

50 percent 50% of corporate clients have spent more, or significantly more, time and attention providing KYC documentation over the past 12 months.
All this pain is driven by regulatory change. 74% of financial institutions have seen an increase in the level of engagement by regulators around client due diligence and KYC over the past 12 months compared with 52% globally. 74 percent
The regulators have the attention of FIs. 74% reported increased time and attention spent by senior management and the board of directors on KYC over the past 12 months. 74 percent
44 percent
Global FI responses
55 percent
South African FIs

Financial institutions that report making changes to their CDD and KYC processes as a result of regulatory rule changes prompted by the 2012 Financial Action Task Force (FATF) Recommendations: 55% compared with 44% globally.

Learn more

Download the full report for more insights on the KYC challenges facing South African financial institutions and corporates.

More on how South Africa is addressing KYC pain points.

Join the conversation

What are your greatest challenges in conducting KYC? Let us know in the comments below.

More answers