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Know Your Customer

How to stop your KYC data going stale

Mark Davies

19 Oct 2017

A bakery worker rides a bicycle as he carries fresh bread on his head in Cairo, Egypt. Phorographer: Mohamed Abd El Ghany
A bakery worker rides a bicycle as he carries fresh bread on his head in Cairo, Egypt. Phorographer: Mohamed Abd El Ghany

KYC data can quickly become stale. Having high quality, reliable information from the outset is the key to the ongoing monitoring of client relationships.

The impact of ever increasing global Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations on banks and financial institutions (FIs) is well documented.

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There are enormous costs associated with gathering, collating and verifying volumes of client information, as well as considerations such as the sheer length of time it takes to on-board and continuously monitor changes in each client relationship.

A further concern for both banks and regulators is the lack of any KYC data and documentation standards across the industry.

There is often a negative impact on the client relationship as a result of repeat requests for the same information.

These KYC specific challenges can be overcome by creating a single source of client data that is standardized and verified.

Client On-Boarding for KYC compliance
Client On-Boarding for KYC compliance

However, only recently have banks and FIs begun to tap into the efficiencies that can be realized when they use this resource across their organizations.

Business sharing

The concept is simple enough: that a reliable, verified source of client data should be shared across business lines — a clear move away from the silo thinking of the past.

Mark Davies, global head of data services at Thomson Reuters, said: “A set of quality data with reliable sources can be used as a resource by many different departments across big banks and FIs, creating efficiencies in terms of both time and cost.

“Furthermore, utilizing this resource speeds up business decision making and enhances the client experience by reducing low value touch points.”

Watch video — Banks coming together to tackle KYC

Data hygiene

The logical time to gather, collate and verify crucial client information is at the beginning of the relationship when the client is on-boarded, but data hygiene should be maintained throughout the relationship.

KYC as a Service have an important role to play, because although it is clearly necessary to meet immediate KYC needs, it is equally necessary to develop a holistic understanding of potential downstream uses for the information.

Collecting and verifying data correctly at the beginning of the client relationship is not sufficient.

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Client data, by its very nature, is not static and once captured, it must be kept up to date on a regular basis.

Any number of factors — for example, M&A activity — can lead to data quickly becoming stale.

Having high quality data from reliable sources is the key, as the most accurate client data can enable both efficient data capture and ongoing monitoring.

Continuous monitoring

As a result of our recent acquisition of Clarient, Thomson Reuters now manages over 350,000 KYC records covering 1.25m managed legal entities in over 140 countries.

Our KYC as a Service is able to identify and classify a client’s risk category, verify their identity, and screen all related parties to create a KYC record.

And unlike any other service provider, we continuously monitor for changes and automatically refresh client due diligence information.

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