Things KYC Compliance Officers Need To Remember

2 Mins read

Technology is advancing at a really fast pace right now. We are faced with a true digital revolution so corporations are now faced with a much higher business risk than in the past. Numerous financial frauds and crimes were carried out in the past so lawmakers and regulators had to implement numerous KYC compliance regulations for businesses. Non-compliance brings in a huge cost so it is very important that you understand some vital things as a compliance officer in the modern world. 

Moving From KYD To KYC

KYC is a process that has to go way beyond collecting documents because KYD (know your document) is no longer enough. Businesses in many industries have to go through EDD (enhanced due diligence) in order to fully understand the other parties involved in transactions. This automatically includes validating the information you get in the document, looking for related hidden risks, and establishing the ultimate beneficiary ownership of a business to avoid money laundering. 

Personal Liability Is A Thing

Thomson Reuters revealed that right now there is a growth in the number of worldwide regulators that hold the compliance individuals accountable when regulatory requirement lapses were identified. Individual accountability is right now the highest it ever was in the banking industry. In the future, similar guidelines as with the SMCR (Senior Managers and Certification Regime) in the FCA (Financial Conduct Authority) might appear all around the world. 

RegTech Investments Become Mandatory

The regulatory landscape changes very fast along with numerous geopolitical risks that are identified. Compliance officers thus need to deploy a very effective regulatory technology when they want to better manage and even understand risk. Most of the banks now use anti-money laundering systems, integrated risk intelligence, and overall complex Regulatory technology. Also, the banks now adopt RegTech in order to automate many of the compliance tasks. This is important because it reduces the operational risks that are associated with reporting and meeting compliance obligations. 

Third-Party Risk Mitigation

The business environment right now is highly-globalized. Organizations are now exposed to various risks linked with data breaches, supply chains, and even natural disasters. There are risk areas that are really important for both the private and the public sectors. They can cause reputational damage and we have to highlight as a part of this category: financial crimes, sanctions, corruption, bribery, human abuse, environmental crime, and conflict minerals. The compliance officers have to leverage technology and data in order to manage the third-party risks identified during the initial screening, together with due diligence. 

Non-Compliance Costs

Besides reputational damage, when non-compliance appears, the company is faced with a huge potential monetary loss. This comes because of legal fees, fines, the stock market value drops, and much more. Compliance officers need to create and use a very comprehensive and robust risk management system besides the KYC process used. 

On the whole, compliance officers are faced with so much more than they used to in terms of job responsibilities. They need to be up-to-date with all the laws and so much more these days.