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Businesses abandoning banking services over slow due diligence processes 

Some 38% UK businesses have deliberately abandoned an application for banking services in the last year due to ‘slow due diligence processes’, according to research from Encompass Corporation, the know your customer (KYC) and regulatory technology firm. 

The survey, which polled 200 business decision-makers in large and medium sized businesses, was conducted between 18-19 March, just after the Chancellor announced a £330bn rescue package due to support UK companies through the COVID-19 crisis. The research asked businesses about the challenges they face in getting access to financial support, as well as attitudes towards cyber security and regulation. 

In addition, the polling found that businesses plan to prioritise spending on cyber security over anti-financial crime compliance in 2020, with 44% putting plans in place. However, over four out of every five organisations (81%) agree that they are confident in their understanding of exposure to financial crime and that they already have the processes in place to address it.

According to the polling results, 44% of companies said they did not regularly put customers and suppliers through formal KYC processes. Additionally, 60% admitted that there has been no training for staff about how to be compliant with the EU Fifth Money Laundering Directive (5MLD). 

Meanwhile, nearly one third of businesses (29%) said they now trust challenger brands and fintech providers more than traditional banks. 

“It is disappointing that complex, expensive and overly-long due diligence processes are preventing British businesses from getting access to the finance and banking services they urgently need,” said Wayne Johnson, CEO and co-founder of Encompass. “Everyone recognises that it’s vital to ensure correct background checks on new customers to prevent money laundering and criminal activity, but these checks should not act as a hindrance to legitimate companies gaining access to the credit and services they require.

It’s also worrying that so many companies admit to minimal KYC onboarding processes, as well as offering zero training on important directives such as 5MLD.” 

The solution for banks and financial services organisations is in harnessing the power of analytics and automated solutions to swiftly and securely adhere to these important compliance processes. One such option is to secure real-time watchlist updates over the blockchain, something that compliance firm EastNets has been working on.

In partnership with Dow Jones Risk & Compliance, EastNets commercialised a feed of sanction alerts over a private blockchain network, with 28 financial institutions now live users of the real-time watchlist feed. EastNets ChainFeed is now featured within the firm’s watchlist screening solution, SafeWatch Filtering. All financial institutions who are actively using EastNets SafeWatch now have access to Dow Jones’s sanction alerts carried over a private blockchain network directly to the screening engine, EastNets SafeWatch Filtering.

Furthermore, the secure nature of the blockchain-enabled EastNets solution restricts the opportunity for malevolent actors to intercept and/or manipulate watchlist data.

“We understand the challenges and risks associated with manual updates of watchlists,” said Deya Innab, EastNets chief strategy and product officer. “Our customers need a timely, secure courier to carry watchlist feeds from end-to-end. This innovative solution uses blockchain technology to overcome these challenges.”


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