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Is there a solution to corporate treasury’s KYC problem?

In the corporate treasury department, Know Your Customer has been getting progressively more difficult as money laundering increases world-wide - the United Nation estimates that money laundering represents 2-5% of global GDP - and authorities world-wide put in more regulations to stem the flow. New bank accounts can take months to set up.

However, there is some good news, e.g. Thomson Reuters comprehensive Org ID service is extending its reach and important buy side companies are joining, and new technologies offer better and more flexible solutions, but is it anywhere enough?

Thomson Reuters Org ID new clients

Three more European buy-side clients - Legal & General Investment Management, Candriam Investors Group and Fund Channel - have selected Thomson Reuters know your customer managed service to complement their due diligence processes. They have adopted their Org ID Know Your Customer platform for due diligence which -- in accordance with KYC and anti-money laundering standards – collects public and private documentation, verifies, screens, determines ultimate beneficial owners and monitors a legal entity for change.

Drawing upon Thomson Reuters extensive international regulatory intelligence and news gathering capabilities, the Org ID KYC managed service also keeps clients up to speed on rapidly evolving changes, helping to tailor their internal compliance and data collection procedures to ensure a smooth, cost-effective customer on-boarding process in any market. The Thomson Reuters managed service is also used for enhancing and refreshing existing customer portfolios to meet a global standard.  

Comments:

  • Dominic Mac, Head of KYC Industry Solutions, Thomson Reuters, said: “We are experiencing increased levels of participation from the buy-side in our solution in Europe and worldwide, notably since the recent acquisitions and integration of Clarient and Avox.” 
  • Pierre-Guillaume Veaux, Global Head of Legal and Compliance at Candriam Investors Group, said: “Thomson Reuters Org ID undertakes sustained due diligence on our behalf, and identifies risk flags in accordance with AML/KYC standards. This means we now can better dedicate our resources to understanding our clients and their associated risks of doing business globally.”

Since its 2014 launch, Thomson Reuters Org ID KYC solution now serves over 50 major financial institutions and asset management firms; manages over 350,000 KYC records and publishes more than 1.25 million continuously refreshed legal entity profiles in over 140 countries with translated extracts from over 60 languages, helping customers accelerate their client on-boarding, comply with regulation, reduce costs and improve their client experience.

But is it enough?

New technology: social biometrics

This technology - which uses a person’s footprint gathered through Google, Facebook and other social networks - is much more powerful and much more difficult to put together than a single fingerprint. But it requires much more work to assemble a social biometric footprint. Then there are the standards needed to get agreement that this social footprint is acceptable and this one isn’t.

Overall, could help, but it will take time.

New technology: artificial intelligence

Carole Stabile, in an article in Bob's Guide, writes, “AI is the foundation of many new technologies for KYC and CDD. AI-based systems are dynamic. They incorporate prior knowledge and continually “learn” and update rules based on new information in order to predict future actions. AI solutions can process large amounts of data quickly and are highly effective at detecting hidden links and identifying anomalies, which makes the technology ideal for on-boarding and monitoring.”

She concludes that, “AI can streamline operations by automating manual processes as well as provide additional information to support alert investigation.” But AI cannot replace bank staff yet in KYC investigations.


CTMfile take: There is no easy fix to the KYC problem as money laundering and other fraud is rampant, and there is no single simple fix. An integrated multi-faceted solution like Thomson Reuters’s Org ID service is required which needs to be accepted AND used by buy and sell side organisations. Sadly, the KYC problem is here for many years.


This item appears in the following sections:
Fraud Prevention
Anti-Money Laundering Fraud Prevention

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