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KYC: ThomsonReuters, Bloomberg and encompass want your business

The battle for your KYC business continues with each third party service supplier trying to convince corporates to use their service with facts, white papers and blogs.

Thomson Reuters - surpasses 400,000 KYC records

Thomson Reuters announced that their Know Your Customer (KYC) managed services - which is now known as Refinitiv KYC as a Service (after the Blackstone takeover) - has surpassed 400,000 KYC records (well more than any other supplier). They believe that this is an important milestone which demonstrates that their KYC as a Service’s ability to deliver a scalable and efficient model which supports financial institutions in addressing industry wide KYC challenges, including the growing book of regulatory obligations.

Client onboarding and managing large scale remediation programs have become increasingly time-consuming and costly for financial institutions as regulatory scrutiny of KYC controls continue. With new legislation continuing to emerge in practically every major jurisdiction, financial institutions are required to focus on building a comprehensive, single view of their clients in order to verify their identity, perform effective screening and ultimately help prevent financial crimes such as money laundering and terrorist financing.

“KYC is fundamental to detecting and combatting financial crime,” said Phil Cotter, Managing Director Risk at Thomson Reuters. “Financial institutions are shifting towards KYC managed services to help their ongoing efforts to tackle this challenge, as well as enhance their KYC processes.”

Refinitiv KYC as a Service - KYC white paper 

Refinitiv KYC as a Service - still branded as Thomson Reuters -  have released a white paper entitled “Reducing the cost of compliance: A bold move towards Know Your Customer (KYC) managed services”. This paper is focussed on the costs and drivers for FIs handling KYC and concludes that:

  • The overall cost savings achievable by adopting the model are considerable and upwards of 35-60% per KYC review 

No surprises about this conclusion, and that Thomson Reuters also believe that “As pressure continues to mount on financial institutions to provide a better banking experience for their clients in a cost-constrained environment while remaining compliant, some firms are looking beyond managed service models towards utilities to carry out KYC to achieve even greater cost efficiencies.” 

Bloomberg - Entity Exchange

Bloomberg's Entity Exchange platform which doesn’t demand banks to all use the same standards, it enables the secure sharing of client data and documents. It remains to be seen whether Entity Exchange, which is so far backed by Citibank, Bloomberg, Coke, Merck, UPS, Cargill and Procter & Gamble, will take off. But Coke’s Aschmeyer believes that it will: “The transformation snowball is already starting to roll. I’ve had discussions with most of our other key banking partners and without exception they have all been pushing to join the project.”

encompass blog: Don’t let outdated customer information expose you to risk 

The encompass service is a software service which doesn’t hold any data, so it will accept data in any format. The service is focused on SMEs, solicitors and accountants, banks. 

The latest blog from encompass focuses on KYC remediation - verifying the identity of the person you are doing business with. Apparently there are four remediation challenges:

  1. Over promising, under-delivering: You need to be realistic and not heroic. It is a lot of effort and will take a long time. You have to acknowledge you're not going to remediate 50,000 clients in 12 months, it simply isn’t possible. Most regulators understand that so when you’re putting your programmes together, be realistic and point out that everybody's learnt the hard way that this is a long slog. This needs to be communicated to important stakeholders outside the organization, as well as inside.
  2. Outdated processes: take a long, hard look at your remediation process and ensure that it is efficient, has good tooling and data sources, and that it works end-to-end. If it doesn't, get out there and look at the new solutions that are available, but make sure you choose wisely: make sure the provider in question really does have the experience and the capability, don't just take their word for it. Test the product, see that it works, and that way you won't be disappointed.
  3. Bad data: you need to have a process in place to offboard those clients that either fail to meet the KYC standards or are not generating sufficient, if any, revenue, so that you’re not carrying the liability and the responsibility of having to refresh their KYC in the future.
  4. Lack of firm-wide cohesion: It’s critical that firms have got senior and board level sponsorship because if the problem doesn't get fixed the consequences are significant, including losing the firm’s license to operate. But it is a long, tough and expensive journey so you need to make sure that you've got buy-in from the very top.

CTMfile take: The evidence is building that banks and other corporates will increasingly rely on third party KYC utility services to manage their KYC which is why we wrote in a previous post that “To overcome the lack of common standards and systems is have direct data exchange between the platforms with NO single entity in the middle controlling and standardising the process.”

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