Are You Ready for Continuous KYC? Use Our Checklist

Continuous KYC (Know-Your-Customer) answers a lot of the questions compliance managers are asking: How can we stay compliant when our customers keep changing? How can we keep the cost and workload of KYC down when regulatory demands keep going up?  

We’re now at the sweet spot where AI and digitalization have converged to unlock powerful new tools for KYC compliance. Are you ready to make the most of them? Run through our checklist and find out. 

1. Have You Cleaned Up Your Data?

Continuous KYC uses automation to accelerate onboarding and monitor the changing status of your customers. This relies on having data that is not just detailed and accurate, but also always current. That’s hard to achieve if you are trying to manually stitch together data from a variety of sources. The solution is to have a “living” single source of truth that consolidates and standardizes a broad range of data sources — and automatically keeps them up to date.  

2. Have You Defined Your Risk Tolerance?

Before you can start to automate your KYC onboarding and monitoring, your company needs to clearly define a risk policy. This should spell out the level of risk your company is willing to accept in a way that is clear and unambiguous enough that it can eventually be applied by an algorithm. This can be a challenge if different parts of an enterprise have different risk assessment rules; for instance, between the retail and commercial arms of a bank. In these cases, it’s necessary to decide whether to unify those views or to make your risk policy more granular.  

3. How Much of Your Onboarding Can You Automate? 

At the heart of continuous KYC is a policy-driven risk engine. This applies your company’s data policy during the onboarding process to assess which cases reach the threshold of needing to be flagged for further investigation. This is the key to reducing onboarding workloads and bottlenecks and enabling compliance professionals to focus on the cases where their attention is needed most. 

4. How Can You Know Which Changes Need Your Attention? 

Your policy-led risk engine is also the key to monitoring your customers’ compliance status on an ongoing basis. It detects which customers don’t meet the parameters of your policy and triggers alerts for additional screening. This is the “continuous” or always-on aspect of continuous KYC. Here it’s important that your risk engine is able to cross-check new directors or key individuals joining a customer’s company against all relevant screening and risk databases — for example, sanction lists and company registries. 

5. How Confidently Can You Say “No”? 

False positives can be the mud in which compliance gets stuck. Without the right filtering capabilities, common names can generate overwhelming numbers of false positives. The solution is to have a unique identifier that cross-references multiple data sources to verify a match. This can increase accuracy and reduce the number of false positives. 

6. Do You Have the Right Tools to Dig Deeper?

Continuous KYC engines provide huge value by filtering out the customers that don’t need your attention so you can focus on those that that do. Many checks will meet the requirements of your policy and pass straight through the system. When an onboarding check or status change triggers a warning, however, the system will generate alerts for humans to step in. From there, it’s in the hands of your compliance professionals to look deeper, carrying out enhanced due diligence to better understand the risk and recommend a course of action. A continuous KYC platform should provide additional tools and data needed to do this.

If you want to learn more about continuous KYC and how automated onboarding brings you closer to always-on compliance, get your copy of our Continuous KYC Guide.