Reputational risk: Although regulators prescribe periodic assessment of a customer’s risk profile, if a customer is subjected to AML fines or sanctions during the period between reviews, all the firms involved with the customer or transaction will be exposed to reputational risk. However, these searches are error prone and are more subject to bias if done manually rather than through the automated process of retrieving data from multiple media sources and evaluating them using defined rules and guidelines. For example, firms must perform adverse media searches as part of their enhanced customer due diligence to comply with Financial Action Task Force recommendations. Regulatory drivers: Regulators are increasingly laying down guidelines to widen the customer due diligence process. Below are the key drivers of perpetual KYC. Handling and contextualizing a large volume of data is critical to maintain an accurate and up-to-date view of regulatory risk at all times. This has led to a renewed focus on the concept of perpetual Know Your Customer.Īdopting perpetual KYC means shifting to a radically new way of doing KYC in which periodic reviews give way to a dynamic process where technology is the key enabler. With the increase in money laundering crimes, banks have realized the importance of maintaining accurate and up-to-date KYC and transactions-related information on their customers that allows them to proactively manage risks at an early stage and across the customer lifecycle by monitoring them continuously.
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