Know Your Customer: Maximising the potential of regulatory technology in meeting your Anti-Money Laundering obligations
Article 5 minute read

Know Your Customer: Maximising the potential of regulatory technology in meeting your Anti-Money Laundering obligations

20 September 2017

Investing in technological solutions to help meet your Anti-Money Laundering (AML) obligations has become a necessary investment to many.

Regulatory Technology or ‘RegTech,’ is now a recognised term for addressing the regulatory challenges of the financial services sector through using innovative technology. Assessing how to make best use of these tools to maintain Know Your Customer and AML compliance, should be top of your current agenda. But before being swayed by the clamour around its evolution, firms should consider the implications of choosing such a route. There are several important considerations in finding the right solution for your business.

As technology evolves, it was inevitable that its potential would be realised in Know Your Customer (KYC) compliance. An automated KYC compliance solution can streamline customer due diligence processes and help to reduce the risk of non-compliance, plus improve efficiency.

Automating processes can help ensure that a firm complies with necessary regulations around the world; but maximising the potential of RegTech to enable AML compliance depends on skilled use and specialist knowledge. The benefits of using RegTech can only be realised by the people who operate it. In other words, it needs knowledge, expertise and manual skills to apply the right RegTech solutions in managing compliance.

Identification process

RegTech is increasingly used for electronic identification. Populating a database with known information about a potential client is a first step. But how the algorithms then check that data against known public records is important to establish the true identity of the client. It requires a specialist service to analyse structures behind establishing identity, to filter up to the Ultimate Beneficiary Owner behind the client organisation.

Manual assessment can spot false positives, for instance when a sanction has been highlighted but it relates to a different person under the same name as the one being assessed. Manually, these false positives can be marked so they don’t get another alert, making it a learning system as well. Sourcing an expert managed services organisation will provide the human skills necessary to supplement RegTech, and enable firms to realise its full potential. Some aspects of compliance cannot be automated yet.

Ongoing monitoring

New technology can improve speed and efficiency, by automating previously manual processes. It can help to streamline and simplify processes, thereby making the on-boarding experience a smoother one. It can be used to compartmentalise and prioritise clients, to speed up compliance checks, particularly with compliance backlogs. But its main benefit is in the ongoing monitoring for compliance once a new client is on-boarded.

Software can monitor the regulatory scene worldwide and look for updates in regulations, sanction list and adverse media, but skilled personnel are still needed to read those highlights and assess the implications. If an investment company is trying to do this on its own, it takes skilled manpower, time, and effort – something that a managed services company can provide effortlessly, 24 hours a day. A professional service provider will work with technology systems to keep abreast of ever-changing KYC laws and regulations, plus current affairs globally to apply to specific client needs. Local knowledge is important, and a global services provider with local reach will ensure the right assessments are made to help firms stay compliant and meet their regulatory obligations on a continuous basis.

Powerful combination

The ability to maintain KYC data is enhanced when a specialist managed services provider can populate a database with information given by a client on their clients, and this can be assessed against all known sources of publicly available information. Manually, the service provider can ask a client for information not in the public domain, such as lists of registered shareholders. This combination of technology and manual skills such as knowledge, insight and expertise makes a powerful combination for KYC compliance.

Combining new technology with in-depth manual checks ensures a high-quality compliance service and lessens the risk of human error. Technology enables sophisticated encryption of data to maintain high security and mitigate potential reputational and financial risks. Add in professionals experienced in data handling and analysis, and you have the perfect partnership to get the most from a RegTech application.

RegTech can also be used to help to improve customer service by combining a KYC database with information on a CRM solution can give a powerful insight into company’s clients. The solution can help to identify new opportunities faster and deliver superior customer experience.

Partnering with a professional service provider offers a good end-to-end solution to a firm’s compliance needs, using systems to provide due diligence checking, identification, information collection and sanction list screening.

Looking ahead

New innovative technology could be brought on the market in the coming years. BlockChain and Artificial Intelligence are expected to be part of the next RegTech solutions. However, data privacy and security must be the top one priority for companies developing the use cases. Providers of RegTech however, focus on IT developments rather than full services.

RegTech should be viewed as a tool, and its full potential can only be realised by combining its use with manual skills, expertise and knowledge – global and local. Combining technology with the manual review of information in local language gives the best possible on-boarding and ongoing compliance experience and provides peace of mind for compliance and risk managers.

Interested in finding out more? Go to: to make an enquiry. 

Written by

Steffen Ruigrok

Director of Investor Compliance & Regulatory Services

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