Perpetual KYC Applies Ongoing Customer Due Diligence for End-to-End Security

Customer behavior changes, risk profiles evolve and new regulations emerge, meaning compliance and fraud teams never completely finish their due diligence.

Ongoing customer due diligence involves meeting compliance obligations by monitoring accounts for emerging risks of money laundering and other financial crimes. That perpetual approach to Know Your Customer (KYC) embraces holistic data and deep analysis to protect the organization and its customers.  

As opposed to a KYC process that takes place only at customer onboarding, perpetual due diligence can assess real-time risk and trigger immediate reviews to prevent larger problems.

Real-Time Customer Profiles

Some regions require regulated entities, such as banks, to conduct ongoing monitoring. That due diligence, according to the Federal Financial Institutions Examination Council, is crucial.

“Performing an appropriate level of ongoing due diligence that is commensurate with the customer’s risk profile is especially critical in understanding the customer’s transactions in order to assist the bank in determining when transactions are potentially suspicious,” according to the council.

Ongoing due diligence requires tracking a variety of transaction, account and organizational elements, including risk thresholds, suspicious activity, status adjustments, changes to account information, watchlists, market trends and trade data. That’s hard to do without the right technology in place.

Systems that identify deviations in activity can trigger alerts for staff investigations.

It’s one thing to identify an exceeded threshold that warrants investigation, but it’s quite another to detect a pattern that sophisticated fraudsters use to stay off the radar. 

Dynamic risk scoring can monitor numerous account variables. Machine learning and fraud analytics can monitor large transaction volumes in real time and help organizations uncover and analyze those hard-to-detect patterns that point to questionable activities.

Intelligent Data and Risk Analysis 

The complexity of customer data calls for intelligent automation that can accelerate ongoing monitoring and overcome the expense and potential errors of manual checks.

With automated ongoing KYC, compliance teams can focus on cases that have been flagged for review. That can lead to reduced costs and the confidence that problematic accounts get the due diligence they require.

That could mean KYC remediation, enhanced due diligence or even account termination. The key is to have processes that speed up responses.

But it’s critical to balance the customer experience with ongoing customer due diligence. There are valid reasons for account changes, and monitoring tools can create false positives. 

An organization’s response, though, doesn’t always require customer interaction. When it does, the experience can be improved through occasional small interactions rather than a full reverification. 

Perpetual KYC can also enable smoother onboarding. Systems that collect only the data necessary for a particular risk profile, rather than all the data regardless of risk, can accelerate the process.

Perpetual KYC Implementation 

An automated perpetual KYC system can deliver economic benefits through improved risk controls, compliance, customer relations, operational flexibility and performance.

System implementation and vendor selection affect teams across an organization, including legal, information security and IT. But once the changes are in place, the organization can see benefits beyond economics, such as stronger data governance and a culture of compliance.

Perpetual KYC as a Core Value

Organizations that foster a culture of compliance can gain a competitive advantage through ongoing due diligence that limits risk, creates transparency and builds trust.

Perpetual KYC frees an organization from constantly checking batches of accounts to meet only minimum standards. Scheduled account data updates help ensure accuracy and reflect real-time risk.

Perpetual KYC also enables operational efficiency because most checks are automated. It also improves the customer experience because reviews focus on specific information rather than the entire account.

Companies that embrace ongoing customer due diligence position themselves to build customer trust by limiting fraud and achieving compliance in markets around the world.