Fenergo顧客確認 (KYC)

The KYC process protects financial institutions and the entire financial system from financial crimes e.g. money laundering, terrorism financing and other illegal frameworks.

The KYC process is heavily dependent on client information. Clients must prove they are who they say they are and that their sources of funds are legitimate. They need to prove their identity and produce documents verifying the legitimacy of their information and onboarding application. Financial institutions may refuse to open an account or may cease an existing relationship with a client if the client fails to meet KYC requirements.

There are 3 key challenges of conducting Know Your Customer.

‍Firstly, the KYC process is very information and document heavy. Clients must prove they are who they say they are, and all monies associated with them have a legitimate source. For financial institutions that do not have KYC automation, the process of outreaching to clients to collect this information is quite haphazard and time-consuming. In fact, KYC is a key reason why client onboarding takes so long.

Secondly, when the client information is submitted, it must be inputted and processed into the relevant systems. This can introduce a high level of human error. The more manual a KYC process is, the more KYC specialists are required to manually input and review client information to make an assessment as to how much risk the client poses to the institution. Due to the complexity of KYC reviews and the amount of information required to be sifted through, this can lead to errors in judgment and inadvertently doing business with entities that may harm the reputation of the financial institution. Furthermore, the more people required to conduct Know Your Customer checks, the higher the cost of KYC compliance.

The final challenge comes in the form of regulatory scrutiny. In 2022, global penalties totalled $4.9 billion for KYC violations and non-compliance (Fenergo Fines Report, 2022).

Perpetual KYC (or PKYC) automates as much of the existing periodic KYC review process as possible. It means continuous monitoring of the client profile - identifying changes across relevant data sources, assessing their risk impact, and applying materiality. With more frequent but fully automated incremental refreshes, the client profile is kept up to date, so that when a review falls due, the volume of work requiring human intervention is reduced.

There are many benefits of P-KYC. Here are three core benefits for financial institutions.