Customer and KYC Screening for Risk Aversions – Technology Systems

September 9, 2020

Customer identification and compliance with established standards are essential for stopping the proceeds of money laundering practices. In the past, several businesses were afflicted by these kinds of financial crimes. But, KYC screening did have a fair share of controversies and downsides. Let’s discuss this in the following.

On this date, we have seen banks and financial institutions requesting for KYC submittals as a preventive, risk-based approach to stop falling into traps whose fixation is at financial crimes. Not to forget, various money laundering practices lead to terror-based activities.

The due diligence process carried out by banking and non-banking financial institutions ensures that the customers do not feed into risk-based sequences. Different countries have regulatory authorities to control these procedures for total compliance through KYC screening regulations.

What Are The Controversies Associated With KYC?

Wikipedia enlists a wide range of controversies occurred due to KYC, such as extraordinary compliance costs, perceived intrusive and burdensome behavior by the banks have customers reprimanding any further business relationship, problems for digital nomads, problems for people without permanent addresses, jurisdiction control issues, digital snooping and surveillance, and so on.

These controversies do not lie down that easy until a very highly-approved method isn’t implemented. The banks and non-banking institutions also face grueling processes for custom acquisition and the burden of KYC due to mandatory regulatory compliances has their performance affected. Perhaps, we can eye the role of advanced technology systems, AI, and machine learning for eliminating these problems.

How Does Technology Systems Play A Major Role?

We’re living in a generation where technology can’t be avoided. If that’s done, we would lose precious time and efforts for the work done and face uncountable difficulties along with inconsistencies. With the evolving technology, the customer screening software systems in these banking and non-banking financial institutions prevent disruptions by PEP, criminals, terrorists, unapproved entities, and so on.

The features in the ICP (Internal Control Program) and technology-based systems:

200+ denied and restricted party lists from different agencies of government and international platforms.

Fuzzy matching algorithm for allowing detection of misspellings, ambiguity, and different instances.

Variable screening functionality and batch screening of trade partners

Fully hosted web solution over a secured cloud-based connection.

Automated systems and archival methodology for recording screenings and associated entities.

Seamless Integration Of AML Screening For Complete Compliance

Screening of customers, trade partners, suppliers, employees, consultants, visitors, etc requires an infrastructure in any business facility. However, most businesses cannot afford a hardcore IT infrastructure to facilitate these services. Here, modern trade compliance consultants offer cloud-based AML screening systems that do not require any addition of IT systems, hardware, or software.

We can witness the latest implementation of screening procedures for complete compliance in organizations.

Author Bio:-

Linqs Inc writes about the risk-based approach in KYC screening by banking and NBFCs. Highlighting those controversies surrounding AML screening, he explains the role of technology for customer screening procedures in the way to achieve complete compliance with regulatory standards.

Article Categories:

linqs software helps you with an accurate KYC screening of customers or trading partners before entering a deal with them.

    Leave a Comment