Continuous KYC: Need of the Hour for Businesses

With the significant increase in the need for continuous KYC (CKYC), we look at its benefits, the repercussions of not having the right monitoring, and how we can help companies in this journey.

There is a significant increase in the need for continuous KYC monitoring of clients now more than ever. Regulated businesses are finding the need to adapt to the new age risk that is attached to digital payments and digital currencies. Having ongoing monitoring of customer profiles can help businesses ascertain risk and take appropriate action towards it.

What is CKYC and why does your business need it?

The conservative approach focuses on assessing the customer's risk position at a given point in time (i.e., at the time of onboarding), whereas continuous KYC monitoring helps to understand and attend to the changing risk profile of the customer throughout the relationship or lifecycle.

With appropriate analytics and relevant insight, CKYC can identify and stop complex money laundering or any kind of suspicious pattern and transaction in real-time, helping financial institutions have anti-money laundering (AML) transaction monitoring.

Why you need ongoing monitoring:
  • Constant change in client profiles
  • Exposure to high-risk or sanctioned countries
  • Risk assessments of business relationships
  • Benefits of automated ongoing monitoring
Some repercussions of not obliging with CKYC

Continuous KYC allows businesses to discover risks and adopt necessary measures. There are, however, consequences when a business fails to oblige with CKYC. Below are some examples:

  1. FINRA fined USD 1.1. million to a leading financial and wealth management company for failing to report 89 potential high-risk profiles after an internal investigation of its stakeholders.
  2. Research by the Insurance Information Institute found that three million identities were stolen in 2018 and 1.4 million of those stolen identities were fraud-related. Moreover, 50% of those identities were stolen to conduct credit card fraud with banks and businesses.

Why is CKYC more important to regulated businesses now than ever?

Post-COVID-19 pandemic, things have not been the same. There has been a dramatic shift in economic and financial regulatory scenarios across the globe.

On one hand, there is financial instability that contributes to the rise in unemployment, which has in turn led bad actors to commit financial fraud through charity foundations and other business activities. Market volatility also caused the prices of cryptocurrencies and other digital currencies to practically double, driving individuals to park illegal funds in virtual wallets.

On the other hand, businesses are pushed into using digital payments, which results in an increase in digital transactions. With the recent spike in demand for contactless home deliveries and electronic payments, digital e-commerce businesses have grown phenomenally.

Benefits of a continuous monitoring approach

A continuous monitoring approach allows businesses to:

  1. Have a granular insight into the risk areas for a data-driven decision.
  2. Have a speedy and cost-effective approach to compliance by eliminating manual and outdated processes.
  3. Prioritise high-risk and change the risk levels based on issues identified by automated monitoring.
  4. Identify potential risks that could affect the financial health and reputation of your business.

Finding the right partner

Our extensive experience in digital transformation in the finance industry allows us to extend support to more businesses. Our tech partners, who are market leaders in client lifecycle management (CLM) and CKYC/AML systems, have enabled Synpulse to become a one-stop shop for businesses to fulfil their regulatory requirements on AML/KYC topics and integrate the solutions to business systems in a hassle-free way.

Check out our full list of service offerings to see how we can help you: Services | Synpulse

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