Introduction

Current manual on-boarding processes for KYC/AML is time-consuming, open to fraud and can lead to loss of business. Furthermore, the adoption of risk-based frameworks – as opposed to prescriptive methods – allows greater interpretation to requirements and the training of staff to correctly identify these requirements could be onerous.

The Bureau House Group of Companies has developed an application programmer interface specifically designed to meet the requirements of a risk based approach to KYC/AML and perform all the necessary data matching in a single function.

The Challenge

KYC/AML is a growing trend in all businesses world-wide and the regulatory framework continues to change. Financial penalties are becoming larger and more frequent and the move in many jurisdictions to a risk-based framework has forced accountable institutions to re-evaluate the old methods of performing client validations. Institutions that rely on quick turn-around times to gain new market share are often unable to conclude transactions owing to the lack of client documentation being on-hand at time of transaction (casinos and purchasing of pre-paid cellular contracts and pre-paid one-use shopping vouchers for example)

The introduction of risk-based frameworks requires a system that allows customizable rules per transaction, and the ability to create specific rule-sets per product-type and per client-profile. These rule-sets should be able to mirror the organisations KYC/AML framework.

To combat fraud, documentation should not need to be submitted by the client, but rather the client’s supplied information should be verified electronically against a regulatory approved set of data. In jurisdictions where documentation is still required under law, the electronic matching of supplied documents should be done to ensure authenticity.

The cost of KYC/AML can be high, both in terms of the direct costs of vetting every new client, as well as in loss of business from turning clients away due to insufficient paperwork. The traditional on-boarding process, with its multitude of paperwork, can take many hours in a large organization – from the collection and copying of original documentation, to the filing thereof, transporting to warehouses, and final scanning into document management systems – with each point of contact a possible source of data loss.

The challenges in the traditional KYC/AM process:

  • More organisations are required to comply, many of whom have no experience in the area
  • The risk-based framework places additional pressure on IT and Data departments as the rules differ across product lines and client profiles
  • Traditional paper based methods are slow and costly
  • New business can be affected by asking clients to return at a later stage with documentation
  • Traditional paper documents can be altered or fabricated
  • Traditional methods rely on physical documents to be copied and transported, increasing costs, adding to delays, and are vulnerable to data loss and damage
  • Staff tasked with KYC/AML validation are expected to be current on regulatory challenges and perform comprehensive analysis at point of sale, which is often outside of their core skills. Training and re-training is costly.

Our Approach

Consumer Profile Bureau (CPB), a company part of the Bureau House Group of Companies, specializes in on-line, paper-less KYC/AML both for on-boarding and remediation. As the single largest group of credit bureaus on the continent (we collectively hold three credit bureau licenses) we have a substantial set of data spanning all sectors of the market. We have processed tens of millions of records for large financial institutions within South Africa, including JSE-listed banks, insurance companies and the gambling industry. We have the experience to guide accountable institutions to meet regulatory requirements.

Our KYC/AML solution is therefore able to access billions of rows of data, which together with our advanced matching algorithms, is able to perform a complete KYC/AML validation in mere seconds, and provide an electronic, digitally signed PDF for audit purposes. In jurisdictions where physical paperwork is not a requirement, the entire KYC/AML on-boarding process can be completed in seconds, at a very low cost.

By adopting a paper-less system we can vet client supplied information (verbal or other) and provide documentary evidence of compliance to local KYC/AML requirements. This ensures that the opportunity to secure new business is not lost when clients are sent away to collect documents.

Since no paperwork is submitted, or the reliance on only using client-supplied paperwork is limited, the opportunities for fraud is curtailed. Data resides on secure servers and is linked by full audit trails to original source of data – ensuring a chain of custody and non-repudiation.

Since an electronic document is returned as part of the process, no physical paperwork needs to be transported or re-scanned – limiting data loss and contributing to corporate responsibility in green-initiatives.

Alain Craven – CIO and Marina Short -CEO – Consumer Profile Bureau

Contact us @ kyc@cpbonline.co.za for further information.