Asset managers understand the increasing demands they face to manage risk and achieve know your customer (KYC) compliance. And digital transformation of KYC activity has long since helped create more efficient onboarding processes.
Now, asset managers are increasingly building an end-to-end approach to risk and compliance throughout the client lifecycle leveraging new technologies. This enables them to understand whom they are doing business with, the risks of doing business with them, and to address those risks at scale not just at onboarding, but on a perpetual basis.
There is another important aspect to this holistic approach to KYC throughout the client lifecycle, and that is it enables Asset Managers to offer better, more seamless customer experiences during compliance processes.
Asset Managers are becoming more exposed to anti-money laundering regulation as regulators expand their reach. In the EU, anti-money laundering laws have given authorities more power to issue fines. And in the UK, the FCA is currently consulting on how regulation can and should be changed to help the industry innovate and maintain competitiveness, while crucially ensuring it prevents “serious harm” that can be caused by financial crime.
This regulatory focus comes, in part, due to the vast growth in the asset management sector, a growth that inevitably leads to an increased risk of money laundering, fraud and other types of financial crime.
The global asset management market was valued at $250.12 billion in 2021, and it’s predicted to reach a value of $1113.53 billion by 2028. These sums attract financial crime, which asset managers need to be alert to. In 2022, two asset managers were charged in an alleged $1.2 billion Venezulean money laundering scheme, and this is the tip of the iceberg that regulators are getting to grips with.
While requirements to manage risk and compliance expand, having sufficient resources to execute KYC processes can be problematic. Asset managers are focused on acquisitions, trading, and delivering wealth. They also need to maintain customer relationships and build trust. So, adopting new technologies that automate access to customer data; which creates an “always on” picture of risk, leads to a smarter way of handling KYC throughout the client lifecycle.
Managing KYC processes and risk on a continual basis throughout the client lifecycle, leveraging automated solutions, enables asset managers to make the most of their resources. It also delivers better customer experiences because, while AML and KYC checks are essential, they can be irksome for customers.
With a perpetual KYC (pKYC) approach, customers aren’t asked for information unnecessarily. Risk monitoring checks are carried out on a continuous basis, and the customer will be assessed appropriately and seamlessly using a risk-based approach. There is minimal friction and people i.e. compliance professionals and customers, are introduced into the process where they add value.
At onboarding a risk profile can be created through a workflow of integrated, automated KYC checks. The risk profile is digitally captured and the customer data maintained in one place. Then continuous monitoring of real-time, risk-relevant data – including sanctions, watchlists, adverse media, and PEPs information - can take place through a process of perpetual KYC.
When there is a change of circumstance however, risk alerts related to a customer profile can trigger enhanced due diligence. Compliance teams can then focus their attention where it’s needed, asking customers for documentation and information when necessary. Compliance efficiency with great customer experiences, and no compromise.
Moody’s Analytics is uniquely positioned to provide automated access to the data needed for KYC throughout the client lifecycle. From entity data to screening data to a choice of individual ID verification, we can offer an integrated and highly automated CLM platform for risk management and compliance.
Moody’s Analytics KYC is transforming risk and compliance. We are enabling asset managers to understand risks in near real-time, and make decisions with confidence about whom to work with, while also helping to maximize resources and deliver great customer experiences.
If you would like to talk to us about digital transformation of your risk management and compliance processes, please get in touch – we would love to hear from you.