4 Ways Software can Ensure KYC/AML Compliance

Posted on October 11, 2022
Written by Clare Puplett

Risk and compliance software platforms help businesses record, track and manage their regulatory obligations. Firms that offer this technology help businesses comply with regulations efficiently and less expensively than manual, process driven solutions. 

RegTech providers offer bespoke integrated solutions that become unique to each business, to help firms navigate the ever-changing regulatory landscape. The software solution replaces legacy disparate systems that can often consume much of the compliance team’s time and energy.

Compliance software uses AI and machine learning to build profiles, verify identities and predict potential risk areas. Any identifiable threats can be analysed, enabling the business to minimise its risk and costs associated with non-compliance, at an early stage.

We’ve identified four ways in which compliance software helps businesses achieve regulatory compliance.

#1: Keeping up with Regulatory Change 

According to an industry report, keeping up with regulatory change has been identified as one of the greatest compliance challenges experienced by the financial sector in 2022. 

With new laws and regulations being introduced at a rate of knots and old regulations being constantly amended, it is increasingly difficult for regulated businesses to meet the demands of the regulators.

However, one way to adhere to compliance changes is to use compliance software and automation, to implement bulk changes across the whole client database/CRM. Reviewed policies and new regulations can be implemented with a simple change to the individual rules and workflows specific to your business, far quicker with an automated software solution.

#2: Manage Compliance Workflows

Using compliance software is a great way to manage workflows and documents, digitise customer data and deliver analytics, to make sure your company achieves regulatory compliance. 

In addition, software automation allows compliance teams to remove those frustratingly repetitive manual tasks and divert resource elsewhere, to focus on the cases that require further investigation.

Additional workflows can be added with ease for internal and external reporting. These can often provide additional value for businesses, particularly as the business can access insights to support faster decision making.

Applying Artificial Intelligence (AI) allows the business to streamline processes and receive accurate incident flags where there has been a change in the KYC risk status of a client.

#3: Achieve Real-Time Compliance

With access to real-time system automation, businesses can benefit from complete transparency and stay ahead of the game, both in terms of competitors and the bad actors. This applies from the point of onboarding, throughout the lifecycle, to achieve end-to-end Customer Due Diligence (CDD).

High abandonment rates are often a result of outdated manual processes. By introducing automated software to manage the KYC/KYB onboarding process, customers can see their acceptance times reduced, from weeks down to mere minutes. This allows the sales team to build the sales funnel; the compliance team to focus on the more complex cases; and ultimately allows a faster time to revenue as the prospect becomes a customer far quicker – virtually in real time.

#4: Compliance Audit Trail 

Firms have to provide detailed information, evidence and audit trails if they are to satisfy the regulators. 

Keeping an audit trail can prove incredibly difficult when it comes to manual onboarding, as the customer often presents their documents in person. The business has to retain records and create a file/copies which can be a very cumbersome process. One which is subject to human error, open to a lack of expertise in identifying forgeries and time consuming.

Using software for electronic identity verification (eIDV) not only supports the customer journey and removes the risk of error, but it also automates the process of record-keeping for an effective audit trail.

The data is stored securely in the cloud, is fully compliant with GDPR requirements and is accessible if the auditors come knocking at the door. It is recognised that, despite the best AML intentions, businesses cannot eliminate money laundering attempts, but regulators do want to see that due processes and risk assessments have been implemented.

A digital audit trail can be the cornerstone of a resilient compliance program that also has the ability to provide strategic value. The information held provides insights into trends and can improve risk mitigation strategies, as well as provide growth and revenue opportunities.