Regulatory compliance refers to a business’s adherence to regulations, laws, guidelines, and specifications relevant to its day-to-day business activities and processes. Failing to comply with these requirements can result in legal fines, loss of reputation, downtime, and loss of productivity, as well as imprisonment in some cases.

Ensuring regulatory compliance means an organisation has completed tasks such as verifying identities, keeping up-to-date detailed records, monitoring changing risk profiles, logging risks, and more.

However, manually performing these tasks can prove time-consuming and resource-heavy and contribute to numerous other issues. Companies are increasingly implementing compliance software to manage these repetitive and manual processes more efficiently and improve their risk management.

Changing from traditional, manual processes to automated AML & KYC compliance software may seem daunting at first. In this article, we examine the five main reasons your business should implement this software, as well as other benefits you can reap.

Benefits of KYC and AML compliance software

1. Keep up with regulations & remain compliant

It’s not only financial institutions that are required to remain complaint with regulations – it is imperative that all organisations are compliant with their country’s laws and regulations. For the UK, the consequences for non-compliance can be severe, depending on the situation. But how can businesses achieve compliance when anti-money laundering regulations and others change so frequently?

According to an industry report, keeping up with regulatory changes 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.

The consequences of falling behind with regulations and becoming non-compliant can be severe, ranging from fines to imprisonment. This could likely affect your right to work in certain sectors or industries or even restrict your ability to travel abroad. On a more superficial note, an organisation that fails to comply with legislation runs the risk of a loss of reputation and, with it, the loss of customers.

There is a solution for this. AML & KYC compliance software can assist in automating processes, allowing businesses to review policies and new regulations and implement changes with a few clicks of a button. This can help businesses remain compliant with AML regulations and protect their businesses.

2. Easy implementation when digitally transforming KYC

Good software providers are well-versed in the complexities of delivering digital transformative KYC processes. Using customer success teams, the implementation process identifies the goals to ensure the business obtains early adoption and the best value across all teams.

Often, the implementation can be carried out remotely and delivered ahead of schedule, with less complexity, downtime, or delays than anticipated by the business. Operating efficiencies are gained immediately.

3. Manage your compliance workflow more effectively

Using compliance software is a great way to manage workflows and documents, digitise customer data and identity verification and deliver analytics, ensuring your company achieves regulatory compliance. Additional workflows can be added with ease for internal and external reporting. These can provide additional value for businesses, particularly as the business can access insights to support faster decision-making.

4. Save time and resources while reducing the risk of human error

With something as important as compliance, it is vital that all checks and tasks are completed with precision. Compliance is a critical ongoing process, from the point of accurate KYC or KYB onboarding through the entire lifecycle to ongoing monitoring and remediation.

Manual processes are time-consuming, prone to human error and costly in resource allocation. Investing in automated software can assist your business in simplifying the process and freeing up time and resources. This will result in compliance teams having more time to focus on more important, complex tasks.

Compliance teams are encouraged to take a risk-based approach to ongoing CDD. Software solutions are increasingly capable of adopting a Red, Amber, Green (RAG) scoring approach – meaning that the risks relevant to each business can be defined, set within the compliance platform, and, once breached, provide an alert for further due diligence.

5. 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).

6. Reduce abandonment rates

When onboarding and monitoring processes are complex and time-consuming, customers may lose patience, resulting in high abandonment rates. By introducing automated software that digitises workflows and integrates into existing systems, you can create a more seamless experience for your customers.

With automated KYC/KYB onboarding processes, 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. With customers experiencing fast and seamless solutions, the rate of abandonment will decrease substantially.

7. Enhance your information security

Compliance processes naturally use and store sensitive information – from a list of the company’s assets and personnel to specific issues and potential vulnerabilities. This is why it is of utmost importance to keep your compliance documentation safe.

Modern compliance software solutions have acknowledged this and have implemented security protocols that are designed to protect the data they use and have access to.

Knowing that your organisation’s information security is ensured for as long as you are legally required to keep your compliance activity records is a huge weight off your compliance team’s shoulders.

When using a software solution to manage your compliance processes, you can securely implement any changes to PEPs, Sanctions and Adverse Monitoring in real time. With a well-designed software platform, your business can be assured that the regulator or your internal team can have access to a full and secure audit trail, which leads us to the next benefit…

8. Ensure 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 regarding manual onboarding, as customers often present their documents in person. The business has to retain records and create a file/copies, which can be cumbersome. 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. Still, 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.

Automated KYC and AML software for proactive compliance

Delivering digital transformation across the business and in KYC onboarding isn’t optional anymore – it’s a must to stay competitive. Using software provides the opportunity not just to Know Your Customer but to truly Understand Your Customer.

Regulated businesses should take advantage of the numerous benefits of automated client life-cycle management software platforms, otherwise they will fail in this new world of digital experiences. So, if you’re ready to optimise your KYC process, ensure KYC or AML compliance, and benefit from the full array of software advantages, contact us today or click the link below for a free demo.

Last updated: Wednesday 29th May 2024