The Poll Results Are In – And We’re Not Talking About the US Election!

Poll Question 1: Have you been involved in a KYC Remediation project?

50% have not been involved in a KYC remediation project

The response to this question was not a complete surprise as the majority of the respondents were from the world of FinTech.  

KYC remediation has often been regarded as an activity undertaken by traditional Financial Services firms. These firms have built a substantial back book of data which is held within multiple legacy platforms that no longer meet the latest regulatory compliance obligations.

However, as we head into 2021 we are seeing many changes. FinTechs have onboarded many clients and have now amassed client data which has been exposed to changing risk status as the data matures and the economic landscape changes.

KYC remediation, and periodic client reviews, are critical to ensure FinTechs truly understand the organisations they are doing business with and the risks associated with doing so. This is even more relevant as we move into 2021 with higher instances of fraud due to the ongoing pandemic, changing regulation with 6thMLD and the impact of Brexit.

Poll Question 2: What is the key challenge your firm faces when remediating client data?

51% of attendees cited that having to ask existing clients for more information was their biggest remediation challenge

Providing a simple re-verification process is critical to avoid attrition and reduce poor customer experience which leads to reputational damage.

Utilising digital self-service solutions, to allow clients to update their own information and upload ID documents at their own convenience, greatly improves efficiency for gathering client data to support the remediation process. 

Self-service can reduce marginal execution costs to near zero. Some customers will need assistance, your solution should be configured so that staff can access it as well, whether to assist customers with the application process or for requesting full assistance.

Digital transformation is increasingly important as it supports a much improved customer lifecycle/journey. In today’s competitive marketplace those companies that place digital transformation at the forefront of their strategy are seeing growth in customer acquisition and retention. 

For this reason NorthRow has developed digital onboarding, monitoring and remediation solutions such as RemoteVerify that allows clients to use their own smartphone, to capture ID documents, facial-biometric data, address verification and more. Not only does it deliver an improved customer experience but it also improves the efficiency of your remediation process.

Poll Question 3: For your last remediation exercise did you seek to supplement in-house staff with external resources?

55% did not supplement in-house resource with external resource

Organisations are under pressure to demonstrate a commitment to customers, and at the same time, need to reassure the regulator and executive management that they are following latest regulations.

They have to take swift action to remediate mandates and enforcement actions issued in response to regulatory non-compliance. But these projects require substantial resources, posing something of a dilemma for the organisation. Should the Business As Usual (BAU) team be built out or should remediation be outsourced to a third party?

The fundamental rule for executing a successful KYC remediation programme is for firms to focus on remediating only the risk presented by the customers, rather than examining every data point in the file. The goal is to identify the ‘high risk’ clients – those that are most at risk of engaging in financial crime – and raise flags against them for further investigation. We call those that require further investigation ‘the ambers’. All businesses want to reduce the numbers of Ambers as they only cause anxiety within the business.

RegTech software can automate this part of the process Using a highly configurable digital software solution can segment, cleanse, plug gaps set and maintain consistent standards, ensuring that the business understands and remains confident of its data landscape. The NorthRow Rules Engine, for example, allows regulated businesses to remove much of the interpretation of the regulatory obligations by applying rigorous rules logic to the available client data, and determine if the client is high, medium or low risk. All data and documentation required to support the regulatory compliance process can be identified with the application of the rules logic, to ensure continued compliance and the avoidance of penalties.

Depending on the scope of your remediation project, outsourcing reduces pressure on the internal BAU team and allows them to focus on their core competencies.  Carefully selected outsourced solutions bring together speed, expertise and operational efficiencies.

A combination of both internal resource and digital transformation is found to be the optimal route to deliver effective remediation.

In summary

The traditional response to remediation has largely been to throw additional headcount and budget at the problem in order to resolve it. However, this drives up the overall cost of compliance and is unsustainable given the volume of newly-introduced or impending regulations that will require periodic client reviews. Instead, if we see this as an extension of the onboarding process and look at the entire customer lifecycle, then we can achieve effective monitoring and remediation efficiencies.

With the advent of digital transformation, larger-scale remediation projects can be delivered in a more streamlined and productive way. This replaces the previous frequent manual interactions which cause false positives and affect the overall efficiency of an organisation with duplication of tasks and increased resource. Other pitfalls include missing or incorrectly assigned risk ratings, which lead to inadequate levels of due diligence being undertaken.  

Businesses are required to not only satisfy their home regulator, but also those within each jurisdiction the business operates within. This can be difficult to manage unless a digital solution is implemented which can be easily updated through clever APIs.

Regulation is constantly changing, so the need for remediation is here to stay. With a risk-based approach to identifying and remediating data with an effective ‘Amber Management’ strategy means a business can achieve effective compliance and deliver a great customer experience. It’s a win-win for all!

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