How does Accuity’s data service help clients with their KYC obligations?
Know-your-client (KYC) compliance has several steps to it, beginning with the onboarding of new customers. Whether these are corporates, financial institutions, funds, distributors, or individuals, financial institutions have to monitor their counterparties and maintain regular checks on them. Accuity provides both the technology and the data to help comply with some of the numerous KYC obligations.
From a data standpoint, Accuity sources and provides a comprehensive coverage of all the major sanctions lists worldwide, which we enhance to cater for the gaps present in the sanction lists. For example, our team of editors researches all government members of a sanctioned regime in case a sanction list issues a sanction against a government without specifically listing its members. Accuity also provides significant coverage of politically exposed persons (PEPs), or those customers that could present a risk to financial institutions because of the sphere they, or their associates or family members, operate in, for example those in the government or in senior public positions.
We identify links between these people, their associates and their family members, and build a database to help our clients understand more about the risk profile of their own clients. On top of this, Accuity provides coverage of negative news and law enforcement lists such as the FBI, which can further help our clients with their risk-based approach. Accuity also provides the technology that helps our clients efficiently screen their counterparties on an ongoing basis. In 2014, we acquired Fircosoft, and we’re proud to be given the opportunity to help nine of the top 10 tier-one banks with their screening requirements, a similar platform that can be leveraged by asset management firms.
Finally, through our BankersAlmanac product line, Accuity can help due diligence teams to efficiently and effectively onboard new counterparties, and manage their existing relationships by uniquely providing the documents deemed necessary as best practice by leading authorities such as certificates of incorporations.
Is this kind of screening thorough enough?
Screening is part of the answer. We help our clients with some elements of KYC such as sanction, PEP and enhanced due diligence screening. In order to fight against financial crime, asset managers will need to put in place solutions combining KYC, anti-money laundering (AML) laws, tax, and anti-bribery and corruption tools. For example, this can ease the collection of AML questionnaires from fund distributors or other intermediaries for fund managers or transfer agents.
One of the biggest challenges now will be to try to remove the opaque veil that still exists between our clients’ clients and the assets that they manage. Accuity is committed to delivering more visibility on ultimate beneficial ownership information, which will help our clients’ further fight against financial crime.
Accuity has been around for a long time—how has financial crime compliance changed?
Over the years we have seen a need for further compliance because of increasing regulation, and this is showing no signs of slowing.
KYC obligations have been evolving both in width and depth. Not only do financial institutions have to collect more documents and information, but the regulators also now expect compliance officers to provide full audit and traceability, showing all evidence supporting onboarding and risk evaluation decisions. Large fund managers have seen their compliance costs increase dramatically, both because of more stringent procedures and the larger teams required to collect and analyse information.
Compliance solution providers have recognised this; we have been evolving our solutions by trying provide more information, such as up-to-date AML questionnaires, better integrated software with data in a single solution, and more advanced workflow capabilities, in order to streamline processes and reduce costs.
Is the data collection still mainly a manual task?
Whether we consider the collection of sanction, PEP or adverse media and enforcement data, or due diligence documents via the BankersAlmanac, our approach to data collection comes from the combination of both automated systems and manual processes.
Accuity has invested significantly over the years to automate its data collection processes and ensure efficiencies were gained where possible. However, automation cannot be solely relied upon if we want to offer our clients peace of mind that they are getting the most comprehensive, relevant and reliable data quality in a timely manner. This is why we also employ a large team of data editors who are subject matter experts strategically distributed around the world. Between them, they have fluency in all major languages to perform specific tasks, which cannot be automated. Blending the technology and subject matter expertise ensures our database offers clients the protection they seek in our ever-changing landscape.
What else could the screening service be useful for?
Another subject that has been quite topical is the need for increased screening processes in trade finance, particularly around ‘dual-use goods’, or goods that could be used for both good and bad purposes. For example, a shipment of ball bearings could be on its way to a factory that manufactures bicycles, but it could also be intended for use in building nuclear weapons.
Regulators are starting to ask trade finance operations teams to identify the types of goods that could have a dual purpose like this and the destinations that may be high-risk for those products, so that they can flag up transactions showing high-risk products being shipped to high-risk locations.
When processing a trade finance transaction, banks now need to know not only what is being shipped but also what it is going to be used for. That is very difficult to track.
We have paired up with a trade finance software provider, China Systems, to connect our screening engine to its compliance checks for trade finance operations. We have incorporated the data for the goods and destinations that present a risk, and have created algorithms around that, so we can now help market participants to understand what situations could be high-risk, and we can flag up those situations, if they do arise.
There is currently a lot of attention being paid to the risks in trade finance, and this particular issue of dual-use goods is now being addressed in regulation. Banks are not equipped to identify those goods yet, which means, at the moment, it is a very manual and time-consuming process.
Regulations are only going to increase, and the costs and constraints of compliance are only going to become more burdensome.
Accuity provides a single screening and filtering engine, and there are many applications that it can be combined with to service the industry. It’s a very versatile piece of technology, which can be configured to our clients’ policies regarding trade with many applications—we are not limiting ourselves to anything.
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