KYC & AML-CFT efficiency and profitability: technology is everything!
Closely scrutinized by regulatory bodies, regulatory compliance is no longer an option for companies, especially when it concerns financial flows. In today's accelerated fight against money laundering and the financing of terrorism, customer identity verification (KYC) procedures must offer strong guarantees of reliability. However, increasingly complex European and French regulations impose numerous constraints on organizations, particularly in terms of efficiency and cost.
The importance of compliance and budgeting
Regulatory constraints are expensive
Regulatory constraints are relatively onerous. They impact companies with direct costs (reporting, questionnaires to be completed, storage of supporting documents, monitoring technologies and other databases...) but also with indirect costs (processes, salary impact, time spent on monitoring and reporting to the relevant authorities, recruitment of external consultants for audits...). Not to mention the financial penalties for non-compliance. This raises the crucial question of profitability. Since costs are constrained, how can we control them and, if possible, reduce them to a bearable level?
One option is to do nothing, i.e. to consider that these costs are ultimately akin to "compulsory compliance levies", giving companies relative peace of mind vis-à-vis the supervisory authorities. In this case, compliance policy will be based on manual processes that are hardly optimized.
Don't confuse effectiveness with efficiency
There's no denying that this approach should be avoided. On the one hand, because the costs are always higher than they appear; indeed, a simple compliance management audit is enough to identify lost productivity and time, as well as hidden costs and lack of process fluidity. Secondly, because many managers and employees still confuse effectiveness with efficiency. Effectiveness measures the gap between results obtained and results sought. Efficiency, on the other hand, measures the relationship between the quantity and quality of results obtained and the resources (material, human, financial) used to obtain them.
Untapped potential for optimizing productivity
Continuing with this line of reasoning, an essentially manual process can then be considered efficient, since the results obtained (KYC compliance and AML-CFT) correspond to what is sought. This is true even if the process is slow and costly, and employees are negatively impacted by time-consuming tasks such as filling in forms or juggling multiple Excel spreadsheets. Even more so if information volumes and false positive rates are very high...
Optimize resources and processes with the latest generation of automated software solutions AML-CFT & Anti-corruption
Focus on profitability efficiency
The manual compliance process is neither efficient nor cost-effective, because the resources mobilized are disproportionate to the objective. These resources must therefore be optimized or even increased. The notion of efficiency must therefore be favored as the basis for implementing a cost-effective compliance policy.
Acting on the resources involved
If it is not possible to act on the objectives to reduce their scope - there will always be a need to comply with the ever-increasing number and complexity of regulations - the best approach is to optimize resources by automating compliance processes. Turnkey RegTech software solutions will manage KYC/KYS issues by dramatically reducing tedious or low value-added tasks, while improving reporting processes and suspicion handling time.
Comprehensive functionality for optimum coverage of compliance policy
With real-time analysis of thousands of sources (Global/Regional Sanctions, Asset Freezes, Politically Exposed Persons, identification of countries and currencies under embargo, etc.), these solutions will identify potential malfunctions and keep proof of the checks and due diligence carried out, for the use of regulatory bodies. They will be able to offer detection & filtering functionalities AML-CFT as well as KYC remediation (updating customer information), not forgetting interoperability with existing information systems (CRM, management applications). The use of latest-generation RegTech software solutions will enable considerable time savings, more reliable processes and reduced administration in SaaS mode.
A 100% efficient compliance policy... and therefore more profitable!
Would you like to find out how AP Solutions IO can help you optimize your compliance policy and make it more cost-effective? Request a demo.
