How Perpetual KYC (pKYC) Facilitates AML Compliance

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Perpetual Know Your Customer (pKYC) is a modern approach to customer due diligence (CDD). Unlike traditional KYC methods that rely on periodic reviews, pKYC uses continuous, real-time monitoring and updating of customer information. It enables financial institutions to keep customer data accurate and up-to-date, empowering them to better manage risks, streamline compliance processes and enhance the customer experience.

 

The concept of pKYC has gained traction in recent years as financial institutions face an ever-more-demanding regulatory landscape and increasing pressures to improve operational efficiency. By automating KYC processes and integrating real-time data from multiple sources, pKYC provides a comprehensive and dynamic view of customer risk profiles, enabling compliance professionals to make faster and better-informed decisions about the business’s future relationship with a customer.

 

 

 

What is Perpetual KYC?

At the core of pKYC is the ability to continuously monitor customer information and detect changes over short timespans. Effective pKYC processes can alert compliance professionals to perceived customer risk assessments derived from the analysis of multiple data sources, including transaction monitoring, internal databases, external data providers, and public records.

 

Historically, manual KYC systems have been unable to handle the burden of frequent and ongoing monitoring. However, modern analytics engines can use artificial intelligence (AI) and machine learning to identify patterns, anomalies, and potential risk indicators in large data volumes.

 

By automating manual processes, such as data collection, verification, and risk assessment, pKYC enables financial institutions to reduce the time and resources required for periodic manual reviews, freeing resources to focus on high-value tasks.

 

 

 

Traditional KYC vs. pKYC

While both traditional KYC and pKYC aim to verify customer identities and assess risk, there are significant differences between the two approaches. Traditional KYC typically involves periodic reviews of customer information, often on an annual or semi-annual basis or at specific points during the customer relationship.

 

Traditional CDD reviews are primarily manual and can be time-consuming and resource-intensive. They also provide only a snapshot of a customer’s risk profile at a point in time, which may not reflect changes between reviews.

 

In contrast, pKYC proactively monitors customer information using automated systems and real-time data. It exploits recent technological innovations in AI and machine learning to quickly identify patterns and anomalies that manual processes may miss. The more modern approach enables financial institutions to detect changes in risk profiles as they occur rather than waiting for the next periodic review.

 

For additional information on traditional KYC and CDD, view our blog on the key differences between AML, CDD and KYC.

 

 

 

The Benefits of Perpetual KYC

 

Accurate, Contemporary Customer Data

Perhaps most importantly, pKYC improves customer data accuracy and quality for the financial services industry and other regulated industries. Continuous, automated transaction monitoring and frequent CDD data updates ensure businesses have a complete and up-to-date picture of each customer’s risk profile.

 

 

Increased Customer Satisfaction

Automated pKYC workflows streamline onboarding and minimize the need for repeated information requests. Customers can better engage with your business in a more convenient manner, increasing customer satisfaction and loyalty while reducing churn rates.

 

 

Fewer AML Compliance Errors

Automated CDD systems minimize human error and ensure consistency in applying KYC policies and procedures. This not only improves operational efficiency but also enhances regulatory compliance by ensuring that all necessary checks are performed uniformly.

 

 

Reduced Compliance Risk

pKYC can help financial institutions detect and respond to suspicious activities more quickly and effectively. By continuously monitoring customer behavior and transactions, pKYC systems identify potential red flags in near real-time, enabling compliance teams to take swift action to mitigate risks and prevent financial crimes.

 

 

Scalability and Adaptability

As businesses grow and expand, their customer base and regulatory requirements evolve. Perpetual KYC is highly scalable and adaptable, capable of handling increasing volumes of data and accommodating changing regulations. This flexibility makes it an ideal solution for businesses of all sizes, from startups to large enterprises.

 

 

 

The Impact on AML Compliance and Risk Management

Perpetual KYC’s continuous monitoring and risk scoring streamline remediation processes and reduce the time and resources required to address potential threats. Compliance teams and your business benefit from faster resolution of anti-money laundering red flags and reduced risk of fines and reputational damage.

 

pKYC can also enhance a financial institution’s ability to meet its AML obligations by providing a more comprehensive and dynamic view of customer risk profiles. With data from multiple sources and advanced AI analytics, pKYC can identify patterns and anomalies that indicate suspicious activity, enabling compliance teams to take swift action to mitigate financial crime risks and comply with regulatory requirements.

 

 

 

Implement a Perpetual KYC Process With Alessa

Alessa provides a complete, integrated AML compliance solution that is made up of a variety of modules, including: 

 

 

 

 

Gain a Continuously Updating 360° View of Your Clients

Our 360° View of Client Risk module provides continuous monitoring of client information, pinpointing the clients who have surpassed your organization’s risk threshold, telling you why their risk score changed and simplifying your investigation and reporting processes.

 

 

How It Works

This module harnesses data from our other compliance modules, including each client’s transaction monitoring, identity verification, regulatory reporting and sanctions data, analyzing any current or past alerts, changes to data and/or suspicious actions. Alessa analyzes this complete view of your clients’ information and activities, and will send daily updates that highlight clients whose actions and data have caused their risk scores to surpass your establishment’s risk threshold in the last 24 hours.

 

Contact us today for a free demonstration of how Alessa can assist you with perpetual KYC and AML compliance and fraud management.

Schedule a free demo

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