Reporting and Governance

Since 2009, US and European authorities have levied $342bn in fines on banks for various regulatory infringements that include violations of anti-money laundering rules. This total amount is expected to exceed a staggering $400bn by the year 2020. By Kelvin Dickenson, president at Opus

Regulations put in place to protect financial institutions from exposing themselves to risks connected to terrorist financing, money laundering, and economic sanction avoidance have been expanding since the 2008 financial crisis.

While these heightened reporting requirements are ultimately beneficial for all stakeholders, the situation places pressure on organisations to amplify their efforts at putting efficient systems in place that minimise risk and allow for more effortless vetting of people and entities.

Automated Know Your Customer (KYC) workflows serve to eliminate many instances of error that can lead to inadvertent regulatory violations. They also provide the flexibility to adjust as changes arise in the regulatory landscape.

Often organisations are made up of smaller entities that create the whole, or the same entity has more than one identifier or is identified in different ways in multiple information silos. Automated workflows can also greatly facilitate the synchronisation of multiple sources of information so that all users have a single view of accurate and up-to-date data that would otherwise be extremely challenging to coordinate.

Here we shall look at some of the ways that automated workflows can help companies keep pace with the heightened and evolving KYC requirements by streamlining workflows like credit investigations, CDD and EDD.

Automated workflows

Automation of many aspects of the approval process reduces error, standardises investigations and allows systems to access data from multiple databases simultaneously. Having these processes in place allows onboarding teams to do more in a shorter period of time while still meeting ever-stricter rules of compliance and minimising risk. Not only do these protocols reduce costs by conserving time and manpower, but we have already seen the exorbitant fees that can be avoided by optimising systems of risk management.  

Customer single view

Data silos slow down vetting processes. Synchronising all data sources makes automated workflows more accurate and efficient. However, most organisations house entity information within 10 or more databases. Information silos like these are extremely common, as different departments use their own processes and systems to maintain records. Acquisitions further accentuate the problem. Organisations working with a single view of customer data across the entire company that has been de-duped, mapped and cross-referenced – for example, LEI [Legal Entity Identifiers] and GIIN [Global Intermediary Identification Numbers] – can more easily head off non-compliance issues off at the pass.  

Additionally, cross-referencing data is a powerful tool for ensuring a full picture of each customer and for identifying potential business risk. Additionally,  leveraging a unique numbering system, organisations can cross-reference entity and data sources to pull together disparate enterprise risk management (ERP), contract lifecycle management (CLM), and front and back-office systems.

Timely and accurate data

Ongoing monitoring of changes, along with the implementation of triggers that alert organisations to alterations in customer profiles that can expose organisations to risk, are a benefit of automated workflows crucial to protecting financial institutions from non-compliance issues.

Additionally, at the typical bank, data decay occurs at a rate of 25% a year. This is partly due to manual errors during data entry and editing and partly due to the rate of change in the business space. Mergers and acquisitions, office relocations and more all put records out of date at lightning speed.

To fight data decay, a golden copy of data must be regularly revisited and updated. Without ongoing data maintenance, important changes in entity status could easily go unnoticed, and data errors across the organisation creep back in.

Automated workflows can be put into place that check for events on a daily basis, offsetting the dangers of many situational changes that can compromise the integrity of an organisation.

Frequent – and even daily – updating and cross-referencing of identifiers like LEI and GIIN, along with the entity identifiers of rating agencies and regulators can be an ace in the hole for institutions looking to optimise risk management procedures.


The evolution of KYC regulations does not promise to slow down any time soon. In our current environment, many financial institutions are coming to the conclusion that cleaning up and centralising data across their organisations needs to happen before violations occur.

With an accurate, centralised repository for data, implementing more sophisticated automated workflow solutions to optimise systems of investigation makes compliance far less challenging.

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