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Succeed in your KYC remediation project

AML-CFT requirements are evolving regularly. Sapin II law, 5th European directive, 6th directive... These regulations, although necessary, complicate the life of companies, mainly in the banking and insurance sector.

The consequences of an uncontrolled KYC process are heavy. Financially, the ACPR's fines can go up very high, we are talking about 100 million dollars or 10% of turnover. The consequences in terms of damage to brand image are also disastrous. The question is: how can companies comply with ever-changing regulations?

In this article we will present a method developed by Jouve and presented by Eric Brétéché, Product Manager. A major player in the French digital ecosystem, Jouve relies on the combination of robust technological skills and fine business knowledge to handle complex processes in the public sector, health, banking, social protection and industrial property. I - The reasons



More and more companies are obliged to implement a formalized and systematic KYC process:


- Regulatory constraints in constant evolution: National, European, International. LCB-FT (AML/CFT), European directives. In the event of non-compliance, taxable persons may be sanctioned by the AMF or the ACPR.


- Obligations in terms of internal processes: Obligation to verify the identity of customers, to collect mandatory supporting documents according to the evolution of the risk related to the business relationship, ensure the traceability of controls in the event of an audit...


- Obligation to apply these controls throughout the business relationship, which also requires updating all customer files. This is called KYC Remediation.


II - Definition of the method



With regard to the KYC remediation of customers and natural persons, the process is increasingly industrialized and automated. These KYC remediation campaigns generally concern large volumes of customer files with few supporting documents (identity, address). While these diligences are sometimes carried out internally, they are increasingly outsourced to players who offer industrial remediation platforms. Regarding the KYC process of legal entities the approach is identical but the treatment is more complex, so rarely industrialized. The number and type of supporting documents to be collected will depend on the shareholder structure of the legal entity, the various natural or legal persons involved, the identification of the beneficial owners, etc.

In both cases, the critical phase is the collection of mandatory documents and this must be done quickly and efficiently. To quickly collect these mandatory documents, the fast-growing practice is the use of digitalization and automation. The digitalization of the KYC process has many advantages:

- No need for an agency to collect documents (online banking/management company)

- No need to ask the customer to travel

- Time savings for employees and customers

- Systematic screening and faster processing of a large volume of data

- Systematic document control to fight against document fraud thanks to artificial intelligence algorithms embedded in the solutions Solutions must be sufficiently efficient so that treatment is fast and effective. The customer must not have to submit his documents several times and the checks must be carried out quickly (ideally in real time or in session time at the time of loading).

III - Performing your KYC remediation in four key points



The implementation of the KYC remediation process requires four key steps:

1 – Stock analysis


- Analyze the entire customer base

- Identify the customers to be remedied and the types of documents to be collected


2 – Communication campaigns


- Define the modes of communication (mailing/SMS/phoning) according to the type of communication (initial communication, reminder 1, reminder 2 ...)

- Define the types of messages according to the different reminders Plan communication campaigns according to feedback



3 – Collection and analysis of the file


- Collect documents via the different channels offered: collection portal, email, return mail

- Check the documents collected, check the completeness of the file, identify missing documents


4 – Campaign analysis


- Analyze the effectiveness of communication campaigns through dashboards (Analytics)

- Adapt messages, communication channels and the rhythm of reminders according to return rates and customer typologies. KYC remediation is not an option but a necessity.

Institutions and companies in the financial sector must quickly comply with regulatory obligations or risk sanctions and image risk.

About Flaminem

Flaminem is a software publisher, which offers a dematerialized platform in the cloud to digitize the KYC processes of your customers and / or suppliers.


Website: www.flaminem.com

Contact us: contact@flaminem.com

References:

Flaminem webinar of 09/07/2020 by Eric Brétéché

https://www.lesechos.fr/idees-debats/cercle/opinion-le-know-your-customer-au-sein-des-banques-une-reglementation-strategique-pour-la-relation-client-141302

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