KYC Initiatives for an Interconnected World
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By Sophie Alexander

Abstract

The sheer volume of regulatory change in the area of compliance can be overwhelming for many firms. With more intensive scrutiny from regulators worldwide and record fines imposed last year, it's more important than ever for companies to ensure they have a robust risk management framework in place. Sophie Alexander's article highlights the findings of three recent surveys carried out by Dow Jones, KPMG and Thomson Reuters, which give an insight into the challenges faced by companies in the area of compliance.

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Companies are getting used to working in an ever-changing regulatory environment and the results of three surveys highlight some of the common themes faced by companies working in compliance as well as the impact these changes are having on their business processes.

We analysed KYC survey findings from Dow Jones, KPMG and Thomson Reuters.

Global Regulations are Impacting All Jurisdictions

Global regulations appear to be having a huge impact on companies' anti-corruption policies. For example the US's FATCA and the UK's Bribery Act have an effect beyond the country borders, as reported in the Dow Jones Anti-Corruption Survey Results 2014 (PDF).

Whilst most companies appear to be confident in their due diligence processes, the findings showed that time and cost remain the key factors hindering progress for some, read more in the Thomson Reuters Cost of Compliance Survey 2014 (PDF - registration required).

Outsourcing & Off-Shoring are Growing Trends

Outsourcing and off-shoring is a growing trend and more companies now outsource at least some of their AML functions.

In the aftermath of political instability in certain regions, it was found that financial institutions are more focused than ever on the need to exercise even more scrutiny over Politically Exposed Person (PEP) transactions.

Know Your Customer is the Second Largest AML investment

The KPMG Global Anti-Money Laundering (AML) Survey 2014 (PDF) found that Know Your Customer was the second largest AML investment made by companies and given that 70% of companies have received a regulatory visit which focuses on KYC, this is unsurprising.

However, this is still a challenging area because of the complex ownership structures in place.

Adopting a more Proactive Approach

What is clear from looking at the results of all three surveys is that companies, financial institutions in particular, need to adopt a more proactive approach to avoid being subject to fines and sanctions. This means keeping an eye on regulatory trends in order to anticipate future areas of regulatory scrutiny.

Editor's Note

FreePint Subscribers can log in to read and share more key highlights from the surveys as well as ideas for next steps in KYC Survey Findings from Dow Jones, KPMG and Thomson Reuters.

This article is part of the FreePint Topic Series: What You Need to Know Your Customer (KYC) running from July-September 2014 which includes articles, reviews and expert tips. Register your interest now, and you'll also get a free PDF report with selected premium articles when it's published in September.

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