Banks turn to technology innovation, as global regulation continues to increase KYC complexity

Accuity annual financial counterparty KYC survey reveals:

  • Local interpretation of regulation adds complexity to the KYC process
  • 69 percent of respondents find collecting accurate ownership and UBO information difficult
  • Lack of skilled staff presents a challenge for 68 percent
  • Reduction in counterparty relationships suggests de-risking continues, but pace is slowing

The annual Accuity Financial Counterparty KYC Survey has revealed that 75 percent of senior compliance and correspondent banking professionals have encountered added complexity in interpreting and adhering to local legislation. As global regulators continue to introduce and enforce more stringent compliance standards in efforts to mitigate the risk of financial crime, compliance officers are under pressure to have all relevant due diligence information at their fingertips.

Regulations such as 4AMLD and the FinCEN Final Rule have placed greater emphasis on KYC processes, particularly when it comes to accurately identifying Ultimate Beneficial Ownership (UBO). 69 percent of survey respondents admitted to finding the collection of reliable UBO information challenging, despite moves by several countries to introduce centralised UBO registers.

Additionally, 76 percent of respondents continue to find rising costs and onerous processes a challenge in KYC. The highest priority for 67 percent of respondents is avoiding regulatory fines and enforcement action, yet 81 percent are struggling to adapt to changing global regulation, which has gathered pace in recent years.

Dalbir Sahota, KYC industry specialist at Accuity said: “The rising cost of compliance and changing regulatory requirements are driving financial institutions to constantly evolve their systems, but their operations are not designed for continuous change. The laborious processes involved in KYC continue to present hurdles, which can only be overcome with a more comprehensive systems overhaul.”

77 percent reported that to complete KYC checks, they must undertake manual and repetitive tasks. The recruitment and training of specialist staff also emerged as an issue frustrating the KYC process, with 68 percent of respondents flagging skills shortage as a challenge.

“There are significant efficiency gains yet to be made in this industry, and technology innovation will be key,” Sahota added. “We expect to see financial institutions automate more of their KYC processes as well as looking to new developments in artificial intelligence and machine learning to overcome some of these efficiency challenges – so there is cause for optimism.”

Financial institutions have also been struggling to justify the profitability of maintaining higher risk counterparty relationships, due to the increased effort required to conduct due diligence and obtain the necessary documentation. In the survey, 84 percent of respondents confirmed they review high-risk entities in a different way to low risk entities – a figure which has increased from 74 percent in 2014.

“An additional cause for optimism is a slowdown in the de-risking trend we have seen develop over the last few years,” continued Sahota. “This latest survey suggests that although de-risking continues, the pace may be slowing.” In 2014, 58 percent of respondents had over 250 financial counterparties; this reduced to 47 percent in 2016 and 43 percent in 2017. Over the same period, the number of financial institutions with fewer than 250 counterparties has increased.
Counterpart Relationships

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For more information, please contact:

Imogen Nash, Accuity
Tel: +44 (0) 7789 924 920

Francesca Bliss, Cognito,
Tel: +44 (0)20 7426 9419

Notes to editors

About the survey

Accuity surveyed 100 banks, financial institutions, corporates, and government and regulatory bodies across all regions to get a deeper insight into their pain points in conducting financial counterparty KYC. This survey compares the results from our 2017 survey with the results from our 2014 and 2016 surveys to provide a global view of the latest trends, including an increasing emphasis on the need to identify the Ultimate Beneficial Owner (UBO).

2017 participant profile

Europe 47%
APAC 30%
Americas 13%
Middle East & Africa 10%
Organisation Type
Bank 69%
Corporate 17%
Non-banking Financial Institution 10%
Government & Regulatory Body 4%
AML, Compliance and Legal 28%
Correspondent Banking, FIs, On-boarding 17%
Payments, Settlements 15%
Operations 9%
General Management 8%
Other 23%
Manager, Supervisor 31%
CEO, Vice President, Director 28%
Head of Department 24%
Executive, Operations, Assistant, Analyst 10%
Other 7%

About Accuity

Accuity offers a suite of innovative solutions for payments and compliance professionals, from comprehensive data and software that manage risk and compliance, to flexible tools that optimise payments pathways. With deep expertise and industry-leading data-enabled solutions from the Fircosoft, Bankers Almanac and NRS brands, our portfolio delivers protection for individual and organisational reputations.

Part of RELX Group, a world-leading provider of information and analytics for professional and business customers across industries, Accuity has been delivering solutions to banks and businesses worldwide for 180 years.

About Bankers Almanac

The Bankers Almanac for Risk and Compliance portfolio offers unrivalled intelligence on global financial institutions – with access to more than 23,000 banks worldwide – allowing banks to improve operational efficiency while making better-informed decisions about their correspondent banking partners.

Additional modules are available, including the Bankers Almanac Due Diligence Repository, which contains over 600,000 completed KYC documents, Bankers Almanac Ultimate Beneficial Ownership, which demonstrates individual beneficial ownership of entities down to 0.1%, and Bankers Almanac Regulatory Views, which identifies institutions that may require additional investigation – including state owned enterprises and sanctioned entities. With Bankers Almanac for Risk and Compliance, KYC professionals can maintain a holistic view of a counterparty using accurate intelligence that is updated regularly and verified by primary sources, to ensure quality.

Media contacts

For more information, please contact:

Imogen Nash, Accuity
Tel: +44 (0) 7789 924 920

Francesca Bliss, Cognito
Tel: +44 (0)20 7426 9419