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"KYC and AML checks: Alleviate the need for in-person trained staff and improve regulatory compliance"
Automate KYC and AML checks with a virtual agent
Jun 15, 2022

kyc

Globally, banking regulators are initiating or strengthening compliance requirements to shore up weaknesses in customer due diligence and to identify risks associated with money laundering and terrorism. The cost of compliance for banks is twofold: first, the cost of implementing systems to ensure that know your customer (KYC) and anti-money laundering (AML) processes are in place, and second, the cost of fines that result from failing to establish and maintain policies, procedures and reporting to financial regulators. ‍

KYC and AML processes are designed to ensure that customers are who they say they are and to prevent criminals from depositing or transferring funds that result from illicit activity. As part of the customer onboarding process, the collection of information to comply with KYC and AML regulations is critical, and failure to do so can have significant financial consequences for banks—including fines with lots of zeros.

The number of institutions fined in 2021 increased significantly from the previous year, and fines totaled $2.7 billion. According to the Global Enforcement Review, the most problematic areas included AML management, suspicious activity monitoring, customer due diligence and compliance monitoring and oversight.

Some of the largest fines paid in 2021 for inadequate KYC checks and AML system failures include:

  • ABN AMRO – fined $574 million
  • Capital One – fined $390 million
  • Deutsche Bank – fined $130 million
  • DNB ASA – fined $48.1 million
  • Apple Bank for Savings – fined $12.8 million

But the financial impact of noncompliance doesn’t end there. In addition to fines and penalties, noncompliant organizations also suffer reputational damage from the unwelcome public attention. Research shows that banks cited for AML noncompliance suffer an average 21% decline in their share price.

Banks cited for AML noncompliance suffer an average 21% decline in their share price. Source: Basquill J, Share price and reputational damage: banks count cost of AML failings, Global Trade Review, Feb. 2022.

Improving KYC/AML processes to ensure compliance and reduce risk

When initiating the opening of new accounts or validating that a customer’s risk profile hasn’t changed over time, the KYC process typically includes a contact center team member verifying a customer’s identity, performing a screen against prohibited lists, assessing the customer’s risk profile and conducting ongoing monitoring. But relying on people to consistently adhere to KYC and AML processes can be challenging. Not only must processes be consistently adhered to and recorded during account initiation, customers will also often need to be contacted after the fact to follow up on transactions. This can include an inefficient exchange of emails and calls and potentially introduces variability—and risk—to the process.

Banks need to improve the collection of information and consistency of KYC and AML programs by automating the process to ensure compliance and reduce risk.

Eliminate variability and support compliant KYC and AML processes with Gridspace Grace

With Gridspace Grace, banks can more efficiently, consistently and cost effectively address KYC and AML regulatory compliance with an automated virtual agent. Gridspace Grace gives bank contact centers the ability to minimize the variability introduced by human representatives, while still offering a user-friendly and compliant experience. In addition to ensuring that all required questions are asked and recorded correctly, banks can eliminate the time-consuming and manual back and forth of emails and calls by simply sending customers a link to click to answer the questions provided by Grace.

Indistinguishable from a capable human and purpose built for financial services, Grace easily scales to handle call surges, enables auditability with 100% visibility into every conversation and creates seamless handoffs when escalation is needed.

Explore how to simply and quickly support KYC and AML compliance and regulatory requirements with the Grace virtual agent.

Gridspace Grace gives bank contact centers the ability to minimize the variability introduced by human representatives, while still offering a user-friendly and compliant experience.