Enhancing Know Your Customer (KYC) & Customer Due Diligence (CDD)
By Eric Malherbe, Business Solutions Manager, Pre-Sales Fraud NEMEA
Know-your-customer (KYC) and Customer Due Diligence (CDD) guidelines form a fundamental part of a banks’ risk management practices and customer risk monitoring, and are legal requirement to comply with anti-money laundering (AML) laws.
In its simplest form, KYC and CDD refer to the steps taken by a financial institution or business to establish customer identity by collecting and documenting a customer’s name, date of birth, and address. Financial institutions and/or business then verify that information, build a customer’s risk profile, and then monitor the customer’s transaction behaviour on an ongoing basis.
However, as the demands for information required to comply with KYC and the complexity of the rules increase, financial institutions and businesses find themselves having to manage, monitor and analyse a plethora of information on each customer to be compliant. The result is that the implementation and enhancement of KYC and ongoing compliance is a costly and time-consuming enterprise – and achieving the holistic, firm-wide level of KYC/CDD detail continues to be a challenge.
The goal is to take a more comprehensive and continuous approach to CDD ...
Nowadays, knowing your customers is about more than just identity and the validation of it. It’s about knowing preferences, interactions, behaviours, contextual knowledge of time and place – it’s about establishing customers as individuals rather than segments which demonstrate particular behaviours.
It should therefore, come as no surprise that this level of detail and control starts with analytics. A centralised, data-driven analytics platform can help you to turn the management of customer knowledge into a process, starting with a main hub that can be used to open up “consistent dialogue with customers across all your touch points” and readily assess customer risk.
Establishing digital infrastructure to provide end-to-end KYC and customer due diligence – one consolidated view of all activity – is where financial institutions and businesses need to start if they have not already. This approach will enable them to integrate and leverage data they have on their customers to drive a more effective KYC/CDD approach and continuously monitor the customer relationship.
And SAS can help.
At SAS, we have been helping businesses to drive more effective KYC and CDD initiatives through superior big data analytics. We understand and appreciate that managing complex customer data and acting on risk enterprise-wide is difficult, which is why we offer our SAS Customer Due Diligence solution. Our Customer Due Diligence solution enables you to assess the risk of a customer relationship, conduct comprehensive screening, periodically review risk entities, establish an expectation of customer behaviour based on collected data and risk rating assessment, and automate the review of risks through workflows and reporting at an enterprise-wide level.
As many systems only use a limited number of data elements to accurately score customer relationships, the Customer Due Diligence solution collects information throughout your enterprise to build a better picture of customer interactions. SAS provides incomparable techniques to access and aggregate data enterprise-wide to provide you with the most accurate, up-to-date and valuable information, allowing you to increase transparency and reduce risk. Information compiled via the Customer Due Diligence solution is then analysed and each customer is provided with a risk score. The information can then be reviewed by your department on a regular basis and if there is any deviation from a customer’s predicted transactional behaviour, your investigators or analysts can be alerted immediately.
Key features and capabilities of the SAS Customer Due Diligence solution
- Continuous event-based risk rating of entities
Rather than manually review risk-based entities, the SAS Customer Due Diligence solution allows you to review events when they happen, instead of reviews over longer intervals of time. SAS Customer Due Diligence performs continuous monitoring and will alert you of any change to a customer’s risk rating and allow you to review it further.
- Case management / investigation
The Customer Due Diligence solution provides end-to-end customer monitoring, allowing you to manage cases and customer activity in real-time. You can easily manage case and assess customer activity from an easy-to-use interface. Global search capabilities allow you to filter and sort cases categorically, by date/time or numerically, so you can always find what you are looking for.
- Manage risk attributes effectively
See multiple sources of data across your enterprise and other databases. With the Customer Due Diligence solution you can build a more accurate picture of how a customer interacts with you.
- Automation and integration
The Customer Due Diligence solution uses automated workflows to speed up the review process throughout the organisation. These workflows adhere to standard processes and defined compliance parameters. Lastly, the solution can be integrated with the SAS Financial Crimes Suite to provide broader insight into a customer’s behaviour.
These are but a few features the SAS Customer Due Diligence solution can provide you. As KYC and CDD processes become more and more complex, an enterprise-wide solution that is built around big data analytics is absolutely essential.
To find out more about our Customer Due Diligence solution, click here.
What to read next
- Article: Rethink Customer Due Diligence
To comply with Bank Secrecy Act and Patriot Act regulations, your institution must give every customer an anti-money laundering (AML) risk rating.
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