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16 June 2020

What’s driving digitization in onboarding, KYC and AML?

Content team

Whats driving digitization in onboarding KYC and AML

Virtual working has become the norm as Covid-19 has swept the globe, forcing organizations to find the technology to allow everyday processes to continue.

Bureau van Dijk’s recent webinar, Covid-19 and compliance: is lockdown accelerating automation in onboarding and AML, considered whether and how technology is advancing as a result of unavoidable virtual working, and in what areas it could bring most benefit.

Expert panellist Holger Pauco-Dirscherl highlighted the changes technology is bringing about in the banking and finance sector, while Bureau van Dijk senior director compliance solutions Bill Hauserman outlined the pivotal role of smart technology in combatting fraud during vulnerable times.

Holder Pauco-Dirscherl

Holger Pauco-Dirscherl is Transcendent Group partner, head of compliance and anti-financial crime. Below he answers your questions on technological advancements in onboarding in financial institutions:

Are technological solutions such as facial recognition adequate replacements for activities that are traditionally done face-to-face, such as onboarding?

The current pandemic is accelerating the transformation of face-to-face onboarding towards technological solutions. Financial institutions are facing indefinite branch closures and decreases in budget and staffing; they need to embrace this transformation. Their younger ‘digital native’ customers do not want their online account set-up to be interrupted by an offline identification process.

It’s in the banks’ interest to avoid any such interruption, as the majority of new account applications will never be completed. Other kinds of companies have already understood this and have found smart solutions, so that the main competitors of financial institutions today are not other financial institutions, but a fast-growing number of ‘fintechs’. To remain competitive, financial institutions need to become fintechs themselves, using smart technological solutions.

This means adopting a high level of digitization and automation in onboarding processes, including online identification and facial recognition. It involves assessment of identity risk using smart and robust processes to verify the real identity of clients and other parties.

But this also means dynamic KYC (know-your-customer) processes and systems, including automated data collection and screening. It includes ongoing review of data for completeness and quality, replacing static review cycles. This frees staff from boring and time-consuming manual processes, allowing them to use their time for the proper management of client related risks instead.

This technological transformation includes solutions to identify networks of clients and connected persons, as well as outside parties which cannot only be identified by humans. We will always need humans with their experience, intuition and curiosity for the effective management of client risk but they need smart technological solutions to help make the most of their time and expertise, rather than waste it on repetitive manual processes.

Bill Hauserman

Bill Hauserman is Bureau van Dijk senior director compliance solutions. Below he answers your questions about tackling supply chain risk during the pandemic:

Given the current heightened risk of bad actors, or ‘pandemic profiteers’, what are the disadvantages of relying on documentation from clients regarding supply chain risk?

The Covid-19 pandemic has brought many kinds of misery, not least the assault by criminals trying to take advantage of all of us. Whether you are a hospital trying to buy face masks or a mask manufacturer looking for elastic, carrying out better due diligence on suppliers and third-party relationships is vital at this time.

The documentation collected from your third parties is both crucial and irrelevant in combatting this. Irrelevant because bad actors don’t tell the truth. Crucial because the more you know, both true and false, the better risk-detection technologies perform. Creating transparency in the supply chain or any third-party relationship is based on exception mapping that can focus the efforts of human risk analysts to uncover the truth.

Spending time reviewing false positives wastes risk analysts’ time so that bad actors are not discovered. It’s time to throw out the risk-based due diligence handbook and change your operational due diligence processes to cope with increased false positives.

This is achieved first by aligning internal and third-party supplied data with a verified source on organizations and the people who own and manage them.

Next, screen all third parties plus their owners, managers and directors for sanctions, political exposure and adverse media. Typically, due diligence programs do a minimum of this kind of screening to reduce false positives, potentially allowing bad actors to slip through. But machine learning can now detect and review false positives before human risk analysts are notified.

This approach finally allows broader screening with fewer false positives and much greater transparency on bad actors trying to enter your third-party relationships.


Listen to the webinar, Covid-19 and compliance: is lockdown accelerating automation in onboarding and AML.

Content team, Bureau van Dijk

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