Know your customer

By selecting the right KYC product from the plethora available on the market, you will not only move closer to complying with changing regulatory obligations, but may also realise additional return on investment, turning a potential business burden into a benefit. Adopting a consistent KYC process helps you maintain higher standards of customer service, gets new business on board faster and by improving your knowledge of the customer, can generate better business opportunities. The main buying factors to consider are:

• Content and coverage.
• Ease of use.
• IT deployment.
• Support and assistance.
• Costs and contracts.

Content and coverage
Importantly, consider the sources of information available with the product and against which any research will be conducted. This can include sanctions and politically exposed persons (PEP) lists, news archives and company data. You need to be confident that the content searched is the most comprehensive for your needs and is regularly updated. Does the company deal solely with locally based companies and individuals or is there business transacted requiring international data?

Ease of use
Ideally, you want to be up and running quickly without needing lengthy training. Look for an intuitive interface and search functionality, and remember the more user-friendly the product, the less time taken getting new recruits up to speed.

IT deployment
Ensure the software and technology behind the product is scaleable and customisable in line with your requirements. Some KYC products require software to be installed locally or involve bespoke development, whereas others are simply accessed via an internet connection requiring only a password. It is also important to consider how the product may be developing alongside regulatory obligations, such as offering an audit trail for example.

Support and assistance
Consider what happens when the product doesn't work. You will want to avoid keeping prospective clients waiting while dealing with technical problems, so you will need a help desk and alerts of system problems before they become an issue as well as access to local IT support and training.

Costs and contracts
Consider the price and, more importantly, the flexibility to pay. You will want to be able to pay in a way that helps you control costs and budget properly. Think about the options available and which price package best suits your company. To reach agreement on price and any potential discounts, think about how many checks you'll be performing and how many people will be using the product.

CASE STUDY

Lexis Nexis helps Wachovia
Wachovia is a diversified financial services company that provides a broad range of retail banking and brokerage, asset and wealth management, and corporate and investment banking products and services. As such, it has a statutory duty to comply with UK and European Union anti-money laundering legislation and carry out due diligence checks on all potential customers.

The LexisNexis Know Your Customer (KYC) application enables users to quickly check online high-risk entities against global databases of news, company filings, biographies, international sanctions and politically exposed persons (PEP) lists to assist with the verification of identity and reveal associated interests, thereby conducting enhanced due diligence.

Additional functionality targets negative and derogatory news on the entity under review in an unparalleled archive stretching back 30 years and covering over 15,000 sources.

Wachovia benefited in several ways. It could offer a better experience at meetings with potential clients. “This is a very sensitive time as they are not our customers at this stage, and we endeavour to carry out pre-screening checks, using KYC, to give our relationship managers as much information and knowledge as possible,” said Martin Woods, UK Money Laundering Reporting Officer. “Pre-screening is of great importance to us in the management of risk, and the protection of our staff and franchise,” he added.

Wachovia also benefits from better knowledge of emerging markets such as India and China. “There is a compelling need for more data and information in these two areas especially, and as operators in those areas, banks require as much advance information as possible. KYC provides a valuable resource in these areas,” Woods explains.

He goes on to explain how KYC gives a detailed picture of potential clients. “KYC has revealed enlightening information about a party that sought to have a relationship with Wachovia that has caused us to rethink the proposal.” Woods concludes: “In terms of quality of content, KYC cannot be beaten. It gives me reassurance, excellent data and total flexibility.”

Mark Dunn is the Risk & Compliance business consultant at LexisNexis.