Delivering successful KYC remediation campaigns: possibilities and pitfalls
Know Your Customer (KYC) processes are key for companies and financial institutions aiming to mitigate risk and comply with regulations. In this blog, we’ll explore how successful real-world remediation campaigns are organised and executed, along with common pitfalls to avoid.
Keeping close tabs on end customers
Keeping a complete and up-to-date record of client data is no easy feat. Whether they are multinational financial institutions, niche brokers or leasing companies, organisations of all sizes struggle in keeping track of their customers. As a cornerstone of risk management, regulatory compliance and fraud prevention, KYC remediation campaigns are essential for managing risk, ensuring regulatory compliance and preventing fraud. These efforts help update inaccurate or outdates KYC files to improve risk assessments, while keeping internal operations running smoothly.
Although the ideal for forward-thinking companies is to adopt a perpetual, holistic approach to KYC, targeted remediation campaigns are often necessary to meet regulatory demands or to fix significant internal data inconsistencies and other issues. Regulators in Europe and elsewhere are ramping up pressure on non-compliant institutions, frequently mandating remediation campaigns and showing no hesitation in issuing hefty fines. In 2023, for instance, Danish authorities hit Danske Bank with a penalty totalling over $2 billion.
Typical KYC remediation issues
Effective KYC remediation might seem straightforward, but is far from it. The initial challenge doesn’t only involve gathering accurate documents and data, but also correctly flagging suspicious items for human verification and possible intervention. Currently, many of these processes are still paper-based, especially during initial onboarding scenarios. The preferences of target groups – e.g. certain demographics being less inclined to use online platforms – can also play a role. While some of our Harmoney clients had already previously digitised their initial data capture, subsequent manual data verification and incompatibilities with legacy IT systems created significant additional bottlenecks. The subsequent steps are frequently overlooked when setting up remediation campaigns.
A typical successful flow looks as follows:
- Identification of outdated items and high-risk clients.
- KYC remediation campaign to clean and update client files and collect missing data.
- Integration of clean data into CRM and other key software, such as core banking systems.
- Automatic detection and alerts about high-risk clients and dossiers for human verification.
- Systematic, automated client monitoring.
This process extends beyond initial digital data capture supported by software. This is exactly where the Harmoney platform comes in.
Case study: real-world KYC remediation
As the leading end-to-end compliance provider in Europe, our Harmoney team works in close sync with partners in various markets to ensure full compliance with local legislation and offer country-specific expertise. In Luxembourg, for instance, we teamed up with Finologee to introduce Harmoney to the local market under the KYC Manager brand.
Recently, a Luxembourg-based financial institution reached out to us to launch an urgent KYC remediation campaign after intervention by local regulatory authorities. The main challenge was to quickly set up a remediation campaign for a group of high-risk end customers.
Our team swiftly configured the relevant existing Harmoney modules to meet the client’s requirements and fit their current software ecosystem. In just six weeks, we organised an outreach campaign that was both fully compliant with national regulations and easy for the financial institution’s back-office team to process and follow up on, particularly for manual risk validation.
The ability to integrate different data sources seamlessly, manage required document flows and apply local regulatory expertise enables instant compliance and clarity amidst data complexity – even in large corporate structures. With response rates for Harmoney-powered KYC remediation campaigns often exceeding 80%, organisations are well-positioned to move towards continuous KYC and the logical next step: integrated KYC and KYT (Know Your Transaction).
Looking ahead with integrated KYC and KYT
As a frontrunner in compliance, fraud detection and risk management, we are noticing a significant shift in financial institutions’ approach to compliance, with a gradual convergence of KYC and KYT processes. Traditionally, KYC and KYT were considered separate silos, largely due to technical and time constraints and set-up costs. However, leading players are adopting the capabilities of integrated platforms like Harmoney, combining all relevant modules on a single, unified platform.
The combined algorithmic power provides a more comprehensive view of customer behaviour and transaction patterns than classic, siloed KYC/KYT. This helps organisations to focus on their core business, while providing full peace of mind when it comes to all things compliance.
Harmoney offers a cutting-edge digital platform that streamlines intricate onboarding and compliance procedures, featuring automated screening functionalities. Interested in discovering more about our innovative solution? Reach out to us for further details!