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Let’s Build a Fortress: Leveraging KYC for a 360° Customer Risk Assessment

In today’s increasingly digital and globalised world, compliance professionals face a constantly evolving threat landscape.

Customer Due Diligence, or CDD, once a cornerstone of Know Your Customer (KYC) practices, is no longer sufficient. To effectively mitigate financial crime, fraud, and
other potential threats, organisations require a more thorough approach.
This White Paper explores how leveraging KYC as the foundation for a 360° customer risk assessment program can strengthen your compliance framework.

Beyond KYC: The 360° Risk Assessment Framework

Defining KYC and its Core Principles KYC refers to the essential business practice of identifying, verifying, and understanding your customers. It comprises two core principles: • Customer Due Diligence (CDD): This involves collecting and analysing basic customer information such as name, address, identification documents, and beneficial ownership structures.

• Enhanced Due Diligence (EDD): In higher-risk scenarios, EDD requires more in-depth customer scrutiny, including verifying your customer’s source of wealth and/or funds and analysing their business activity. The Evolving Regulatory Landscape KYC regulations are constantly evolving to combat emerging financial crime threats. Key drivers include: • Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) regulations: These international and regional regulations mandate robust KYC procedures to prevent financial systems from being abused for illicit activities.

Introducing the 360° Risk Assessment Approach
KYC Data: The Bedrock of a 360° Risk Assessment
Expanding the View: Additional Data Sources
Sanctions and Watchlist Screening
Adverse Media Screening
Customer Due Diligence (CDD) Questionnaires
Behavioural Analysis

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The Know Your Customer (KYC) Imperative

Beyond Compliance: The Benefits of KYC Effective KYC offers significant advantages beyond regulatory compliance: • Improved Customer Relationships: KYC fosters trust and transparency, strengthening your relationship with your customer. • Enhanced Brand Reputation: A robust KYC program demonstrates a commitment to ethical business practices, an activity that ultimately safeguards your brand’s reputation. • Reduced False Positives: KYC helps streamline customer onboarding by differentiating legitimate customers from higher-risk and potentially dangerous actors.

The Role of Technology in KYC With the advent of digital technologies, KYC processes have become more efficient and effective. Digital identity verification, biometrics, artificial intelligence (AI), and machine learning (ML) can automate and enhance KYC procedures, reducing manual errors, improving accuracy, and saving your organisation time and money.

Let’s Build a Fortress: Leveraging KYC for a 360° Customer Risk Assessment

Beyond KYC: The 360° Risk Assessment Framework

Contents

The Know Your Customer (KYC) Imperative

INSIGHTS & EXPERTISE

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