08.18.2014
By Terry Flanagan

KYC Compliance Burden Falls on Banks

‘Know Your Customer’ regulations are compelling banks and corporations to develop methods for speeding the on-boarding and remediation processes for new customers.

“The burden for end clients has been steadily increasing as regulators have dramatically increased their supervisory activities on the banks,” Anna Mazzone, head of KYC at Thomson Reuters, told Markets Media. “This has led to banks needing to identify with precision the ultimate beneficial owner of the legal entity with whom they are doing business and validating many other aspects of the legal entity.”

Thomson Reuters’ Accelus Org ID service, launched earlier this year, acts as a neutral ‘central clearing house’ by building an identity record, which works as a globally-recognized KYC ‘passport’, and provides the ability to screen for money laundering risk characteristics, negative news flow and/or sanctions issues.

Anna Mazzone, Thomson Reuters

Anna Mazzone, Thomson Reuters

“We’ve made everything easier for clients, and that has already encouraged early adopters to engage with our portal,” said Mazzone. “The alternative for end-clients today is they can supply their documents by email every time they want to do business with a different broker or banking counterparty.”

With Accelus Org ID, Mazzone said, there is no more danger of security fraud. “Because a firm can share all documents simultaneously from the portal, they have one place to store all documents associated with KYC, and the firm maintains control of who is looking at their information,” she said.

Accelus Org ID will also alert when documents need to be updated. Firms supply documents into the portal and then authorize their bank or broker to pick them up.

“We have streamlined the process to make it easier for end-clients and their banking and trading counterparties to do business while also being compliant with the demands of regulation,” Mazzone said.

A new online portal facilitates client on-boarding, identity collection, and verification, reducing the operating and remediation costs associated with complying with KYC requirements. The portal is used by clients of financial institutions, including asset managers, hedge funds, corporations, and correspondent banks.

“With increased attention being placed on complying with complex KYC requirements, so too is the compelling need to identify and work with trusted industry partners to ensure the collection and maintenance of accurate KYC information,” said Damian Glendinning, treasurer at Lenovo, in a release. “Having a centralized solution in the Thomson Reuters web-based portal of Accelus Org ID KYC Managed Service, will certainly help to increase efficiency and reduce costs related to repeatedly providing KYC information to multiple firms.”

The service is centrally updated as new regulations come into effect and covers rules and regulations surrounding the AML, FATCA, Dodd-Frank, EMIR and MiFID, supporting KYC compliance in the US, Europe, Asia and the emerging markets.

Accelus Org ID will enable firms comply with the new FINCEN customer due diligence requirements, Mazzone said. The new proposal goes even further than what is required today and firms will now be required to identify the ultimate beneficial owners of the end-client.

“There is some debate as to how much validation will be required to confirm registered advisers,” she said. “For example, if we want to validate an individual or entity’s address, can we just rely on the fact that they’re registered with the CFTC or the SEC?”

Accelus OrgID has implemented a market practitioner advisory board to address the on-going requirements to manage policy changes to regulation and ensure the Service properly implements these new requirements.

“We have the banks working with us on our policy, which addresses the requirements for conducting the KYC due diligence as it relates to AML across ten major capital markets: the U.S., U.K., Canada, France, Germany, Singapore, Hong Kong, Japan, Switzerland, and Australia,” Mazzone said.

Featured image via Dollar Photo Club

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