Accumulation of dispersed data, increasing number of regulations, complexity, and repetitiveness of tasks, as well as limited personnel and financial resources, are currently difficulties for many institutions dealing with Know Your Customer (KYC). Robotizing the processes is the way to overcome these challenges, as you will see after reading the article.
What is Know Your Customer process?
In a nutshell, Know Your Customer (KYC) refers to the process used by institutions that need to follow legal requirements (such as entities bound by anti-money laundering and counter-terrorism financing legislation) to collect information about their customers, record it, and confirm its accuracy by comparing it with external watch lists and public databases. This extensive process involves many repetitive steps. That’s why it’s worth considering its automation.
It’s beneficial, especially for financial institutions that are responsible for the security of customers’ funds. Institutions want to get to know the partners they enter into a relationship in order to:
- counter financial crime,
- keep the organisation safe,
- protect all customers and stakeholders,
- comply with laws and regulatory requirements.
Does the KYC process have to be done manually?
Certainly not. The good news is that the basic tasks of searching external databases, internal databases, and sourcing information from open sources can be streamlined through robotization. The question is: what tasks can be automated? The answer is relatively simple. First of all, these are tasks involving gathering information from various databases. Before the applications that robotize processes, humans manually moved information between databases, such as copying records from one Excel sheet to another or extracting information from emails. Robots will perform such tasks excellently, working up to ten times faster than humans. In addition, they can easily operate at night or other times to avoid overloading systems (if required, of course).
On the other hand, automated processes are not suitable for data analysis or making decisions that have not been pre-programmed, although they can notify human supervisors. In such cases, human supervision is necessary.
Elements of the process that can be automated
The selected elements of the process that can be automated encompass:
1. Searching public registers (CEIDG, KRS), including looking for personal and capital links
An important element of the robot’s work is access to data. In Poland, access to registers such as CEiDG and KRS is open. This allows anyone interested to obtain basic information about entrepreneurs or companies. The use of RPA (Robotic Process Automation) automates and speeds up this process.
2. Identification of the beneficial owner
When programming RPA algorithms, various types of variables and parameters can be taken into account, such as the percentage of shares held by specific shareholders, to verify the beneficial owner.
3. Reviewing sanctions lists and politically exposed persons (PEP)
People are responsible for setting up these lists and keeping them up to date, while RPA checks that queries reach data collected on sanctions lists or PEPs.
4. Media search
Searching through thousands of articles about customers or potential business partners is nearly impossible for humans. Of course, it can be delegated to an appropriate agency to monitor the media, but this is a relatively expensive solution. For this reason, it is much better to have a company robot that can handle this task more efficiently. The most important issue is constructing vocabulary with focus words. This is a task for a human. The rest of the tedious work will be done by the algorithm, which will provide reports with links to relevant phrases.
5. Identifying high-risk industries and countries
Similar to sanction lists, robots make use of the available databases to help institutions avoid high-risk or unacceptable clients.
Advantages of automating processes using RPA
The advantages of automation include:
- speed of operation,
- easy monitoring of robot performance,
- quick modification of the RPA algorithm,
- operation according to a defined and repeatable pattern,
- cooperation and communication with people,
- low implementation costs,
- decision-making based on pre-programmed conditions and available or acquired data,
- non-stop operation if required.
Automating the simple and massive elements of the KYC process allows analysts to focus on complex, challenging, and non-obvious cases. This is due to the fact that the counterparty verification process follows identical, measurable criteria for all individuals and entities, over a predictable period of time. This increases the attractiveness of the analysts’ work, fosters their development and gives them the opportunity to face non-obvious cases, such as those involving money laundering (in AML departments) or possible fraud. KYC analysts, no longer burdened with the tedious work of finding basic information, have the time to go off the chart and focus on specific tasks.
Based on projects carried out by Sii experts in RPA, the key benefits of implementing such solutions include time savings, increased productivity, the ability to focus on key tasks, and reduced operational costs. This technology supports many business processes and enables automation and integration of numerous applications and environments, which is why more and more companies are opting for it. It is not only an investment with a fairly fast payback period and measurable profit, but also a tool that brings long-term benefits to the employees.
Summary
Despite the many advantages of automation, there are still areas where human engagement is necessary. That’s why Sii has created a unit that provides professional support to ensure compliance with legal requirements in the KYC process. Consultants not only carry out customer verification in full or simplified scope, but also manage the entire process – from mapping and analysis to resource allocation, implementation, quality control, and optimization.
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If you’re interested in RPA area, be sure to also take a look at other articles by our experts.
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