Unsung heros

Published: February 2, 2018

Unsung heros

As KYC requirements become more complex, many financial institutions are calling for specialist third parties to save the day.

Know your customer (KYC) is becoming increasingly challenging for banks. As they contend with a wave of new regulations – not least the EU’s fourth anti-money laundering directive (AMLD 4), which came into force last June – they are devoting ever more resources to compliance.

According to a Thomson Reuters survey, large financial institutions saw their KYC-related spend surge to US$150mn in 2017, up from US$142mn the previous year. This figure is expected to rise by at least another 13% this year. Meanwhile, major international banks are spending between US$900mn and US$1.3bn a year on financial crime compliance.

This kind of investment is no surprise, given the potential costs of getting it wrong. Since 2009, regulators in the US and Europe have imposed hundreds of billions of dollars in sanctions on banks for various forms of misconduct. Many of these fines have to do with inadequate anti-money laundering controls. 

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