Know Your Customer (KYC)

In Commodities, Equities, Exchange Traded Derivatives, FX, OTC Derivatives, Regulation, Thinking by New Link Editor

The importance of Knowing Your Customer

In the wake of the 2008 crash, the regulatory frameworks governing anti-money laundering (AML) and Know Your Customer (KYC) due diligence practices have become more onerous for financial services organisations.

One of the key concerns around these regulations, however, is that the regulators have not provided any clear guidance about what standards of adherence they expect, leaving the interpretation of what’s required to achieve compliance to the discretion of financial service providers. New Link Consulting’s bespoke KYC services offering is proving to be an asset to financial organisations struggling to negotiate this aspect of their operations. Working in partnership with clients, New Link can provide a range of solutions to the internal and industry challenges raised by KYC due diligence regulations to ensure that your organisation can meet its obligations in this rapidly evolving and complex compliance environment.

Due Diligence Services for Financial Institutions

The main principle underlying KYC guidelines is to ensure that banks and other financial institutions deploy sufficient efforts to establish the bona fides of their clients. This ensures that they cannot be used, either intentionally or unknowingly, for money laundering activities and for any form of identity theft, financial fraud or the financing of terrorist activity. Having effective KYC protocols in place helps financial institutions to manage the risks associated in managing large scale, often complex and international transactions more effectively. In addition, the advent of more stringent regulation around KYC due diligence has led to the likelihood of ever more punitive fines being levied for non-compliance, making the case for introducing effective risk management mechanisms even more imperative.

In this climate, many firms wish to ascertain how best to optimise their KYC compliance processes to meet the latest regulations, as well as how to scale up and enhance their existing processes to accommodate their changing client base. Inevitably, given the rapid scale of change in the regulatory framework, many firms have developed backlogs of KYC cases requiring urgent remediation to bring their existing portfolio of clients to an acceptable level of compliance.

New Link Consulting services through the KYC life cycle

New Link Consulting has the capabilities and expertise to provide its clients with support through a wide range of processes in the KYC life cycle.

Services include supporting firms through the KYC process with new client acquisitions, through to conducting remedial reviews of existing client portfolios, along with managing any resulting off- boarding activities required. New Link Consulting tailors its support to individual firms’ requirements, and is able to offer a rapid response team to deal with specific issues, or longer term support through the entire KYC life cycle.

Increasing regulatory demands are having an impact on wider practices, such as client on-boarding, which require additional checks to be made and data captured for client accounts. These include accurate identification of the type of entity being on-boarded (eg MiFID or FACTA classification) and capturing of unique industry identifiers, such as GIIN and TIN (as required by FACTA and CDOT regulations). New Link Consulting supports firms to meet these growing requirements, both as part of ongoing on-boarding of new clients, as well as remediation of existing client portfolios to ensure compliance with the new obligations.

The KYC life cycle

New Link Consulting works in partnership with its client firms, to ensure seamless hand-offs for processes they either need or wish to retain processing responsibility for. Many companies are now looking to source part of the data and documentation required to achieve KYC due diligence compliance from external market utilities. With its unrivalled knowledge of the KYC arena, New Link Consulting can connect firms to the most appropriate utility to meet their needs, and facilitate decision making during vendor review processes.

New Link Consulting’s KYC service mix

New Link Consulting deploys experts from within the KYC industry, supported where necessary by teams of trained consultants.

Our practitioner led approach ensures firms benefit from a wealth of market insight of KYC and the wider regulatory landscape. Our ConnexCity service brings experienced, ex-City practitioners together to execute managed services from locations outside of the City but within the London commuter belt. It is this blend of experience and location footprint that enables us to execute high quality, complex operational activities for firms, at a compelling price point. We have the ability to mobilise our teams quickly across our range of services, with a flexible, delivery focused pricing model.