Understanding KYC Due Diligence: Basics to Best Practice

“Banks are deluded into believing they’re digitally transforming their organisation when all they’re doing is deploying new tools for yesterday’s industry…in other words, they’re simply playing catch-up.”

Does this sentiment sound worryingly accurate?

Your organisation has no doubt accelerated its digital transformation in the last few years. You’ve also likely invested vast amounts of capital and resource into improving customer experience, reducing cost-to-serve, and meeting the demands of today’s rapidly evolving regulatory landscape.  

But let me ask you a tough question – has the impact of all this investment really met with expectations?

It's time to start transforming for the future

Let’s imagine a future where complexity is simplified, you really know your customers, they really trust you, cost-to-serve is dramatically reduced, and compliance is embedded into every aspect of the customer lifecycle journey.

But did you know the technology already exists to make this future a reality?

This is Customer Lifecycle Intelligence (CLI), and it has the capability to drive your digital transformation further and faster than ever before.

Our whitepaper ‘How Customer Lifecycle Intelligence Can Help Every Bank & FSI Become Digital Future Ready’ explains why leading banks are already harnessing this differentiated strategy to help them:

• Win the right customers
• Accelerate onboarding
• Keep customer for life

Better Business, Faster

A great divide is emerging between those who are adapting to change, and those who are being left behind.

Investment in CLI will deliver the impactful transformation you’ve desired for too long. 

Download your free copy of our whitepaper today.

Following on from our recent series of regulatory roadmap briefings, FullCircl explores the impact of the Government’s latest commitment to tackling economic crime and improving transparency over corporate entities.

What is the Economic Crime and Corporate Transparency Bill?

Currently at committee stage in the House of Commons, the Bill follows on from the Economic Crime (Transparency and Enforcement) Act, passed in March 2022 in response to the Russia/Ukraine conflict. This legislation served to significantly simplify the process for imposing sanctions, identifying, and tracing illicit wealth, and preventing ‘oligarchs’ from seeking damages.  

The new Bill takes this a step further, aiming to mitigate the risk of bad actors taking advantage of the openness of the UK economy to perpetrate fraud, money laundering and organised crime. The government is committed to bringing this latest bill forward to deliver a wider-ranging suite of reforms on tackling economic crime and improving transparency over corporate entities.

The Bill will deliver:

• Reforms to Companies House
• Reforms to prevent the abuse of limited partnerships
• Additional powers to seize and recover suspected criminal crypto assets
• Reforms which give businesses more confidence to share information to tackle money laundering and other economic crime
• New intelligence gathering powers for law enforcement and removal of nugatory burdens on business

In terms of financial institutions’ ability to find the right customer, onboard them faster and keep them for life, it is the first point – reform to Companies House – that will have the biggest impact.

Why the need to reform Companies House?

The Bill aims to transform the role and operation of Companies House, which has come under fire from organisations including UK Finance for being “dysfunctional” and helping to facilitate business fraud. Banking leaders have also entered the debate, criticising the online register of UK-based companies. It’s worth pointing out that Companies House is itself in favour of reforms and wants to act as a preventor of fraud and economic crime.

The aim of the Bill is to ensure that information held at Companies House is more reliable and accurate. It will be given greater powers to question and challenge information that is submitted, as well as add or remove inaccurate information. It is also anticipated that further legislation will allow for the cross-referencing of Companies House data against other corporate data sources.

The Bill focuses on improving content at Companies House and delivering data protection in the following ways:

• Knowing who is setting up, managing, and controlling corporate entities
• Improving the accuracy and usability of data on the companies register
• Protecting personal information
• Ensuring compliance, sharing intelligence, and other measures to deter abuse of corporate entities

What does this all mean for financial institutions?

For financial institutions, transforming Companies House from a passive library to a proactive gatekeeper will deliver greater transparency, and greater confidence in the information held, as well as more accurate information for identifying and mitigating potential financial crime risks.

However, this is not going to happen overnight. It’s going to take time for Companies House to manoeuvre through this, and we can likely expect a phased approach to both implementation and remediation.

So, how to stay ahead of reform?

As UK Finance recently pointed out, a greater focus on transparency, data quality and reliability will require the harnessing of technology. Opportunities include:

• Automated data validations, screening, and cross-checking
• Machine learning and data analytics
• Data Matching and graph database technology
• Adverse media screening
• API-driven data sharing

The great news is that FullCircl can help you deliver on all these opportunities.

Improving decision-making has always been at the heart of what we stand for. We welcome these reforms and the impact they will have in terms of greater transparency, accuracy, and reliability of data for our financial service customers.

It’s also great news for us. Companies House is just one of many data sources our Customer Lifecycle Intelligence solution harnesses to deliver super-connected, enriched data and unique insights on companies and the officers inside them. The more reliable the data, the more valuable our tools, applications and business logic become – helping our customers find customers that fit their risk profile, onboard them quicker and keep them for life.

Customer Lifecycle Intelligence is not static data - we deliver a multi-dimensional view that combines advanced data ingestion, validation, data matching, and augmentation with real-time media screening and more. All neatly delivered via web app or API.

Whether it’s automated data collection and critical checks, ensuring compliance, confidently targeting the right customers, or growing advocacy through frictionless onboarding and support, FullCircl is helping the UK’s leading banks and financial services providers do Better Business, Faster.

Take a read of some of our resources or customer stories to find out more. When you’re ready to talk, get in touch with a member of our team today.

Increasing complexities of empowered customers, digitally enabled challengers, and the pace of technological innovation have disrupted the banking industry since the pandemic.

Three years into the ‘new normal’ business as usual is simply no longer an option. Banks need to rapidly adjust to demanding customer expectations, and deal with the high degree of complexity when it comes to profitably acquiring, onboarding, and serving the right customers at scale.

A year ago, we held an open discussion with senior banking leaders from across the sector – big, small, traditional, challenger, private and commercial. We delved deep into what the future looked like, what challenges they faced and where the biggest gains would be made.

How far along this journey are we in 2023?

What does the new ‘new normal’ look like?

In 2022, two-thirds of banking leaders believed that they would lose market share within two years if they didn’t make significant progress. Since then, they’ve been hit with yet more challenges.

The global economy is in a fragile state as we head into 2023. Russia’s invasion of Ukraine, supply chain disruption, high inflation, rising interest rates and tightening economic policy have created an unprecedented level of uncertainty, both for banks and the business customers they serve.

These challenges have significantly increased the level of urgency when it comes to transformation. Pressure is mounting to increase the pace and scale of change in a manner that delivers impactful results, and a great divide is emerging between those adapting to change, and those who are being left behind.

In our guide ‘Banking in the New Normal’, we analyse the insights of senior banking leaders, uncover where they believe the biggest gains will be made, and explore not only why the winners will be those that deliver on these priorities, but also how they can do it in the quickest and most impactful way possible.

Your bank can no longer wait to innovate. Download your free copy now.

UK Finance has brought back its popular Regulatory Roadmap webinar series. We joined live to bring you all the highlights on the key topics and issues impacting UK B2B financial institutions. 

Read on as we delve into its recent payments regulation webinar.

Regulatory change has been a dominant theme in the payments sector in recent years.

The payments landscape is fast-moving. As the use of payments, payment volumes, and digitalisation of the economy evolves, the pace of change is not likely to slow as we approach 2023. Regulators are being forced to move quickly and adapt in ways that support innovation and competitiveness while protecting financial stability and resilience.

The session explored the key headlines in payments industry regulation including the new consumer duty, Confirmational of Payee (CoP) extension, account-to-account transaction standards, open banking, and the forthcoming changes to the Payment Services Directive (PSD2).

Here are our three highlights:

Know your Supplier (KYS) is more crucial than ever

Under the scope of the new consumer duty, an issuer will be responsible for ensuring agents and distributors comply with the consumer duty of care requirements. Issuers will need to examine how every part of the supply chain impacts the consumer, even if indirectly, and they will need to develop monitoring and data collection capabilities to continuously monitor the impact on consumer outcomes.

In addition, critical third parties will also be brought into the scope of regulatory supervision – from technology providers and data outsourcing to communications providers and beyond. Payment service providers increasingly rely on third-party services, and regulators are now addressing the systemic risks posed. The Financial Services and Markets Bill sets out a statutory framework for overseeing the resilience of services third parties provide, that many financial firms rely on.

Onboarding providers is going to get a whole lot tougher

Currently, the CoP framework covers 92% of transactions in the market, but the extension aims to bring into scope 98% coverage. This will mean onboarding around 400 more providers, with the aim of reducing authorised push payment (APP) fraud and accidentally misdirected payments, and providing certainty to a greater number of payment system users that they will have CoP protections when they make and receive payments.

This represents a huge undertaking, with current average onboarding times of around 9-12 months. Anything that can be done to reduce onboarding times will be welcomed by the industry.

Data is more important than ever

Whilst not a discussion topic in its own right, as we listened it become obvious across all the themes discussed that as the regulatory landscape in payments evolves rapidly, the value of data is greater than ever.

From onboarding at scale, ensuring supply chain resilience to improving continuous compliance, delivering on risk assessment and fraud management requirements, as well as meeting customer expectations and consumer protection requirements, driving efficiency, and delivering innovation, the value of data is immense.

So how can FullCircl help?

Read our guide to how Customer Lifecycle Intelligence will help power the next generation of payment innovation, or get in touch with a member of our team to understand more about how we can help you get ahead of the new regulatory landscape.

UK Finance has brought back its popular Regulatory Roadmap webinar series. We joined live to bring you all the highlights on the key topics and issues impacting UK B2B financial institutions. 

Read on as we dig into their webinar, COP27 and Beyond: UK Sustainable Finance Rules. 

The global sustainability landscape has been tumultuous since COP26 in the autumn of 2021. And yet, it’s been a busy year for Environmental, Social and Governance (ESG) regulation both in the UK and globally, with lots of progress made to move the agenda forward on key areas such as the transition to a net zero economy, embedding ESG across all regulatory functions (not just policy, but also holding organisations to account through enforcement), and the package of measures to address the rise of ‘Greenwashing’.

But the thing that stood out to us during the discussion was that there is still not enough reliable data disclosure and that this is a significant problem for banks and financial institutions when it comes to risk management, compliance, and the opportunity to take the lead in accelerating progress amongst clients, as well as achieving their own ESG ambitions.

The ESG data gap

Incorporating ESG metrics into investments, product and service development, due diligence, and KYC decision-making is an important way to mitigate risks, protect reputations, improve customer perceptions, generate long-term growth, and, as the panel pointed out, protect from the risk of litigation.

There is rapid development of disclosure requirements and moves towards standardisation of ESG reporting requirements, as well as increasing numbers of companies proactively publishing ESG progress reports. However, the quality, comparability, and coverage of data is still inconsistent, lacks transparency, and creates significant difficulties for banks and financial institutions when it comes to scrutinising the integrity of client commitments and monitoring progress toward targets.

How to address the imperfect data challenge?

With the regulatory landscape evolving at pace, banks and financial institutions cannot shy away from tackling the gaps in availability and consistency of ESG data.

As a member of the panel pointed out, financial institutions not only need robust and transparent data that can be tracked, but they also need to identify patterns in that data to make up for gaps and inconsistencies - including identifying potential ‘Greenwashing’. But for many, especially the smaller organisations, this seems like a daunting and expensive task.

Hence why many still don’t have a centralised ability to collect and analyse ESG data.

ESG data takes many forms and can be found in many places (internal, external, structured, and unstructured). It is highly dynamic, making it hard to keep up let alone analyse and react to, and finally, because ESG data is big data and analysing it is a huge undertaking.

One of the panelists rightly pointed out that to date there is no overarching ESG solution for banks, financial institution or other businesses, and so innovative data providers are picking up the slack when it comes to addressing the imperfect data challenge.

How is FullCircl bridging the ESG data gap?

Our Customer Lifecycle Intelligence (CLI) platform is helping banks and financial institutions evaluate ESG related risks and opportunities.

FullCircl’s Business Information Graph (B.I.G)™ ingests billions of data points every day from a multitude of official and third-party sources.  We match and enrich this information to unlock the most accurate and contextualised view of every business in the UK and Ireland – giving our users an up-to-the-minute view of what they need to know about an organisation, large or small, for:

• Prospecting - Grow new business by identifying sustainable sectors and organisations that meet ESG criteria.
• Due diligence, KYC, and Onboarding – effectively determine and measure the ESG footprint of companies.
• Green finance – identify green and sustainable projects and companies for new investment opportunities.
• Product and service development - respond to consumer demand for sustainability-driven investment products.
• Stay ahead of regulatory and compliance requirements – monitor and respond quickly to regulatory and reporting changes.

We can help you get ahead of the new regulatory landscape. Contact a member of our team today to understand how we align with your sustainable finance agenda. 

As UK Finance brings back its popular Regulatory Roadmap webinar series, we joined live to bring you all the highlights on the key topics and issues impacting UK B2B financial institutions. 

Read on as we dig into their webinar, 'What Next for UK Capital Markets?'

What next for UK Capital Markets, and what role will technology play in the evolution?

It’s an exciting time for UK Capital Markets.

The UK is home to some of the oldest and most developed financial markets in the world, and we have a unique opportunity post-Brexit to improve these markets, securing their long-term future prominence and global competitiveness.

On 9th November 2022, UK Finance hosted a panel of experts from the FCA, London Stock Exchange, investment banking, and fintech to discuss regulatory reform and rejuvenation, the deeper purpose of capital markets, and future challenges and opportunities.

Keen to hear more about the intersection between the evolution of capital markets and the digital revolution, here’s what we uncovered about the positive impact technology will play as we as ask the question - ‘what next for capital markets’?

Evolution, not revolution

UK capital markets already have all the ingredients for success. There is huge momentum and appetite for policy reform to make sure that not only are primary and wholesale markets working well, but also how they need to evolve to further strengthen the UK’s position both domestically and globally.

There is encouraging progress being made following a range of initiatives such as Lord Hill’s Listings Review, the Wholesale Markets Review, the Primary Markets Effectiveness Project, and the Financial Services and Markets Bill. We can expect a phased and multi-level approach to change and reform over the next few years.

There will be lots for banks to grapple with, so how can technology help?

Embracing innovation

As one panelist pointed out, when you investigate the pipes and plumbing of how markets work, there are lots of opportunities for digital innovation.

Whilst delivering increased certainty of execution and reducing cost were two of the primary motivators of digital disruption highlighted by the panel, there are many other areas in which automation, data, and agility can ensure that UK capital markets are fit for the future. The panel highlighted:

• Improving the research environment,
• Improving corporate governance procedures,
• Improving audit standards,
• Maintaining transparency,
• Cutting out the middlemen,
• Cost efficiency,
• Quicker access to markets,
• Communication.

I would add to that list:

• Rising to the challenges and opportunities of increasing regulation,
• Evolving to meet client expectations,
• Meeting head on the issue of intensifying competition,
• Reducing inefficiency,
• Detecting and investigating financial crime,
• Staying at the forefront of the ESG agenda.

What is clear is that as UK capital markets evolve, banks need to engage with advances being made in technology and data science to address the challenges and opportunities presented by the current pace of evolution if they are to innovate, retain, and grow the prominence of UK capital markets in the years ahead.

How can FullCircl help?

We’ve only touched on a few of the key points here, but we created FullCircl to solve the big challenges we see on the horizon for the regulated industry sectors we serve. In helping our customers do better business, faster we provide:

• Business Information Graph (B.I.G) & API – to deliver super-connected enriched data and insights on companies and the officer inside them – updated daily
• Rules-based decision engine – a configurable, low-code decision engine to screen and onboard in seconds based on specific risk profiles and compliance rules
• Monitoring and business development – continuous monitoring and timely intelligence for proactive first engagement and remediation

We can help you get ahead of the new regulatory landscape. Contact a member of our team today to find out how we are helping our customers do better business, faster.