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Risk or opportunity?

Tackling Financial Crime and
Know Your Customer compliance

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With imminent regulatory changes, continuing remediation activities and an ever-evolving technology landscape, Financial Crime and Know Your Customer (KYC) compliance is an area still in a state of flux.

Our 2016 KYC survey findings reveal that 60% of firms still have remediation activity outstanding, despite almost all of our respondents in 2015 predicting that their remediation activities would be completed within 12 months. Firms' Boards are now increasing their focus on KYC with the number of firms looking at transitioning to a KYC utility increasing fourfold.

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10 Billion

About the survey

Our 2016 survey provides a snapshot of the current state of Financial Crime and KYC compliance at more than 20 global financial institutions.

Representing the views of senior executives from firms with revenues totaling over £500 billion, we explore the common risks and opportunities that financial organisations are confronted with – and how they are handling these.

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KYC Report brochure

Change is the new normal

Despite significant investment in changing risk and compliance functions over the last 18 months, there is no sign this is slowing down.

40% of organisations highlight significant ongoing change to risk and compliance operating models, client onboarding processes and financial crime policies and procedures.

KYC report diagram

KYC board diagram

Board interest has increased

KYC compliance has not only maintained its importance in the boardroom, but has become an even greater focus since our last survey.

60% of firms highlighted KYC as a high priority for the Board, an increase of 6 percentage points since our 2015 research.


Considering new approaches

More than half of firms (53%) are either considering, or actively transitioning to, an outsourced utility to perform all KYC-related activities. This represents an increase of over 25% on our last survey.

Yet one in three firms highlight 'change fatigue' as a primary barrier in moving to a different model.

KYC considering new approaches diagram

KYC remediation diagram

Remediation

60% of firms have some or significant levels of remediation activity, down 17% on 2015.

But, firms should not be complacent – there is still a significant volume of work to complete. Effort focused here is a continued pressure on time and resource, which could otherwise be put to other operational improvements.


The future of financial crime

Firms are split evenly between those who are on schedule to meet KYC and Financial Crime compliance requirements (45%) and those who are behind schedule (44%).

Just one in five firms is confident in its ability to respond to all future changes to sanctions.

KYC financial crime diagram

Conclusions

Our result demonstrate a clear shift in approaches and behaviours as firms continue on their regulatory compliance journey.

More firms than ever are exploring KYC utilities but overcoming change fatigue will be critical to success. Over 50% of firms would consider these more aggressively if the regulator provided clear approval of a particular approach.

With 60% of firms experiencing a backlog in remediation activities, firms are weighed down by legacy issues that hinder a more strategic approach to compliance. Balancing these competing short-and long-term needs will be key to gaining competitive advantage.

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Our experience

We helped Thomson Reuters launch the market's first managed service for 'Know Your Customer'.

"The talent they presented us with really demonstrated that they have good depth on the bench. They are a very experienced, very professional, supportive firm."

Anna Mazzone, Thomson Reuters

We helped Thomson Reuters launch the market's first managed service for 'Know Your Customer' [_EY-nwW4x7Y]

Contact us

Our expertise and experience in KYC gives organisations confidence to transform their operations. To find out how we can help you manage your KYC activities, please get in touch.

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Gavin Neilson

Gavin Neilson
PA financial services expert

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