The challenge of KYC checks for IFAs

Tony Machin, CEO of TrustID, discusses how IFAs can conveniently comply with KYC and AML requirements without the money and resources available to larger financial organisations.

As an Independent Financial Advisor, you’re legally required to perform Know Your Customer (KYC) checks as part of Anti-Money Laundering (AML) compliance. But, even without the legal imperative, there are compelling reasons to follow due diligence. Properly conducted KYC checks can not only guard against money laundering, but also prevent corruption and fraud. All these issues can have serious consequences – both for your business and for the wider society that we live in.

The challenge of implementing KYC for IFAs

The need for thorough and transparent KYC checks is just as important for IFAs as it is for a large investment banks – although the depth of the processes required may vary, according to the nature of your business and your likely risk profile. But the particular challenge for IFAs is how to conduct robust and cost-effective KYC checks, and keep up with changing requirements, with limited resources. According to International Banker, most major banks dedicate over 10% of their budget to regulatory compliance and governance – but IFAs often lack large teams or sizeable budgets to carry out these critical checks. So, how can IFAs implement an efficient and robust AML compliance procedure, without the resources of larger organisations?

How technology can help

Smaller organisations have traditionally conducted manual KYC and AML checks. But manual checks can be time-consuming, inconsistent, and even based on outdated information. And of course, they are resource heavy.

A more modern and effective approach is to use an automated KYC system. The good news is that this technology is no longer reserved for large businesses. Smaller organisations can use automated KYC systems as a way to carry out straightforward and affordable KYC checks online. Moving to an automated AML service can help you comply with the latest legislation, strengthen your identity verification and even improve the on-boarding experience for your customers. Here are just some of the benefits that technology could bring to you as an IFA:

• Reduce effort
  Capturing customer information through an automated system makes compliance simpler and gives you a consistent, robust process, no matter who performs your KYC checks. Clear, downloadable reports also make results easy to understand and give you a straightforward way to demonstrate your AML compliance for an internal audit or visit from your regulator.

• Save time
  Online AML platforms can carry out KYC checks in minutes. What’s more, with electronic identity verification, you no longer need to manually check documents and you can store the results electronically, removing the need to keep paper copies. Automated KYC services also give extra reassurance by checking and monitoring your customers against political exposed person (PEP) or sanctions lists. Many providers offer the same service level agreement to all businesses, to ensure AML compliance is quick and easy no matter what size you are.

• Make checks from anywhere
  You can access online KYC check services from any smart device or PC. This allows you to easily capture and upload an image of a client’s ID, wherever you meet them. Some KYC providers also offer additional features. Remote upload, for example, allows customers to share ID documents over a secure link. For higher-level security checks, facial recognition software can be used to match a candidate’s selfie with the photograph in their identity document.

• Enjoy peace of mind
  With access to industry-leading technology you can enjoy greater confidence in your protection from fraud. TrustID’s online KYC checks, for example, start with best-in-class identity verification. We assess the authenticity of identity documents from across the globe using a combination of AI, biometrics, and human expertise. This saves you from the need to train and maintain in-house document experts, reduces your chance of approving fake documents and prevents customers from using a fraudulent identity to access your services.
  
  
• Only pay for what you use
  Investing in new services or technology during uncertain times can be risky, but some ID service providers offer a low minimum order and don’t tie you in to long-term contract. Look for a KYC checking service that offers modular features that you can add over time as your requirements change, or a pay-per-check pricing model that lets you scale up or down with your customer demands.

Remaining compliant with KYC and AML regulations will always be an issue – but thanks to new affordable technology, there are now alternative options for KYC checks that are convenient and robust, and accessible to all business sizes. In fact, smaller businesses like IFAs could arguably benefit the most from automated KYC checks, as they offer a quick and easy way to comply and therefore leave you more time to focus on your core business.