kyc: know your customer, aml compliance challenges ...€¦ · kyc: know your customer, aml...

KYC: Know Your Customer, AML Compliance Challenges underlying China Banks 2018

50%

44%

33%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Repeated checksand manual

process

Lack of audit trailand evidence / recordsof checks performed

Lack of qualityreference data

Extended workinghours

Difficulty in settingup internal compliance

policy for all staffto follow

Others

78%

30%

57%

43%

30%

4%

Manual processes and quality data are the biggest challenges to China’s financial institutions.

What are the current challenges inyour compliance screening process?

What type of customer do you currently screen?

High net worth individual customers

41%Corporate customers with their senior management and beneficial owners

85%

Correspondent banks with their ownership structure and ultimate beneficial owners

80%

61%

Most screen correspondent or customer banks but almost half also screen High Net Worth (HNW) individuals. Accuity’s PEP data could be animportant component.

Counterparties or third-party payer

0%

10%

20%

30%

40%

50%

60%

70%

80%

PBOC AMT/CFT list Sanction List Politically ExposedPersons PEP

Stated OwnedEnterprise SOE

Adverse Media andenforcement data

59%

76%

67%

43%

56%

Sanction lists are fundamental to all banks and growing needs for PEP and other list are observed.

Which reference data do you need?

What are the challenges in identifying your customers as a PEP?

Lack of PEP database with comprehensive coverage

Hard to define a PEP

Identification of foreign passport

Others

50%

44%

33%

9%

Most of the financial institutions find that their greatest challenge to deal withPEP identification is their poor PEP database coverage.

74%

26%

4%

52%

30%

Public sources (annual report, commercialregistration information portal, etc.)

Public sources (annual report, commercialregistration information portal, etc.)

Direct from customers

In-house research

Third-party data provider

Others

Most banks use very manual processes for checking UBO with a quarter using a third-party provider.

How do you check owner(including ultimate beneficiary owners)information of your customers?

80%

43%

4%20%

Corporate customers with senior management and

beneficial owners

High net worthindividual customers

Correspondent banks with their ownership structure and ultimate beneficial owners

Others

UBO is found as the highest/ most significant impact in the KYC process

Which of the risk areas having the most significant impact on your currentKYC on-boarding process?

What is the frequency for AML/CTF checks on your (customers / trade transaction / counterparty)?

15% 17%20% 37%

Once every quarter Once every 6 months Once a year Others

Internal system integrated with screening function

Transaction monitoring

systems

Others Reference dataprovided by

partner / associations

Public sources(OFAC,EU, etc)

Third-partylookup tools

Others

What are the reference datasources used in your current

screening process?

What types of screening doyou currently have?

The vast majority of respondents (Financial Institutions) only have a transaction monitoring system and most use lookup tools. This could explain the compliance’s team frustration with lack

of automation and the reliance on manual work.

30% 72%2%

35% 31% 59% 4%

Have an automatic screening function

Reduce the false postive rate

Add on-going monitoringfunctions / automatically alert users

for new matches

Improve audit trail and record keeping functions

Improve the screening accuracy and set alert for high risks

accounts / payments

Have more updated and higher coverage for data (i.e. Sanction lists /

PEPs data)

Set up workflow for differentlayers of personnel to review the

screening results

Automation and accuracy/reduction of false positives are key improvements sought,Accuity’s Global Watch List and UBO

data could be an important requirememnt.

What improvements are needed for your current AML/CTF

screening system?

67%

52%

43%

30%

57%

48%

48%

0%

5%

10%

15%

20%

25%

30%

35%

There is an even split between team sizes. Most of the teams are nine or fewer people.Most financial institutions have less than nine employees in the compliance team.

Companies should constantly refresh and improve the compliance program via automation.

31%

26%

31%

4%

9%

1 - 3 4 - 6 7 - 9 Third-Party Others

What is the size of your AML / Compliance team?

Set priority in effective KYC Compliance Program with Accuity’s scalablesolution and complex data in order to optimise resources

and stay compliance ready at all times.

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At the recent KYC compliance conference in Shanghai, China, Accuity conducted a market survey with the leading banks’ compliance & AML professionals. Highlighted below is a synopsis of some of the key findings from the survey.