What is Perpetual KYC for AML Compliance?
Perpetual KYC for AML Compliance is an approach to KYC CDD that provides near-real time Risk Management for financial institutions. Perpetual KYC methods provide high value for banks and for other Risk-focused businesses.
AML Partners defines the scope of Perpetual KYC much more robustly than just enhancing Periodic Review requirements for AML Compliance. AML Partners defines Perpetual KYC as supercharged Risk Management using three key components that are automated for continuous updates. These three components are data imports, screening, and Risk monitoring.
The first component of Perpetual KYC is leveraging a Perpetual Data Interface. The second component is leveraging Perpetual Screening. Perpetual Screening includes Sanctions Screening, Adverse Media Screening, and Politically Exposed Persons (PEPs) Screening. The third component is Perpetual Risk Monitoring of Key Risk Indicators in near-real time.
AML Partners emphasizes that Perpetual KYC will not replace the process of Periodic Review as some claim. Rather, Perpetual KYC provides near-real time Risk Management and intelligence. And in so doing, the Perpetual KYC framework supports successful Periodic Reviews and makes the process quick, easy, and accurate.
1. Perpetual Data Interfaces in the Perpetual KYC Framework
Perpetual Data Interfaces are central to the Perpetual KYC Framework. Some of the larger and more innovative data vendors have developed processes to keep their data up to date at all times. Institutions that seek to leverage Perpetual Data Interfaces should seek out those vendors. Institutions should also choose RegTech software platforms that can automate interfacing with this data and that can also ingest and analyze the near-real time updates.
Dun and Bradstreet is one example of a data vendor that provides frequent updates to AML platforms designed to handle ‘perpetual’ data imports. Institutions with a Dun and Bradstreet data subscription and cutting-edge AML software can maintain near-real-time ownership information. Institutions can choose from options that include the following:
- Bulk-Update Seeding—With this option, institutions can choose to seed their entire KYC collection with Dun and Bradstreet data.
- User-Submitted Updates–With this option, an institution can submit a client to ad hoc screening. With ad hoc screening, the AML Compliance software platform can automatically send a request to the vendor to update that customer’s data.
- Periodic Review and/or KYC Refresh – With this option, an institution configures its AML Compliance software platform to automatically run a refreshing of KYC data at the beginning of a periodic review. This option lets end-users refresh a KYC CDD file so that it is completely up to date with data interfaces and crucial intelligence for Risk Management.
- Push Updates – The push-updates option delivers to subscribers near-real time updates of all data provided by D&B.
Leading AML Compliance software can now deliver this range of choices to institutional end-users. Compliance professionals at financial institutions now have the power to choose the Perpetual Data Interface options that best meet their needs for near-real time Risk Management. Perpetual Data Interfaces in the Perpetual KYC framework provide crucial Risk Intelligence that protects institutions in near-real time.
2. Perpetual Sanctions, Negative News and PEP Screening in Perpetual KYC
Perpetual KYC also requires configuring a perpetual option for Sanctions Screening, Negative News or Adverse Media Screening, and PEP Screening. Institutions can now choose among data vendors who offer complete seed-data lists and also delta lists. The delta lists show changes from the seed data.
For example, Institutions can leverage LexisNexis® data to maintain near-real-time screening for Sanctions, Adverse Media (i.e. Negative News), and Politically Exposed Persons (PEPs).
The top AML Compliance software platforms can download and ingest LexisNexis data records that are used for various screening tasks during KYC onboarding. Those data files are then used by the AML software to conduct standard KYC screening during the carefully configured onboarding workflow.
The perpetual part of this process requires institutions to configure their screening engine to automatically check with their data provider—LexisNexis, for example–to initiate regularly scheduled full database scans. These ‘perpetual’ screening scans can identify all of the institution’s customers affected by any LexisNexis changes. The screening engine would also look for changes to any principles in a customer record.
And since leading screening engines now offer robust de-duplicating capabilities, the institution can expect its screening engine to automatically de-duplicate appropriate items and present for resolution only cases with new hits.
3. Perpetual Risk Monitoring in Near-Real Time in the Perpetual KYC Framework
The third key element in Perpetual KYC is Risk Monitoring. Virtually every financial institution grapples with the challenge of additional Risk-relevant data being pulled into a customer record after the Risk Rating has already been calculated. Sometimes, that new data would affect an institution’s assessment of Risk for that customer.
Prime examples of new information that might appear during Perpetual Screening include newly identified Politically Exposed Persons (PEPs) or new Adverse Media. With cutting-edge AML software platforms, the institution’s authorized users can configure their AML software to conduct automated Perpetual Risk Monitoring.
For example, when additional Risk-relevant data appears, modern AML software can automatically reassess Risk for that client. And if a reassessment raises concerns about the level of Risk based on the new information, end-users can configure their AML software to recognize and warn the institution about the elevated Risk it now faces.
Summary of the Basics of the Perpetual KYC Framework
Perpetual KYC opens incredible new opportunities to monitor and manage Risk in commercial financial institutions and beyond. With Perpetual KYC, institutions can access and monitor near-real time intelligence crucial to Risk Management and AML Compliance.
To remember the basics of Perpetual KYC monitoring, remember three core elements in managing Risk: Data Imports, Screening, and Risk Monitoring. With today’s advanced technologies for AML software and related GRC tools, adding an automated perpetual approach to each of those elements can supercharge your Risk Management and Risk Intelligence.
And while Perpetual KYC does not replace Risk-Based Periodic Review/Refresh of your KYC files, Perpetual KYC does automate and integrate the work of Periodic Review to achieve low-touch near-real time accuracy with extraordinary efficiency.
To learn more about Perpetual KYC and how it can elevate your Risk Management practices, contact us today.
With AML Partners’ platform technology for RegTech, updating and upgrading your AML and eGRC software solutions is easier, faster, and much less expensive. Contact us today to explore how platform technology and our end-to-end AML Ecosystem powered by the RegTechONE platform–can transform the efficiency and effectiveness of your unique AML Compliance efforts. RegTechONE software for AML Compliance includes fully integrated modules for CDD KYC software for on-boarding, behavior and transaction monitoring software, and sanctions screening software for comprehensive AML screening. And AML Partners simplifies your end-to-end fully integrated AML Compliance efforts even further with an optional Subpoena Search module for FinCEN 314a and similar subpoena searches. Contact us today to learn about our proof-of-concept option or schedule a demo of RegTechONE, the AML software ecosystem. With extraordinary configurability and built for API extensibility, the RegTechONE AML software platformpowers not only an end-to-end AML software solution but also vendor management, AML client lifecycle management, eKYC Golden Records, Perpetual KYC, and so much more.