In December 2016, fintech news platform Finextra, in association with mobile capture & identity verification software solutions provider Mitek, published a white paper entitled ‘Digitalising KYC: a win-win for Financial Institutions and Regulators’.
Regulators identify the financial services industry as critical in the fight against terrorist financing, and this is reflected in regulations aimed at strengthening anti-money laundering (AML), anti-terrorist financing (ATF), and know your customer (KYC) activities in financial institutions. Consequently, significant obligations have been placed on the industry.
According to the Government Accountability Office, financial institutions in the US were fined a total of USD 12 billion between January 2009 and December 2015 for violations of bank secrecy, AML, sanctions, and related regulations. These types of fines are indicative of the importance for banks to ensure compliance with KYC and AML regulatory measures.
According to the report, technology and regtech could help to free up large sums of operational and capital expenditure that are currently spent on compliance, which could potentially expand firms’ capacity to innovate. For European banks and financial institutions, the success of digital onboarding will depend on the adoption of cost-effective enrolment methods that meet all compliance standards while also offering a pleasant, secure, and instant user experience.
The paper concludes that, with regulators increasingly embracing, and even encouraging fintech solutions, the time is ripe for financial institutions to start digitalising their KYC processes. The emergence of innovative digital solutions for KYC that meet the needs of consumers and regulators is proof that seamless mobile user experience and strong and secure identity verification need not be mutually exclusive.
To read or download the full white paper, click here.