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Due Diligence Stressed at ACAMS 2016

Post Categories: Blog

By: Chris Dempsey, Sr. Software Product Manager – KYC


Is Your Bank “Spreading the (KYC) Peanut Butter Evenly?”

Coming out of ACAMS 15th Annual AML & Financial Crime Conference in Las Vegas last week, I saw several themes emerging in the AML/BSA/KYC space. The conference featured an impressive array of speakers and exhibitors from the commercial banking industry, fintech and regtech, as well as regulators and law enforcement.


One commercial banker summarized the conference very well by saying, “We don’t spread the peanut butter evenly on the bread in this business.” This sentiment was discussed in detail throughout the conference in several ways, with the key takeaway being that banks and third-party payment processors (TPPPs) need to deploy a greater variety of tools and processes to know their customer and know their customer’s customer. Over reliance on any one tool or process can leave blind spots for banks and TPPPs resulting in unseen risk within their portfolios, or worse; material findings from regulators.


Regulators made it clear that they are actively monitoring risk by assessing the effectiveness of programs and technologies banks use in the KYC/KYCC approach. Additionally, the expectation that banks keep up with technology and do not approach KYC/KYCC as a check-box exercise was made explicit in multiple sessions. Industry leaders also made the case that banks must not only be proactive in implementing AML/CTF programs for all products, services and geographies, but that they need to do a much better job in “baking in” the costs of compliance to any product they are planning to release to the market.


To more evenly “spread the peanut butter,” speakers from all sectors highlighted various approaches and solutions available to banks and TPPPs.


Top Takeaways from ACAMS 2016

Implementing the FinCEN Rule Change for Customer Due Diligence is the top concern for many in the industry. Beneficial Ownership will, however, be just one additional tool in the commercial bankers KYC/KYCC toolbox.


Hiring and retaining qualified analysts continues to hamper banks and TPPPs ability to implement robust AML/CTF programs internally. Opportunity to outsource components of or entire programs do exist, but banks need to be cognizant of the requirements and restrictions of using vendors for this critical component of their business, and accountability must remain explicitly with the bank.


Upcoming requirements will likely stipulate that ongoing monitoring must be done on all clients, not just high-risk clients, heightening the already heavy burden on compliance departments. This burden will likely further shift the build or buy/outsource decision for many banks.


Numerous banks rely too heavily on their customers to provide information and are not doing enough independent verification, especially in regards to Beneficial Ownership. Most banks do not have the resources or the expertise to be investigators and should take this into consideration when developing their BSA/AML practices.


The riskiest customers move to TPPPs as banks actively de-risk their portfolios. If your financial institution banks TPPPs and TPSs, special attention needs to be paid to these customers; however, regulators do not recommend de-risking. Instead, having a strong relationship and visibility into the TPPP’s customer base is essential.


To learn about G2 KYC Solutions and how G2 can help you take a risk-based approach and gain visibility into your portfolio, send us an email to schedule a time to meet.


To find where G2 will be over the coming months, hop over to our upcoming events page for details on travel and conferences.


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