Key Points
- The need for digital and perpetual Know Your Customer (KYC) practices is growing in the financial sector due to compliance purposes.
- Perpetual KYC (pKYC) represents an ongoing and real-time approach to customer due diligence, presenting an alternative to traditional periodical KYC checks.
In a presentation by RegTech firm ComplyAdvantage, Napier COO Greg Watson detailed the role and advantages of pKYC. Watson highlighted the heavy operational cost associated with periodic KYC refresh cycles that require significant manpower and pose training and resource-related challenges. The automated nature of pKYC not only ensures the accuracy of customer data but also guarantees consistent adherence to current regulatory norms.
Digital KYC can negatively impact business operations, particularly when there is a spike in workload due to policy changes or remediation work. Firms often need to realign resources to meet regulatory requirements, which can divert critical attention from the main business. This risk and impact on business operations are significantly reduced with the use of pKYC.
Watson further noted that with the vast volume of compliance requirements, traditional KYC methods often struggle to manage associated risks efficiently. Many regulatory bodies stipulate periodical refreshes for KYC and require consistent monitoring of KYC risk. pKYC significantly reduces the risk and complexity of staying compliant.
The rising popularity of pKYC is largely driven by the need to maintain compliance with growing customer bases without being burdensome. Given the increasing pressures coupled with the advantages of pKYC, many industry thought leaders consider the replacement of traditional KYC by pKYC inevitable.
Those wanting to gain a comprehensive understanding of Regulatory Technology (RegTech) including pKYC can enrol in the Professional RegTech Certificate course, which offers a real-world exploration of the industry, including data reporting, KYC and onboarding, anti-money laundering practices, and cybersecurity.
