Considering that banks and financial units are frequently subjected to criminal activities such as money laundering and terrorist financing, it undeniably essential to know that your customer's remediation is to corporations.
The Know Your Customer process is a control procedure that financial institutions providing financial services apply to customers to identify and prevent risks. In the KYC process, which plays an essential role in revealing the potential money laundering risk, customer information should be regularly protected and updated. With KYC Remediation, this information is regularly maintained and updated.
What is KYC Remediation?
KYC Remediation aims to ensure compliance with the cleaning and updating process of your customer's data to ensure it according to the most up-to-date regulations. The Risk Assessment, created according to the customer profile, should continue with the appropriate risk rating: Correspondingly, KYC remediation updates and edit of customer information collected through KYC.
Therefore, KYC remediation is the process of updating customer documents and information collected through KYC to meet regulatory compliance. Institutions must comply with regulations under AML / CTF. If rules are not followed, they may be exposed to severe ML / TF risks and suffer reputational damage. Businesses must have a comprehensive remediation procedure to conduct an accurate risk assessment that includes risk factors associated with customer profiles. A total improvement procedure is central to getting to know your customer and minimizing business risk.
KYC Remediation Process
One of KYC's priorities is to run a separate information gathering process for each client. After collecting enough data about a customer, the improvement process begins. The most common KYC remediation strategy is scanning, inspection, and clarification. However, companies can run their KYC processes by creating their remediation strategies. After the improvement process is completed, risk-based assessments on the customers' profiles with a risk-based approach determine the customer risk level of money laundering and terrorist financing. In line with the data obtained, monetary units report possible suspects to relevant authorities. The continuous change of customer profiles due to AML / CTF Regulations requires regular updating of KYC data. Businesses should have a better KYC optimization system for successful compatibility.
Remediation can be feasible automatically or manually. However, the primary purpose of KYC remediation is to distinguish the profiles of customers with potential money laundering risk from the risk-free profiles. Therefore, companies need to have sufficient customer information and detect money laundering and terrorist financing activities to prevent money launderers from entering the legal, financial system. For this reason, automatic remediation is preferable mostly for faster and more accurate customer scans.
Why is KYC Remediation Important?
There are decisions under AML / CTF regulations that businesses that carry out financial activities must comply with. In particular, FATF plays the most critical role in these decisions taken to deter financial crimes and prevent money laundering risk. Businesses are required to comply with the policies implemented by the Financial Action Task Force(FATF) Otherwise, they may be required to pay substantial fines. The KYC Remediation makes it easier for businesses to meet the obligations of the financial sector. Banks and businesses are required to report possible money laundering. However, constantly changing legislation and customer information and not detecting this change may cause the crime to be overlooked and the reporting process to be delayed. This negligence of businesses can hurt them enormously. This negligence of companies can cause them enormous damage. With the KYC improvement process, continually changing customer information is kept up-to-date. Continuous updating of customer information enables continuous risk assessment and eliminates a possible financial crime risk.
The Role of Sanction Scanner in KYC Remediation
Know Your Customer (KYC) is one of the essential practices for AML/CTF. Know Your Customer (KYC) is one of the primary methods for money-laundering prevention. What you must do to minimize your business's risk is to continuously and simultaneously update your customer information according to the changing financial regulations. Sanction Scanner is AML and KYC compatibility software. Sanction Scanner provides advanced PEP, Sanctions, and Adverse Media Screening services. With the Sanction Scanner, you can easily make KYC Remediation by creating a Risk Assessment suitable for your customer. For more information, contact us