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On 14th March 2023, FullCircl joined some of the UK’s leading financial crime thought leaders to share our expertise and key insights into the best practice Anti-Money Laundering (AML), compliance, and anti-fraud strategies helping financial institutions gain competitive advantage in the field of regulatory compliance and stay ahead of KYC requirements.
The highlight was the main stage panel discussion, hosted by our very own EVP Identity Solutions, Warren Russell.
Warren was joined by Stephen Frame, CCO & MLRO at Caxton, Helen McHugh, BDM at Transact Payments, and Phil Seymour, Senior Risk and Compliance Officer at Payabl. Together they discussed how financial institutions (FIs) can look to technology to ensure compliance at a time when the UK and European regulatory landscape is becoming ever-more complex.
Topics included how to balance the need for KYC compliance whilst managing customer expectations, the potentially prominent role AI might play in KYC processes, the future of compliance, and how FI’s can stay ahead of regulation.
Here's our key takeaways from the event…
The 2024 regulatory environment
Stephen Frame identified 2024 as the busiest year he has ever known for regulatory change.
It is certainly set to be big year for FIs. We can expect evolving requirements around AML and KYC regulatory compliance, PEPs, sanctions, and Ultimate Beneficial Ownership. The implementations of the Economic Crime and Corporate Transparency Act, The Financial Services and Markets Act, and updates to the 6th Anti-Money Laundering Directive and The Payments Services Regulations, as well as increased scrutiny of cryptocurrency, authorised push payments, ESG, and of course the role of artificial intelligence (AI).
In its recent plan for the year ahead, the Financial Conduct Authority (FCA) highlighted its bold strategy of far-reaching reforms aimed at reducing and preventing financial crime, improving the integrity of the financial system, and ensuring the UK remains an attractive place to invest. As the panel pointed out, the FCA is becoming more proactive in developing regulations and informing FIs on how best to comply.
So, what does this ocean of pressure really look like for compliance professionals?
The role of compliance is changing
The panel agreed we’re moving away from compliance being a tick-box exercise, to being at the forefront of FI activities. Accordingly, there must be a shift in the FI mindset towards becoming more compliance focussed.
Traditional compliance check lists are simply not effective in such a pressurised regulatory environment. A more dynamic and proactive approach to AML and KYC compliance is required, not only to remain responsive in this fast-moving regulatory environment, but also to stay ahead of ever more sophisticated financial crimes.
The panel also pointed out that there’s no excuse for manual KYC processes in 2024. High profile failures in AML and compliance stand as testament to the risks of failing to embrace technology. Data analytics, digital identity verification, enhanced due diligence, and perpetual eKYC/eKYB now form a fundamental part of compliance best practice and effective management of financial crime risk.
Not only that, but technology is also redefining compliance by streamlining onboarding processes and enhancing customer experiences.
How should FIs need balance compliance and experience?
In addition to further integration of technology in AML and KYC checks, and more proactive approaches to risk management, a big focus for FIs in 2024 will be increased efforts to balance regulatory compliance with exceptional customer service. To this end, the panel believed that a bigger technology budget is needed if FIs are to better support developing regulations and balance this with rising customer expectations.
In addition to charting a more dynamic compliance course, FIs need to ride a wave of heightened customer expectations. AML and KYC processes must not add friction to client onboarding journeys and other key customer lifecycle touchpoints. However, for many FIs, it remains a truism that as KYC regulatory requirement makes processes more onerous, the customer experiences is detrimentally affected.
The panel agreed that KYC and compliance cannot be an afterthought if FIs want to reduce friction.
FIs must make efforts to design compliance strategies around the user experience. Utilising advances in data and automation, such as digital identity verification, real-time PEPs and sanctions watchlist screening, adverse media data, KYC documents checks, and KYB, lessen the need for manual intervention, leaving compliance professionals free to focus on more complex tasks. Thus, successfully balancing the need to comply with current and future regulations whilst delivering superior customer experiences.
Choosing the right technology partner is therefore vital.
Why FI-Regtech collaboration is key to success
As each new regulatory change appears on the horizon, so too does a new wave of requirements and obligations FIs must contend with, in addition to staying on top of all the updates, amendments and additions to the myriad of existing regulations.
The panel therefore believed that 2024 will also be a year of strategic collaboration. FIs must seek technology partners that not only offer a great product suite, but also have the industry experience and expertise to support, guide and advise in building more proactive approaches. Simultaneously enhancing compliance, improving the customer experience, driving operational efficiency, responding to regulation, and fostering the secure financial ecosystem the FCA demands.
RegTech is no longer the new kid on the block. Instead, providers are established as invaluable collaboration partners when FIs have new regulatory goals to reach or new risk management challenges to overcome. RegTech’s are leveraging AI and Machine learning (ML) for KYC and AML purposes, with a range of tools used to verify customers’ identities, eliminate manual error, streamline and automate processes, and most importantly mitigate fraud and other financial crimes fitting a risk based approach.
But, the panel agreed that not all RegTech's are created equal. The key is finding a partner with both the technology capabilities and industry expertise needed to build an environment of compliance best practice.
Why W2 by FullCircl is a compliance game-changer in 2024
With W2 by FullCircl FI’s can onboard more customers and meet regulatory requirements with automated KYC compliance software, AML, anti-fraud, and identity verification solutions through an intuitive orchestration platform.
As part of the FullCircl group, we enable organisations to address to many of the most critical commercial and regulatory challenges, and provide the wrap-around support, training and guidance FIs need to ride the wave successfully.
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