Over the past decade, regulators across the U.S., Europe, APAC and the Middle East have levied nearly $26 billion in financial penalties against financial institutions for anti-money laundering (AML), know your customer (KYC) and other sanctions-related violations. In today’s heightened business and regulatory climate, organizations should not only be concerned with making profits, but also being able to correctly identify who they’re doing business with, which means verifying customers’ identities and meeting KYC and AML guidelines.
When a financial institution creates a new business partnership with individuals or organizations without fully knowing their past and present business dealings, it can expose them to hefty lawsuits, regulatory fines and reputational damage.
How have these regulations impacted the customer experience?
The problem with KYC and AML requirements is they have the potential to make something as simple as opening a new account a long and complex journey for regulated organizations. While estimates vary, banks take an average of 24 days to complete the customer onboarding process and many argue it’ll only get worse as regulations continue to increase.
Although the need to be thorough is important, especially in high-risk industries like finance, KYC and AML regulatory hurdles often create a less-than-ideal customer experience, which translates to abandoned customers and lost revenue.