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The Future of KYC Compliance — Insights from Oonagh van den Berg

Future of Compliance
February 6, 2021

This article is part of Kyckr’s new Future of KYC Compliance series, which interviews leading industry professionals and thought leaders to learn more about the trends that will shape the future of KYC compliance.

The following is an interview we have recently had with Oonagh van den Berg, Founder and managing director of Virtual Risk Solutions.

What's the current state of KYC compliance?

The pandemic was a huge wake-up call for the compliance industry. The main challenge was that we were not proactively prepared for the new money laundering and terrorism financing typologies that presented themselves through a pandemic. We quickly realised that we are not where we need to be on skill sets, automation, and risk control systems. We need to be much more innovative and quick to adapt and acknowledge changes in the skill sets required to develop these controls.

How has KYC compliance evolved over the past 5 years?

Automation and skill sets have changed the most. Unfortunately, in terms of automation we are learning everything we have done wrong. One size does not fit all and we have not been holistic in creating interwoven automation across the risk functions. On skill sets this is evolving quickly. Gone are the old requirements of "accountant" and "legal" backgrounds, now we also need data analytics and investigative skill sets.

How has KYC compliance changed in the midst of COVID?

The need for optimal automation, reduced resourcing model, and having key skill sets at critical thinking junctures is more apparent than ever. 

What are the top trends shaping the future of KYC Compliance?

  • Skill sets adaptation (as previously mentioned).
  • Holistic automation which is interwoven across risks so we have one source of the truth and streamlined reporting which is effective and efficient in risk identification.
  • Big Data challenges are preventing a move towards Artificial Intelligence and machine learning adaptation. We need to take one step back to fix this before we can quantum leaps forward.

On the risk agenda the big focus areas are:

  • Trade based money laundering. There is going to be increased focus now on whether banks have really understood their clients business activities during KYC assessments and inadvertently facilitated fraudulent trades and transactions related to products that would not fit into the clients profile.
  • Modern day slavery risk typologies. This is becoming an increasingly important focus by government and industry groups and much more needs to be done through Public Private Partnerships (PPP) to facilitate information sharing to identify and better understand these complex networks.
  • Illegal wildlife trading risk typologies. This is becoming a much more prominent issue due to the focus by environmental groups and charities such as United for Wildlife. Together with government task forces we will see a lot of positive work happening in this area in the coming 12-18 months.

What's the future of KYC compliance?

  • Automation and a move towards AI and Machine learning is necessary to be able to process the large amounts of data to identify typologies within complex networks as they happen - not reactively. However in the interim we will see changes (as above) in the necessary skill sets required to develop innovative approaches to combating financial crime.
  • We also need to see much more being done on ESG policy being interwoven into sanction and KYC policy to ensure we are complying with our ESG commitments across the banks activities and proactively helping in early detection of potential illicit activities. This is going to really be at the forefront in 2021.
  • Going forward, the understanding of Crypto and risks in different coin types is going to be essential for proving yourself as a KYC compliance officer.
Future of Compliance
February 6, 2021

This article is part of Kyckr’s new Future of KYC Compliance series, which interviews leading industry professionals and thought leaders to learn more about the trends that will shape the future of KYC compliance.

The following is an interview we have recently had with Oonagh van den Berg, Founder and managing director of Virtual Risk Solutions.

What's the current state of KYC compliance?

The pandemic was a huge wake-up call for the compliance industry. The main challenge was that we were not proactively prepared for the new money laundering and terrorism financing typologies that presented themselves through a pandemic. We quickly realised that we are not where we need to be on skill sets, automation, and risk control systems. We need to be much more innovative and quick to adapt and acknowledge changes in the skill sets required to develop these controls.

How has KYC compliance evolved over the past 5 years?

Automation and skill sets have changed the most. Unfortunately, in terms of automation we are learning everything we have done wrong. One size does not fit all and we have not been holistic in creating interwoven automation across the risk functions. On skill sets this is evolving quickly. Gone are the old requirements of "accountant" and "legal" backgrounds, now we also need data analytics and investigative skill sets.

How has KYC compliance changed in the midst of COVID?

The need for optimal automation, reduced resourcing model, and having key skill sets at critical thinking junctures is more apparent than ever. 

What are the top trends shaping the future of KYC Compliance?

  • Skill sets adaptation (as previously mentioned).
  • Holistic automation which is interwoven across risks so we have one source of the truth and streamlined reporting which is effective and efficient in risk identification.
  • Big Data challenges are preventing a move towards Artificial Intelligence and machine learning adaptation. We need to take one step back to fix this before we can quantum leaps forward.

On the risk agenda the big focus areas are:

  • Trade based money laundering. There is going to be increased focus now on whether banks have really understood their clients business activities during KYC assessments and inadvertently facilitated fraudulent trades and transactions related to products that would not fit into the clients profile.
  • Modern day slavery risk typologies. This is becoming an increasingly important focus by government and industry groups and much more needs to be done through Public Private Partnerships (PPP) to facilitate information sharing to identify and better understand these complex networks.
  • Illegal wildlife trading risk typologies. This is becoming a much more prominent issue due to the focus by environmental groups and charities such as United for Wildlife. Together with government task forces we will see a lot of positive work happening in this area in the coming 12-18 months.

What's the future of KYC compliance?

  • Automation and a move towards AI and Machine learning is necessary to be able to process the large amounts of data to identify typologies within complex networks as they happen - not reactively. However in the interim we will see changes (as above) in the necessary skill sets required to develop innovative approaches to combating financial crime.
  • We also need to see much more being done on ESG policy being interwoven into sanction and KYC policy to ensure we are complying with our ESG commitments across the banks activities and proactively helping in early detection of potential illicit activities. This is going to really be at the forefront in 2021.
  • Going forward, the understanding of Crypto and risks in different coin types is going to be essential for proving yourself as a KYC compliance officer.
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