Know Your Customer (KYC) Due Diligence

Transparency in transactions and customer identity verification are paramount to financial institutions looking to meet today’s regulatory compliance standards. Failure to properly gather and analyze customer information, fully understand the nature and purpose of customer relationships, appropriately assess and maintain customer risk profiles, and mitigate risks associated with financial crimes—including money laundering—can lead to major enforcement actions that in turn can result in fines, sanctions, and reputational damage. 

The collection and analysis of customer information is an integral part of a financial institution’s risk-based Bank Secrecy Act (BSA) and Anti-Money Laundering (AML) compliance program. A comprehensive know your customer (KYC) framework enables financial institutions to establish customer risk profiles that facilitate the ongoing monitoring of customer relationships in adherence to regulatory obligations. However, given the multitude of methods that bad actors can use to shield their true identities, implementing and maintaining a robust KYC due diligence program can be quite complex. 

Our professionals assist institutions in developing and enhancing KYC policies and procedures, including customer identification programs (CIP) and customer due diligence (CDD) and enhanced due diligence (EDD) processes, that both meet current regulatory standards and align with an institution’s unique risk profile. Our professionals also provide support for business-as-usual (BAU) enhanced due diligence reviews, periodic KYC reviews, or ad hoc remediation initiatives.

We help financial institution clients to strengthen their customer risk rating model by gaining a thorough understanding of each client’s customer base, product offering, and geographical reach, ensuring that these factors are appropriately selected and weighted to optimize the assessment of its customers’ money laundering and terrorist financing risks. Understanding that customer information and related transactions change over time, we work with clients to implement processes that allow for ongoing reviews to ensure that as the customer relationship evolves, so does the appropriate oversight.

It is not simply enough to know who a customer is and what transactions they are engaging in. We work with our clients to ensure that KYC programs are aligned with the institution’s overall risk management goals to shorten an institutions’ reaction time and disrupt attempted criminal activity.