Implementing Perpetual KYC & Continuous Due Diligence
Perpetual KYC is essential for financial institutions and other organisations to comply with regulatory requirements, manage risk, and provide a better customer experience. By continuously verifying and monitoring customer information, organisations can ensure that customer data is current and accurate, helping to prevent financial crime and maintain regulatory compliance.
In this guide, we will provide a comprehensive overview of how to implement a perpetual KYC process that meets regulatory requirements and effectively verifies the identity of your customers.
The first step in implementing a perpetual KYC process is to define your objectives. What information do you need to verify? What level of assurance do you need for each type of transaction or customer? These questions will help you determine the scope and complexity of your perpetual KYC process.
For example, you may need to verify the customer's name, address, and phone number for low-risk transactions. In contrast, high-risk transactions may require additional verification, such as verifying the customer's identity against government-issued ID documents.
Build A Customer Risk Criteria:
Once you have defined your objectives, you need to determine the level of risk associated with each customer - starting with a criteria will keep everyone aligned and it will help you to choose the appropriate level of perpetual KYC verification required.
For example, a customer with a higher level of risk, such as a politically exposed person (PEP), may require more frequent and comprehensive perpetual KYC verification, such as additional documentation or verification against third-party databases.
Implement Verification Methods:
Next, you need to determine the verification methods that you will use to confirm the customer's identity. This can include verifying customer information against third-party databases, conducting electronic identity verification, or requesting additional documentation from the customer. This is where Togggle can step in to help, organisations can choose how often automated checks are carried out.
For example, you may use electronic identity verification to verify the customer's identity against government-issued ID databases while requesting additional documentation from the customer for high-risk transactions.
Develop Policies and Procedures:
Developing policies and procedures for your perpetual KYC process is essential to ensure consistency and compliance. This should include guidelines for customer verification, risk assessment, documentation requirements, and ongoing monitoring.
For example, your policies and procedures should outline how to verify customer information against third-party databases, assess customer risk, and document and monitor customer information over time.
Promote Training and Awareness Programs:
To ensure your staff is familiar with the perpetual KYC process, you must provide training and awareness programs. This can include classroom training, online training, and ongoing updates to policies and procedures.
For example, your training and awareness programs should cover the importance of perpetual KYC, how to verify customer information using different methods, and how to assess customer risk.
Monitor and Audit:
Finally, you need to monitor and audit your perpetual KYC process to ensure that it works effectively and complies with regulatory requirements. This should include regular reviews of customer files, monitoring of customer behaviour for suspicious activity, and regular audits of your perpetual KYC process.
For example, you should regularly review customer files to ensure that customer information is up-to-date and accurate and monitor customer behaviour for any suspicious activity that may indicate fraudulent or criminal activity.
A perpetual KYC process is essential for financial institutions and other organisations to manage risk, comply with regulatory requirements, and provide a better customer experience. By following these implementation guidelines, you can develop a robust and effective perpetual KYC process that meets your organisations needs while protecting your customers from financial crime. By continuously verifying and monitoring customer information, you can ensure that customer data is current and accurate, helping to prevent financial crime and maintain regulatory compliance.