The world of Know Your Customer (KYC) is constantly evolving as businesses and regulators adapt to new technologies, emerging risks, and changing customer expectations. In recent years, there has been a growing interest in two primary approaches to customer due diligence: Perpetual KYC (pKYC) and Periodic Risk Monitoring. In this blog post, we will explore the future of KYC by examining these two approaches and discussing how innovative solutions like Togggle, a decentralised KYC platform, can help businesses navigate the challenges of customer identification and verification.
What is a perpetual process, is it possible to automate pKYC?
Perpetual KYC is an ongoing process that involves continuously monitoring and updating customer information to ensure that businesses have accurate and up-to-date data on their customers. This approach allows businesses to proactively identify potential risks, enabling them to take timely action to mitigate any threats to their operations. By adopting a pKYC strategy, businesses can stay ahead of regulatory changes and maintain compliance with increasingly stringent anti-money laundering (AML) and counter-terrorism financing (CTF) requirements.
What is a periodic risk monitoring process and can it be automated?
In contrast, Periodic Risk Monitoring entails reviewing customer information at predetermined intervals, such as annually or biennially. This approach can be more cost-effective and less resource-intensive compared to pKYC, as it requires fewer updates and less ongoing monitoring. However, the trade-off is that businesses may not be as well-equipped to identify and respond to emerging risks in real-time, which could potentially result in compliance failures and financial losses.
Striking the right balance of Risk Monitoring & pKYC
As businesses and regulators look to the future of KYC, there is a growing recognition of the need to strike a balance between the proactive nature of pKYC and the cost-effectiveness of Periodic Risk Monitoring. This balance can be achieved by leveraging advanced technologies and innovative solutions that enable businesses to optimize their customer due diligence processes while minimising the associated costs and risks.
Can automated due diligence providers help?
One such solution is Togggle, an automated KYC platform that offers a range of features to help businesses navigate the complexities of customer identification and verification. By leveraging cutting-edge technology, Togggle enables businesses to securely and efficiently manage customer data, reducing the time and resources required for manual verification processes.
Togggle's decentralised nature ensures that customer information remains secure and private, addressing one of the primary concerns businesses face when implementing pKYC strategies. In addition, Togggle's user-friendly interface makes it easy for customers to submit their information, streamlining the onboarding process and reducing the friction often associated with traditional KYC procedures.
Furthermore, Togggle's advanced event capabilities enable businesses to identify patterns and trends in customer behaviour, allowing them to make informed decisions about the appropriate level of monitoring required for each customer. This can help businesses strike the right balance between Perpetual KYC and Periodic Risk Monitoring, ensuring that they remain compliant while minimising the associated costs.
Automation is another critical aspect of optimising KYC processes in the future. Togggle's platform offers automation features that can help businesses save time and resources by automating routine tasks, such as updating customer information and flagging suspicious activities. This enables businesses to focus their resources on higher-value activities, such as analysing customer data and developing more effective risk mitigation strategies.
The future of KYC will likely involve a combination of Perpetual KYC and Periodic Risk Monitoring approaches, with businesses leveraging advanced technologies and innovative solutions like Togggle to strike the right balance between proactive monitoring and cost-effectiveness. By embracing these new tools and methodologies, businesses can better navigate the challenges of customer identification and verification, ensuring the long-term success of their compliance strategies and ultimately enhancing the customer experience.