Financial institutions are required to have processes in place to detect and help deter money laundering and terrorist financing (ML/TF). These processes require certain client information to be maintained in order to demonstrate an understanding of the customer. The cost of noncompliance with know-your-customer (KYC) and other anti-money laundering (AML) regulations has entered into the billions of dollars. The latest research shows that global financial institutions have been fined $10 billion since 2013 for noncompliance with AML rules.
Where financial institutions do not have sufficient client information to demonstrate this understanding or fall short of regulatory or policy requirements, remediation programs have commonly been implemented to refresh KYC profiles. This paper introduces an innovative, risk-based approach to remediating KYC files.