Thomson Reuters for Know Your Customer (KYC) No one can help you Know Your Customer like Thomson Reuters. Thomson Reuters QA Point Pricing Service Plus – Structured Notes and OTC Derivatives 2 Thomson Reuters for Know Your Customer (KYC) 3
Executive Summary
As KYC due diligence requirements continue to grow exponentially, banks and financial institutions (FIs) – along with their customers – are facing wave after wave of increasingly complex regulations. That means they must find new and more efficient ways to integrate these regulations into their daily processes. While compliance is a legal requirement, banks and FIs must also define the crucial line between satisfying the regulator and delivering a positive customer experience. The complexity of this challenge should not be underestimated.
A complete and connected approach to a complex issue
Regardless of the size or nature of your business, Thomson Reuters can act as your trusted partner. We offer broad and connected KYC solutions that combine to provide a truly unique answer. We have both the depth and breadth of knowledge to provide a true end-to-end KYC solution – from data and to hosted or deployed solutions to managed services. At the same time, our products are modular and can be adopted as point solutions to meet specific needs. No matter what stage your organization currently finds itself, Thomson Reuters can complement your existing KYC program and customer due diligence initiatives to enhance efficiencies and allow you to adopt a risk-based approach.
Rely on us to be your single trusted provider in KYC compliance. Thomson Reuters for Know Your Customer (KYC)
Do you really know your customer?
The financial crisis of 2008, along with other It is vital to understand customer activities involving: significant events like 9/11, heralded a new era • Their business partnerships of regulatory scrutiny. They brought into sharp • Their business locations focus the pitfalls of an inadequate regulatory • Their business entities • Their sources of wealth framework and highlighted the many risks This information enables organizations to make informed hiding in human and business networks. judgments about whether or not to provide – or continue to Regulators responded by introducing a plethora of complex provide – services to particular customers. Those engaged in regulations governing the financial community. That means, inappropriate, suspicious or non-compliant/illegal activity can banks and FIs are increasingly concerned with making only be identified if the due diligence conducted is thorough, certain they are not doing business with any organization or accurate and complete. individual with connections to financial crime or funding of terrorist organizations – or where they cannot quantify the risk. Understanding the risk of doing business with an entity or individual has become more crucial than ever. These factors underscore the need to ensure that information on customers is maintained, valid and appropriate. 5
An ever-changing regulatory landscape
Financial industry players have increasingly Costs, time and effort have spiraled nearly out of control, come under the regulatory spotlight, and the with one estimate suggesting that there are approximately 170 changes to regulation, or regulatory activities, every single sheer number of regulations governing anti- day. While not all of them concern customer due diligence, a money laundering (AML) and counter terrorist large part of the challenge lies in understanding and analyzing financing (CTF) continues to rise. Tighter this volume of regulations in order to decide what is relevant; accommodating new and changing regulation; and ensuring regulations, while necessary to maintain the that procedures are watertight from an audit perspective. integrity of the global financial system, have The 2012 Financial Action Task Force (FATF) created very real challenges for banks and FIs. Recommendations, in particular, set new guidelines that require the regulated sector to hold relevant, up-to-date ownership information on all customers. These recommendations are already filtering into legislation (notably, the EU’s Fourth Money Laundering Directive or 4MLD) around the globe, with regulators interpreting the new legislation in different ways, further adding to the complexity that compliance professionals face. Thomson Reuters for Know Your Customer (KYC)
KYC affects banks and end-clients alike
Compliance is never optional; it is simply No consistent standard a requirement. The cost of getting it wrong is As regulators move from a tick-box to a risk-based approach well-documented. Banks have a regulatory to compliance, banks are left to interpret AML legislation and develop their own processes to comply with KYC regulation. obligation to conduct thorough KYC due With no consistent standard, banks request end-client diligence on all their clients and further, to information in their own unique formats, leading to further maintain up-to-date customer profiles. But duplication of effort. there are indirect consequences that affect Data security both banks and their end-clients. The security of end-clients’ strictly confidential information often cannot be guaranteed. Information is often disseminated Time, cost and effort via traditional mail or email and can easily be lost or Determining who you can and should do business with has intercepted. Emailed information, especially, is easy to hack if it significant implications for both banks and end-clients in terms is not encrypted. The alarming rise in cyber-crime and identity of cost, time and effort. Additional strain is placed on existing theft has been well documented in recent headlines and resources, and this often leads to frustration. Not only has the serves to highlight the dangers of business-critical information sheer volume of required due diligence information increased falling into the wrong hands. Even if delivery is successfully exponentially, but the supporting documents will reside in secured, end-clients frequently have no control over how this several different locations within your company. Finding, information is stored and who can access it. These are very real extracting and organizing this information has become security concerns. Understanding exactly who you are doing increasingly burdensome and time-consuming. business with is of the utmost importance, as is using a trusted due diligence provider, as KYC issues affect all stakeholders. Slowing the pace of business Whether you’re a trading firm, corporation, hedge fund or asset manager, the due diligence process required for KYC compliance with a new FI can now take more than six months – just to open a new account. And there are also intermittent and ongoing identity verification requirements to ensure that banks maintain an up-to-date single view of each client and identify any emerging risks. Additionally, FATF recommended in 2012 that it should be a legal requirement for an organization to provide their bank with the most up-to-date legal entity information available at any given time.
KYC issues affect all stakeholders. Both banks and end-clients want to spend more time on running their businesses and less time on KYC. Thomson Reuters QA Point Pricing Service Plus – Structured Notes and OTC Derivatives 7 Thomson Reuters for Know Your Customer (KYC)
A holistic solution How can we help you?
By adopting a risk-based approach to KYC – We manage every step of the KYC process, rather than simply ticking boxes in an attempt because we understand the importance of to satisfy the regulator – our clients are being able to demonstrate a complete audit empowered by Thomson Reuters to identify trail to the regulator - from onboarding though the real risks hiding in business relationships. to remediation. We bring together a wide variety of trusted assets that leverage the depth and breadth of our expertise to offer you a holistic Client Onboarding solution that effectively addresses the myriad challenges Our Client On-boarding platform offers an end-to-end client associated with KYC. lifecycle management solution, leveraging best-class Thomson Reuters data, technology and partner community. Our solution suite caters specifically to the needs of: Our platform delivers a combination of the necessary • Retail clients components of an entity data model, workflow, business • Institutional clients rules, data management and documentation management • Wealth management clients to support FIs with compliant, automated onboarding of new • Corporate clients clients and facilitates continuing refresh cycles. Importantly, client onboarding works seamlessly with the FI’s incumbent systems with multiple access points for all of those who need to collaborate on the onboarding process.
Screening Thomson Reuters offers a solution that collects, structures and ethically and responsibly monitors financial crime data in line with strict global data privacy policies. World-Check is the world’s trusted, authoritative and accurate source of risk intelligence data, using intensive research conducted by hundreds of qualified analysts who utilize credible sources of information delivered to our customers via partners and platforms. Information in World-Check enables customers to require it to carry out due diligence or other screening activities in accordance with their legal or regulatory obligations or risk management procedures designed to combat financial crime. This includes KYC, AML, CTF or anti-bribery and corruption customer and counterparty due diligence and screening. CLEAR offers an easy-to-use dashboard interface that allows customers to quickly flag possible risks on subjects of interest and identify possible material associations. Pulling together unique data streams from sources that include public and proprietary records, news reports, and watch lists, CLEAR is a powerful investigative solution that allows customers to view important and potentially risky associations between businesses and individuals that might otherwise have been missed. 9
Enhanced Due Diligence KYC Managed Service Enhanced Due Diligence (EDD) reports are a cost-effective The days of banks having to collect, validate and maintain method of conducting detailed background and integrity identity data on their customers are over. Thomson Reuters checks on any entity or individual, no matter where they are KYC as a service brings together a number of best-in-class located. Business conduct and reputation history can be risk solutions. For financial institutions conducting KYC due analyzed and a thorough search made for unseen liabilities. diligence, we collect, classify and verify a client’s identity Business intelligence is gathered from regulators, industry against a global standardized policy, while providing ongoing, observers, suppliers, competitors, distributors and customers, proactive identity monitoring to detect changes in legal both current and former. entity status. To assist organizations responding to KYC due CLEAR reports offer data from a wide variety of sources for diligence requests, our KYC managed service streamlines both individuals and companies. Individual-based reports the distribution of one set of KYC documents to multiple include extensive national and state information summarizing authorized financial institutions within a secure, web-based sanctions, criminal records, arrests, assets, licenses, real portal, helping to eliminate duplication and reducing the cost property, vehicles and much more. Company-based reports and time spent responding to an ever-increasing number of include information on sanctions, corporate filings, money due diligence requests. service business information, assets, real property and Thomson Reuters empowers the digital economy by enabling executive information. banks and their customers to easily exchange the information required to do business together. Our operation manages over Transaction Monitoring 350,000 KYC records and 1.25m managed legal entities, in Because high volumes of transactions pass through a financial more than 140 countries. Unlike any other service provider, services organization every day, it can be extraordinarily we continuously monitor regulations for changes and difficult to consistently identify suspicious transactions that automatically refresh client due diligence information. Along warrant greater analysis. Transaction monitoring is part of with our award-winning data and platforms, Thomson Reuters an effective risk-based approach that helps protect against firmly sets the standard in KYC compliance. financial crime. We use pragmatic, pre-built risk scenarios to monitor transactions, identifying and alerting you to unusual Training patterns of customer activity that differ from normal or Thomson Reuters Compliance Learning trains employees expected behavior and may require further investigation. on the laws, regulations and internal corporate policies that apply to their everyday job responsibilities. Offering a range of interactive training options from online compliance courses to instructor-led training, we enable your business to educate in ways that enhance employee engagement while reducing risk and encouraging compliant behavior. Our library of more than 800 courses covers the essential compliance topics in today’s regulatory environment including Anti-money Laundering, Conduct Risk, Market Conduct and Risk Management. Tracking more than 500 regulators and exchanges globally, our courses are continually updated in response to the latest regulatory and legislative changes to ensure that your business is protected against compliance breaches, empowering you to act with confidence. Thomson Reuters QA Point Pricing Service Plus – Structured Notes and OTC Derivatives 10 Thomson Reuters for Know Your Customer (KYC) 11
Why Thomson Reuters?
Only Thomson Reuters brings together trusted information, managed services, software and expertise to create an unrivaled combination that helps you confidently anticipate and act on risk across your organization – so you can accelerate business performance. Our continued investment in robust technology means that senior managers, who increasingly face personal liability for corporate compliance, can rest assured that they have partnered with an organization at the forefront of leading edge compliance solutions. Increase efficiency, save time and cost, and access greater control using solutions from one service provider, Thomson Reuters.
Our Key Differentiators • Our centralized repository of client identity data saves time, reduces duplication of efforts and allows financial institutions to conduct their own searches • Unlike any other service provider, we continuously monitor regulations for changes and automatically refresh client due diligence information • We were the first live KYC managed service platform, and have been processing records since March 2014 • Powered by World-Check, we offer best-in-class data to screen and monitor across 240+ countries, and 530+ sanctions and watchlists, and access to 100,000+ media sources to ensure firms remain compliant • More than 500 risk intelligence researchers update 47,000+ profiles and create 29,000+ new profiles • Risk intelligence analysts – with a total of 47 industry-relevant qualifications – monitor 600+ key worded sanctions and regulatory and law enforcement lists • Global operation covering five continents and 60+ local languages spoken • Through recent acquisitions, we are partnering with the world’s biggest banks (Barclays, Credit Suisse, Goldman Sachs, JP Morgan and State Street), creating the industry’s leading KYC Managed Service Risk Management Solutions from Thomson Reuters
Risk Management Solutions bring together trusted regulatory, customer and pricing data, intuitive software and expert insight and services – an unrivaled combination in the industry that empowers professionals and enterprises to confidently anticipate and act on risks – and make smarter decisions that accelerate business performance.
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