Being in Compliance in the KYC Process: The Growing Challenge for Companies and Financial Institutions


After research with key corporate decision makers and financial institutions, the challenges faced in carrying out the KYC automated solutions in accordance with current regulations, adequately protecting the institutions and at the same time maintaining an efficient and non-stressing relationship with customers were revealed.

Interesting and with a wealth of data was a survey conducted by Thomson Reuters in 2017, to meet the views of financial institutions and corporations, for the KYC process (know your customer) and Diligence Customer Due.

The consensus of both sides, both of whom should collect data (financial institutions), as who provides the data (corporations) it is that this process is complex and requires an ever increasing amount of investment and time.

It is already agreed that the KYC process must cover reputational risks that impose penalties not only on the companies under judgment but also on the financial institutions that have hosted them and supported their transactions. Therefore, as the regulations deepen, there is also a growing need to create processes for researching on-boarding and maintaining ever more complex relationships.

Let us then explore some aspects that deserve our attention regarding the procedures.


  1. a) KYC expenses – In spite of the fact that the financial institutions have made a significant contribution to the KYC and Due Diligence processes of clients, in order to obtain adequate conditions they recognize that it will still be necessary to contribute more resources. The number of employees working with KYC has increased, but the objective result in terms of service quality has turned out to be small.
  2. b) On-boarding – According to IFs it increased from 24 to 26 days, but corporations report that this period has increased to 32 days. The expectation is that this period increase by at least 12%. In this process, FIs claim that they contact customers 4 times on average, but corporations claim that this number actually rose to 8 times.
  3. c) Continuous inadequate verification – Although it is a regulatory requirement, only 25% act preventively and 18% act only when something irregular occurs. On the other hand, 62% of FIs believe that their customers spontaneously made important changes. The survey with the corporations revealed that on average only 30% revealed such facts. From this it can be deduced that the risk of continuous verification increases the FI exposure, since new unknown activities may be performed.
  4. d) The impact of regulation – Although regulatory changes are important and impactful, 23% did not make such implementations and do not intend to do so. Of the others, 54% intend to invest in internal or third-party resources, only in internal processes – 21% and others are not investing or do not know what to do. What is observed is that the improvements made are not being proportional to the increasing demand for higher volume of qualified data of the companies.