eClerx Launches KYC Solution

eClerx, a provider of knowledge and business processing services, today launches a new know-your-customer (KYC) solution. The three-tiered system aims to help buy- and sell-side clients conduct KYC processes through a supervised operations platform, reducing risk and ensuring compliance, the company says.

Alan Paris, New York-based principal at eClerx, says that banks are paying more attention to KYC and anti-money laundering requirements as regulations proliferate, regulators get stricter and fines grow more punitive than ever. For banks, requirements that once offered competitive advantage have become an essential component of risk and a major regulatory challenge. European banks are now taking notice after the record $9 billion fine levied against BNP Paribas for allegedly breaking sanctions against Iran, Sudan and Cuba.

"Banks are caught up in multiple regulatory and compliance requirements and all the major regulatory bodies requiring customer identification and due diligence and so forth," says Paris. "It's ongoing on a global basis. It's not just the United States with the Federal Reserve and the Office of the Comptroller of the Currency; it's also the UK and the European regulatory authorities, as well as Asia and regional regulatory authorities.

"In the past, banks didn't look at KYC compliance risk as closely, but institutions are focused on this now as a result of the incredibly high cost of non-compliance," he adds.

eClerx's solution is the culmination of more than 10 years' experience with KYC regulation-related and document digitization work, across multiple clients and jurisdictions, says Paris.

"This was some of the earliest work that we have performed for our clients since the introduction of the Patriot Act and the resulting tightened KYC requirements. We're also one of the only firms that have done this work for multiple clients."

eClerx has automated the KYC due diligence workflow across regulatory authorities and specific regional requirements, and its platform allows firms to see the work as it is done with real-time dashboards, says Paris.

A good solution can integrate the various teams working with KYC data, he says. "When firms organize around KYC, there are multiple parts of the firms involved, including the front office, reference data and compliance teams, and the folks who deal with the regulations, a general council and the operational teams across other departments. This enables each of them to them to contribute, collaborate, and see the metrics of recording and results. So if a due diligence effort is stuck with one department that needs to provide the information, that can be flagged and escalated, timed and reported on," says Paris.

Paris adds that beyond firms' relationships with the regulators and oversight organizations, onboarding KYC systems will help them prepare for interaction with data utilities. Financial institutions are leaning towards utility models in KYC processes in order to reduce costs, with banks coordinating with service providers such as Swift to create central registries that collect and distribute due diligence data.

"There are many shops on the buy side – asset managers, wealth managers, fund companies – that need to contribute data to these various utilities," says Paris. "Onboarding is critical in this marketplace because all these utilities have something really great to offer in terms of standards and one-stop-shopping."