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Know Your Customer compliance costs continue to grow at financial firms: surveys
Know Your Customer (KYC) requirements continue to burden financial firms with higher compliance costs and ballooning headcounts around the world, surveys by Thomson Reuters have found.
Financial institutions with US$10 billion or more in revenue have seen their average spend on KYC-related procedures increase to US$150 million in 2017, up from US$142 million last year, according to the global surveys.
The number of KYC compliance professionals has also skyrocketed to 307 in 2017 from 68 in 2016. Despite the higher staffing rates, more than a third of firms reported that scarce resources remain their biggest challenge in conducting KYC and customer due diligence processes.
With regards to the process of on-boarding, corporations expect that the average number of days taken for customer on-boarding this year will increase to 32 days, from 28 in 2016. Meanwhile, banks claimed that on average, it now takes 26 days to onboard a new client, up from 24 days a year ago, despite their ongoing investment. Both corporations and banks predicted that onboarding times will rise again in 2018.
Documenting and maintaining current KYC records remains difficult for financial firms, with just 18 per cent of the banks surveyed taking action only when an event triggers a KYC review.
"While our global surveys show compliance challenges remain significant for banks and corporations, those that take a proactive approach to the regulatory environment by using available technology to streamline KYC processes can put themselves ahead of the curve for competitive advantage," Thomson Reuters global head of KYC Industry Solutions Dominic Mac said.
The 2017 Global KYC Challenges Surveys were administered earlier in April and May this year. They included 1,023 respondents at financial institutions and 1,122 respondents at corporations from Singapore, Hong Kong, Australia, Europe and the United States.