KYC Know Your Criminals?


Back when the new KYC rules first came into effect, law firms and financial institutions turned their processes upside down and revamped their on-boarding procedures. Policies were written, meetings were held, forms were made, reviewed and re-done, and staff were trained – all to ensure that the KYC requirement is complied with.

KYCKYC Know Your Criminals?

Criminals they are not. Or at least may not be. Or maybe they are?

Who is subjected to these KYC procedures anyway? Some Mr. Smith who comes to a law firm in hopes to have his long-lasting dispute with his family member resolved? Or a new businessman that sits in the bank’s chair in order to open a business account for his newly cooked company? Or a signing officer of a large public corporation who steps into a lending institution’s walls to get a $5M loan to build a new condominium? Or a seemingly unimportant Joe who regularly deposits cheques originating from various banks around the word into his own account and then transfers the money to other parties?

They widely vary in their type, size, scope and nature of activities, and this array of differences is exactly where KYC plays a pivotal role. Most of them will, of course, be just a simple man doing his good business in the most honest way, and complying with the KYC rule here will seem like an overkill – after all, who would not trust a grandma who comes to get her Will done? But on occasion, there will be someone who is worth noticing that might otherwise go unnoticed if the general perception of “it will spare us” prevails. And this is exactly where the KYC rule becomes very important in order to not only protect a bank’s own money, but more so the bank’s integrity and reputation as a trustworthy institution.

KYC stands for “Know Your Client” or “Know Your Customer” and this name says it all: know who you are dealing with before offering legal services, or before landing money or before on-boarding that individual or corporation to use the services of your institution.

So, KYC has a reason to exist, and it’s highly justified.

However, even so, the impact that the KYC requirement has on the service providers through the substantial administrative obligations that it subjected them to is often considered a burden. The time required to fully comply with the KYC rules, the associated need to get everything reviewed, confirmed and signed by various organization departments, the often frustrated clients whose business is delayed by the delay in KYC procedures, the sometimes lost clients due to the complications with inefficient KYC processes of an organization which take away with them the business that the lost client could have brought with him/it. All this sums up to the need to improve and/or simplify KYC policies and associated procedures.

But how?

Some of the ways to streamline KYC procedures could entail having a dedicated service provider that, under a service level agreement, conducts corporate/business verification of the clients that a legal or financial institution needs to onboard. With service level agreements in place, this could be a quick and efficient procedure that would ensure that all necessary identification documentation is obtained on time and is accurate, especially when it comes to extra-provincial or foreign corporations. Another way, if resources allow, could be to integrate the currently  used KYC process with a KYC service provider’s system in order to automate the corporate/business identity look-up and retrieval of corporate identification documentation and/or data. This could significantly streamline the KYC procedure and to decrease the time it normally takes to perform full set of KYC steps, including data entry component – pulled corporate entity data such as legal name, corporate number, registered office address and directors’ names and addresses, for instance, could be inserted into the legal/financial institution’s database in a matter of seconds and at the same time decrease the possibility of human error when typing such information manually.

In our blog post “Know Your Client” Quick Reference of ESC Services, we provide a list of ESC services which can be used to fulfil the KYC requirement for your organization.

To find out how your system can be integrated with ours via SOAP interface, please send us an email, and we will provide the information regarding SOAP Interface Specifications required for such integration. Our IT team is dedicated to ensuring that your integration is done in a smooth manner with support all the way throughout the project and beyond the point of production release.

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