|
Identification of customers is a critical step that must be performed diligently. Obtaining credible documentation for individuals and entities is the first step in the overall Know Your Customer (“KYC”) process and the first step in identifying potential money launderers, politically exposed persons, Office of Foreign Assets Control (“OFAC”) sanctioned persons and/or terrorist financing entities. Indeed, U.S. and foreign financial services regulators have been meting out severe penalties for deficiencies related to customer identification, risk scoring and enhanced due diligence. Many of these regulatory actions required institutions to “remediate” their customer identification files to ensure adherence with the bank’s CIP and Section 326.
KYC remediation projects are often undertaken to augment or otherwise enhance the relevant anti-money laundering data maintained in customer files. This data could be related to customer identification records, source of wealth, anticipated account activity or any number of other topics. Such projects can be proactively performed in anticipation of changing regulations, in acknowledgment of internal weaknesses in customer information data, or as a result of regulatory mandates.
THE DAYLIGHT APPROACH
Daylight professionals apply a risk-based approach so that the highest risk customer files are completed first. We identify and segregate customer files that are incomplete, contain outdated information or are otherwise in need of re-papering, and assist our clients with upgrading client records to ensure compliance with both bank-wide policies and regulatory requirements.
We believe that effective project management, use of automation, tracking and frequent communication are the critical factors that are necessary to successfully undertake KYC file remediation. Daylight has experience in building KYC remediation case management systems and in integrating our clients’ existing case management systems and protocols with our proven methodology. The entire process is managed by trained and experienced professionals.
The Daylight staff will customize each KYC Remediation project to address the client’s needs. Initially, we adapt client case management tools or utilize/develop Daylight proprietary tools to document and track the progress of the project.
We then obtain an understanding of the existing Customer Identification Program and any related regulatory findings, and perform an analysis of customer files to identify their completeness relative to the USA PATRIOT Act and the institution’s CIP requirements. Specifically, we will identify missing, insufficient or stale documentation, information gaps, and we will track all subsequent project activities in a case management system.
The Daylight staff will also identify and address any accounts requiring Enhanced Due Diligence.
Our customer file analysis will include:
- Interview relationship managers to provide them with schedules of missing information
- Assist in contacting their assigned customers, and documenting their efforts.
- Assess the existing customer risk scoring process and devise a remediation process based upon risk ranking and forensic data analysis of potential high risk product activity.
- Provide quality assurance and recommendations related to scripts, frequently asked questions and other communications.
- Assure that such processes and procedures remain at your organization.
- Provide training to employees and contractor personnel regarding CIP requirements and the remediation process.
- Provide a written report of our findings to assist with updating the regulators.
|
