In Part 1, we have discussed when we need to conduct KYC and what essential information is required. In Part 2, we will examine the customer identification and due diligence, as well as the approach of turning the KYC from a framework into implementable API’s.
Identification Process
The Identification Process is to make sure the customers are the one they claim. For an individual customer, you need to collect his / her identification documents, such as a passport. So you can verify your customer against the photo on the documents, and assure that the documents belong to your customer.
In addition, you need to check the information in the documents against authorized data sources or organizations to make sure your customer is not a Politically Exposed Person (PEP) or on the sanction list.
You can also search the customers’ information on the Internet or apply the latest technology of Artificial Intelligence to improve the accuracy of the identification process.
Verification and Approval
When you have all the required information collected, you can start the Customer Due Diligence (CDD) process which involves verifying the collected information or documents and get the approval from management.
For customers with high risk in financial crimes, such as money laundering, you need to have Enhanced Due Diligence (EDD) which requires more information and approval from senior management.
This is an iterative process, whenever more information is deemed to be required, the KYC will be passed back to the Relationship Manager (RM). The KYC will fail if any document is found to be illegitimate or it is rejected by the management.
Why do we need to turn the KYC Framework into API?
Due to the high complexity of the application landscape in banks, sharing of business logic and data among the applications is a big challenge, and API is the solution.
By turning the business logic in the KYC Framework into API, you can share the business logic of KYC with any applications inside or even outside the banks. In addition, you can centralize all the logic to make the management and maintenance work simple.
Turning the KYC Framework into API
To turn the KYC framework into API, all you need is two steps.
Define the framework of the API in Microsoft Excel
Generate the API by using COMPASS
COMPASS is a Wealth Management Platform from Axisoft. It can turn any financial models in Excel into API. For more information, please contact us.
Thank you for reading the article. In the next article, we shall show you how to build the API of the Money Laundering Risk Assessment (MLRA) which is one of the key parts in KYC Framework.