Do you truly know your customer? For banks, the process is more than being on a first-name basis. Impregnable Know Your Customer (KYC) checks are the foundation of a bank’s cybersecurity efforts—and can have significant impact on your bottom line. Why? Fines issued under Anti-Money Laundering (AML) and KYC infractions are on the rise. In 2019, one-quarter of the world’s top 50 banks were on the hook for steep fines. With authorities cracking down, it’s more important than ever to shore up KYC initiatives. Here are the top 3 trends driving the growing importance of KYC:
1. Escalating frequency of data breaches
Convenience reigns king when it comes to luring new customers, encouraging many banks to hasten onboarding by eliminating internal roadblocks. However, KYC is a dangerous realm for cutting corners. Cybercriminals are hoisting the battering ram at the data door, prowling for personal information like email addresses, phone numbers, and social security numbers.Breaking news headlines continually underscore the importance of a bulletproof Know Your Customer process. Many of the world’s largest companies are on the hook for big breaches, including Facebook, Shell, and Target, making smaller institutions even more vulnerable. Bad actors are becoming increasingly industrious, putting the onus on banks to shore up their data defenses.
2. Steep regulatory hurdles
Banking is one of the world’s most regulated industries. Instead of much-needed relief, the past couple of years have brought on even more compliance pressure, with global per infraction in 2019. COVID-related initiatives like Paycheck Protection Programs and expanded SBA Loans in the United States continue to put banks in the regulatory hot seat. These opportunities for lucrative funds are a breeding ground for criminal behavior and increase scrutiny by regulatory bodies. Fines insured to banks could surpass , and banks with more relaxed KYC checks in place will foot the massive bill.
