It is possible to automate compliance that’s easy to use, but building the tools is technically very challenging and requires specific skills. KYC3 is the only team dedicated to solving this for AIFM, private equity, transfer agents, and wealth management. We’ve got more than 15 years of experience in the regtech space, and 30 years of experience in technology overall.
Jed Grant, the founder of KYC3 has been developing software since the 1990s, and he knows how to build systems that just work.
So let’s get down to it. In this article, we want to run through the five major functions of your compliance program, and then we’ll share with you detailed articles on each of these pillars,coming soon.
So let's talk about the first one, getting the fundamentals right.
So when you work on your compliance program, you really need to understand your Risk Tolerance. You need to get your risk acceptance, get your processes, and make sure that they are well governed and reliable.
The second pillar is your Customer Identification Program.
You need a strong way to identify the entities that you interact with, and that means both individuals and corporate entities, all the way back to the UBOs and controlling individuals of those corporate entities. So you need to have the procedures, tools, and policies in place to ensure that you’re identifying your customers reliably, correctly, and with accurate determination of who they really are and who they represent.
The third pillar of your compliance program is your Customer Due Diligence.
You need to review the documentation, you need to conduct due diligence checks, you need to understand the risks, and you need to remediate those risks.
This means that the information provided by your customers needs to be corroborated by third parties.
The counterparties you interact with should have proof of existence, they should be documented, and you should be able to find that they are legitimate business entities and individuals acting in the manner and for the purpose that they disclose to you.
The fourth pillar of your compliance program is your Customer Monitoring,
and this is the ongoing monitoring of all the counterparties that you interact with, and understanding the risks involved there.
You need to control for PEP and sanction involvement, you need to understand adverse media, and you need to understand the dossiers and reassess periodically the risk that they represent.
This means you need a deep understanding of not only your counterparties, but the products, the channels, and the geographies in which you operate with those customers.
This is very important on an ongoing basis, and it means daily.
And the fifth pillar of your compliance program is your Audit and Reporting.
You need to have reliable, accurate, and consistent reporting.
You need data to drive your decisions, you need data to provide to your auditors, you need accurate records of who decided what, when, and who accepted which risk at what time, and you need all of these decisions well documented, well chronicled, and auditable.
You need to be able to easily provide this information to your internal auditor, your external auditor, and your regulator.
If you can get all five of those fundamentals correct through your whole compliance program, you will have an efficient and effective program that will run cost-effectively in the background without causing friction for your customers, and without costing an arm and a leg.
So if you’d like to learn more, book a call with us. We’d love to have a conversation and see if we could help you out, see if we’re a good fit, and give you a price.
