KYC: How banks can comply with history-making sanction rollouts

It is not just interest rate changes and inflation banks have had to contend with so far this year – ensuring Know Your Customer compliance is up to date has had to be a key focus. Since the invasion of Ukraine on 24 February 2022, in just four months, there have been eight updates to the UK government’s guidance on the UK’s sanctions regime relating to Russia, and the number of individuals on the full UK Sanctions list now totals over 3,500 individuals and entities. With The Guardian recently reporting how the head of the Office of Financial Sanctions Implementation is overseeing the “most extraordinary package of sanctions ever implemented” in UK history, sanctions are being continually reviewed and new outlines are likely to be added in due course. KYC compliance is only going to get harder.

Ensuring compliance with UK sanctions law is critical for any bank operating here – any financial organisation not taking swift action to adhere to new sanctions could be in breach of the law – but it can also be incredibly complex. Geopolitical instability means sanctions can change at short notice, but old banks’ technology infrastructures are fragile, so adapting to change can be complex and time-consuming. Meanwhile, banks also have to ensure they deliver smooth client onboarding, excellent customer service, and faster time to revenue. That is why it is imperative banks invest in appropriate technology that makes it easy to manage compliance.

There is agile client lifecycle management (CLM) software on the market that is regularly updated with sources of new country and product-specific rules and sanctions, and helps teams be able to quickly spot contraventions in KYC checks to prevent prohibited activity.

Process and case management capabilities ensure compliance end-to-end, no matter how a potential client first makes contact with the bank – app, phone call, website, in-person, or something else. Rules-driven processes prompt workers to carry out due diligence by country, booking entity and product. Because all employees use the same unified system, the process will be the same each time, ensuring consistency of service and reducing the chances of human error. That way, clients with legitimate needs that do not break sanctions can be onboarded fast, and activity in contravention to sanctions can be quickly flagged and employees can work to prevent it.

Some software acts as a single hub for data, offering global customer master views to provide a 360-degree customer profile containing all the information an employee onboarding a client might need in one place. What’s more, any information that needs editing need only be updated once across all regions, channels, products and business lines, as there is always one source of truth on that client’s data. This also streamlines service and creates a better customer experience, as a variety of employees can refer to the same profile and always have access to the latest updates, no matter which individual needs to be involved.

With a torrent of sanctions and regular updates to existing regulations, it is critical banks adhere to the law at speed. Banks can’t rely on manual processes alone, as there is a real risk of slipping up. Automation helps streamline processes and when delivered through a low code approach, then this doesn’t require workers who are experts in programming and doesn’t require huge amounts of time writing code. What can prove even more useful is the ability to more easily and quickly translate new business needs into applications. Some tools offer application development that is eight times faster than Java coding, meaning they can manage regulatory and operational changes in days, not weeks or months, and regulatory rule maintenance updates in mere minutes. Further, this can be run in the cloud, offering the scalability banks need to adapt to change. 

Dealing with sanctions compliance is far from easy, but with agile low code software, banks can adapt to changing circumstances and changing regulations as they arise, so they can spend less time and money on inefficient problem-solving, and more time optimising the customer experience to drive growth.