Reported by EY

The document by EY emphasizes a risk-based approach to Know Your Customer (KYC) refresh programs, tailored to various banking customer types. It suggests aligning refresh models with customer risks, including retail, wealth management, and corporate clients, each requiring different strategies based on complexity, risk, and regulatory requirements.

Retail banking leverages digital prompts and ongoing monitoring for trigger-based refreshes, focusing on low-risk customers. Wealth management combines periodic updates with high client interaction, allowing greater flexibility. Corporate banking uses intensive, manual reviews for complex entities but increasingly integrates third-party data for efficiency.

Institutions are encouraged to evaluate existing programs, determining whether KYC refresh outputs are risk-productive or merely administrative. Transitioning to event-driven models or extending refresh cycles can optimize compliance without compromising risk management, provided that data quality and monitoring controls are robust.

A comprehensive view of customer data across lines of business is crucial. Institutions must manage refreshes efficiently, avoiding redundancies while ensuring consistent risk attribute assessments across business segments, especially for high-risk customers.

The document warns of challenges like oversimplification and competing priorities during transitions to modernized refresh programs. A gradual, pilot-based implementation ensures effective adaptation to risk-based models, balancing compliance needs with operational capabilities.

Ultimately, the report advocates leveraging technology and regulatory flexibility to innovate KYC programs, improving financial crime compliance while reducing costs and operational burdens.

Read full report: https://www.ey.com/content/dam/ey-unified-site/ey-com/en-us/insights/financial-services/documents/ey-reassessing-know-your-customer-refresh-building-an-effective-risk-based-program.pdf