KYC: How compliance can improve business performance – post event summary
Know Your Customer (KYC) is not just a set of regulations to comply with. With the right data, processes, and technology, it can be a valuable tool to understand our customers better and thus be able to support them throughout their challenges, while at the same time shielding business owners from unnecessary risk. We wanted to delve a little deeper into this issue and so hosted a webinar with leading experts on the regulatory environment and financial crime to delve into the topic. Our panel of experts discussed what organizations need to do to de-risk their operations and how they can set themselves up for future success.
Our expert panel was made up of Graham Barrow, Director and Presenter of the Dark Money Files podcast, Viljar Kähari, Co-founder of PWC Legal Estonia and Gandolfo Iacono, CEO of LexisNexis Russia CIS & Eastern Europe.
Chaired by our Director of Global Markets, Brynja Baldursdóttir, the webinar drew in over 500 registrants and 300 attendees from 33 different countries, all eager to better understand the opportunities compliance technologies can bring to a business.
Brynja began the session by explaining that KYC is not just a box ticking exercise, it is a necessity for better business in 2021. The key thing to consider is that KYC is all about trust.
Dark Money
To begin, Graham contextualized the important role that KYC plays in protecting the financial system from ‘dark money’. Dark money, “which is any money that enters the financial system for which you cannot show for certain where it comes from”, has real victims that do not show up on paper. Dark money must come at a cost to somebody. Better KYC processes are not just protecting customers and businesses, it also protects taxpayers in corrupt countries and potential victims of money laundering all over the world.
Part of the issue with stopping or at least resisting the flow of dark money according to Viljar Kähari, is that “banks interpret KYC requirements very differently. It seems that client onboarding and monitoring processes are sometimes much more important than actually understanding a client’s business and monitoring transactions.” This alludes to what Graham believes the larger problem to be, that, “there really is a big difference between banks being compliant in terms of the anti-financial crime requirements, and stopping dirty money entering the system.”
Understand your customer
To shift from just being compliant with regulations to stopping financial crime with compliance we must progress from Knowing Your Customer to ‘Understanding Your Customer’ (UYC), a phrase Graham coined during the discussion. He commented that this is “because if people are intent on laundering money, they will provide beautiful documentation to get into the financial institution, but that documentation will need to be lies.” If we can go beyond knowing our customer to understanding them, then we can see through even the best lies. “Because if you force people and criminals to lie when they create the accounts documentation, you then have good documentation to monitor the downstream transactions. And that is the control. It is getting them to say in detail what they want you to hear and then monitor in detail what they actually do. It’s the difference between those two things, which is your control.”
Data, data, data
Our panelists agreed that the bridge between KYC and ‘UYC’ is data. Graham commented that “the ability to take KYC data, and feed it into your transaction monitoring system intelligently, is probably the single most important thing we can do. But we must sell one idea to all our customers. The idea that KYC is not an ordeal we have to put the customer through. It is the most important thing we can do to protect them.”
There are barriers that compliance teams need to break through to get to this next level of KYC. Gandolfo says, “the issue is that we see compliance or AML as a cost centre”. Compliance departments need to be seen as an asset hat needs serious data and software,” and many managers are not aware of this. Managers need to see the value that effective compliance brings in potential fines avoided. Viljar concurred, “compliance departments are overloaded. They do not have the resources they need; they do not have access to different databases.”
Perception
The perception of compliance needs to change for organizations to allocate the resources teams need to resist the flow of ‘dark money’. Viljar stated that “changing the mindset of compliance officers from an inspector to a business advisor is more important and necessary today. Because we cannot assume that all clients are criminals unless they can prove otherwise. It is the common understanding now because you need to provide a massive amount of information and documentation to show that you are getting your money legally. And that is why I’m thinking that the compliance function must become more proactive at finding practical solutions rather than just saying ‘that this work cannot be done.’”
To make this organizational culture shift it will take time, but our panel agreed that a realistic alternative is to outsource KYC and AML, provided there is not a “homogenization of risk appetite”. Viljar noted that when a company does not have access to a public register, “there are several service providers who can easily help to solve this problem. Just the banks and other regulated financial institutions must trust service providers and user services.”
Change of mindset
Summarizing the event Brynja rounded up the discussion by pointing out that the most important takeaway from the webinar is that as an industry, we need to start changing our mindset from knowing our customer, to understanding our customer. We need to vastly improve international cooperation in terms of legislation and regulation, and we can refine processes around KYC in terms of increasing shared services, using data and technology in a smarter manner which ultimately should make sure that we as businesses make our processes reflect our appetite for risk. It is time to make the switch from simply knowing, to understanding our customers.
Learn more
This virtual event was a huge success from our perspective which gathered an incredibly engaged audience. Thank you so much for all your brilliant questions – our panel enjoyed the lively debate!
If you would like to re-watch the session, or if you were unable to attend, please use this link to learn about the benefits KYC compliance can bring to your business.
Creditinfo Group becomes majority shareholder of Kredītinformācijas Birojs (KIB)
LONDON, UK, March 25th, 2021 – Today, Creditinfo Group – the leading global credit information and decision analytics provider – announced that is has increased its stake in JSC “Kredītinformācijas Birojs” (KIB) to 51%, becoming the majority shareholder.
Earlier this month, the US private equity fund Levine Leichtman Capital Partners (LLCP) became the majority shareholder of Creditinfo Group. As the result of that transaction, the share capital of the KIB joint stock company was increased, with ABLV Bank selling its shares.
The other shareholders of the company, including the leading Latvian commercial banks; AS Swedbank, AS SEB banka, AS Luminor Bank, and AS Citadele banka will remain unchanged and will continue to support KIB by serving on the Supervisory Board of the joint stock company.
Jānis Timmermanis, Chairman of the Board of KIB: “This investment is an important confirmation of the company’s potential to continue to grow despite being a relatively young entity and offer lenders throughout the Baltic region modern solutions with scoring and decision capabilities while also enabling prevention of money laundering.”
Brynja Baldursdóttir, Director of Global Markets Creditinfo Nordics: “This announcement marks a significant milestone for Creditinfo and consolidates our presence in the Baltics as a leader in providing Decision-as-a-service solutions – a key component of the Credit Bureau system. With international knowledge and local market support, Creditinfo solutions are setting a high bar wherever they are implemented.”
KIB was founded in May 2013 and is the first licensed credit information bureau in Latvia. KIB helps banks and financial institutions to manage credit risk and apply best practices in risk management and credit operations. Its activities in the field of data processing are licensed and supervised by the State Data Inspectorate.
Ends.
About Creditinfo
Founded in 1997 and headquartered in Reykjavik, Iceland, Creditinfo is a global provider of credit information and risk management solutions. As one of the fastest growing companies in its field, Creditinfo facilitates access to finance through intelligent information, software and analysis solutions.
With more than 33 credit bureaus today, Creditinfo has the largest presence in credit risk management worldwide, with significantly greater influence than competitors. For decades, it has provided business information, risk management and credit bureau solutions to major lenders, governments and central banks around the world to increase financial inclusion and create economic growth by giving SMEs and individuals access to credit.
Media Contact:
Matt Silver
Babel Agency for Creditinfo Group creditinfo@babelpr.com
+44 (0)7769 266 452
More needs to be done to achieve gender parity
Independent analysis done by Creditinfo using its vast data assets showed that gender balance in the workplace is far from being achieved. Companies need to keep this top of mind when it comes to creating leadership opportunities for women as the world moves towards closing the gap on gender parity.
Analysis by Creditinfo Iceland showed that last year, women were only appointed CEOs in a quarter of new hires in Iceland. Women accounted for 25% of new hires for the position of CEO, although this was an improvement on the 20% average over the last five years. Today, women hold around 18% of the CEO positions in the 6,000 active companies, but only about 13% of them are CEOs of the 1,000 higher-turnover companies.
The FKA (Women’s Association in Business) in Iceland, has a set a goal in their “Gender Balance Scale” project that by 2027 the gender ratio will be at least 40/60 in the executive boards in Iceland. The project was established in 2017 and has helped to promote diversity and balance through greater gender equality in management positions.
If we look at the rate of change of last 10 years, it is clear that the goal will not be achieved until 2061. If the share of women in CEO positions is to reach 40% before then, the proportion of women in new hires should be between 58% and 70% by 2027. The analysis also highlights an interesting statistic; a woman is more likely to take over the CEO position if her predecessor was also a woman. That is some food for thought for the gentlemen!
Brynja Baldursdóttir, Managing Director of Creditinfo Iceland has clear views on how to drive change, she says “Given the current proportion of women in new hires, it is clear that the goal of women being at least 40% of CEOs In Iceland by 2027 will not be achieved. It may be more encouraging to focus on raising the proportion of women in new employment to at least 50% in all sectors by 2027. Managers can thus make an immediate impact and help tip the scales.”
In Lithuania gender equality still seems a remote concept according to an analysis recently conducted by Creditinfo Lithuania. At the beginning of March 2021, there were almost 100,000 company managers in Lithuania, of these, only 30% were women. Probably unsurprising the biggest gap is in the construction, manufacturing, mining and quarrying, transport and agriculture sectors. Whereas the smallest gap is in the services, hotel and restaurant businesses. Men start managing companies at just a slightly younger age than women: the average age of female managers is 47 years, and male – 46 years of age. According to the data, a total of 98,127 people worked in the position of corporate managers in Lithuania at the beginning of March, out of which 30% were women, showing the sorry state of affairs.
It is often believed that more women than men are employed in trade, but businesses in this sector are almost three times more likely to be managed by men: 27% women and 73% men.
“Although there is a bias in historically male employee dominated industries the female employee dominated industries are still majority led by males, so the logic does not hold. Across all industries the focus must be on executive management selection on merit alone,” says Jekaterina Rojaka, Creditinfo Lithunaia‘s COO.
According to a report done by the United Nations, women remain significantly underrepresented in all aspects of decision-making, and violence against women in public life is widespread. The attitude that women should not have public roles, enduring norms about gender roles and legal discrimination compound these challenges and devalue women’s contributions to decision-making, threatening sustainable development. The report recommends that in order reach equality in participation and decision-making in public life, it is necessary to implement international and national commitments and norms, including through temporary special measures, create more enabling environments and institutional systems, reduce violence against women in political life and strengthen the voices of women, who face multiple forms of discrimination.
According to another report by the UN Women, women are at the forefront of the battle against COVID-19, as front-line and health sector workers, as scientists, doctors and caregivers, yet they get paid 11 per cent less globally than their male counterparts. An analysis of COVID-19 task teams from 87 countries found only 3.5 per cent of them had gender parity. As a result, this year’s International Women’s Day is a rallying cry for Generation Equality, to act for an equal future for all.
Creditinfo Group
Creditinfo has a rich diversity of talent within the company. In each of our offices we have a mix of nationalities, genders, ages, cultures, sexual orientation, education among others. These differences within the Creditinfo enable the company to thrive and help us to embrace our company values of respect, innovation and no nonsense and ultimately, we create greater trust, internally and with our clients.
We strive to achieve a balance of genders within each of our 30+ markets, however we still see today a lower number of female applicants for certain roles during the recruitment process, often IT and analytical roles, which limits our options when hiring. Globally, we have 34% females and 66% male, and those percentages are also mirrored in management positions worldwide with approximately 63% male and 37% female.
With focus on International Women’s Day, we asked the Group HR & Operations Support at Creditinfo Group for her views on closing in on the gender gap.
“International Women’s Day has given us an opportunity to celebrate the achievements of women worldwide and to also give thought to those women who are not so fortunate. I consider myself lucky to have worked for companies throughout my career that largely support women’s equality, Creditinfo being one of those, where we celebrate and recognize efforts by the women in our company. Recently, our General Manager from Ukraine, Kateryna Danylchenko was recognized as one of the top-50 most influential women of Ukrainian Fintech and these are among some of the achievements we are always proud of. It’d be great to see a more equal split since women’s full and effective participation and leadership in of all areas of life drives progress for everyone”, states Emma Camilleri, Group HR & Operations Support at Creditinfo Group.
#GenerationEquality #IWD2021
