Maintaining up to date customer due diligence information is a legal requirement for regulated entities and involves at its core, verifying a customer’s identity and the business they are involved in, before being able to conduct business with them.
The essential job of an organisation’s Customer Due Diligence (CDD) operations is to do this, usually at scale, capturing and consolidating data, and that data comes from a miscellany of sources. From institutionally held on-premise and cloud-hosted proprietary solutions, documents and files held by customers to industry standard third party solutions such as KPMG Third Party Diligence (K-3PID) which conducts screening of PEPs, Sanctions and Adverse Media. The task is assessing the data requirement, getting hold of that data, and validating it is accurate.
The scope of 'CDD data' however extends beyond just the details of the accounts and individuals being reviewed. CDD policy and risk models, when properly examined and quantified form a dataset of their own, made up of not companies and people but conditions, actions and types of acceptable documents, that form the baseline against which our account and individual data held can be compared.
The process by which CDD is conducted, the steps involved in outreach to clients for information, and the quality controls applied for example, also form a dataset of tasks and deliverables. Ensuring you have this dataset can ultimately transform the way in which your CDD operations function, making them much more efficient.
Using datafication of processes to reduce manual, repeatable tasks
This 'datafication' of the mechanisms of CDD enables automation, drives efficiency and increases quality. While the actual assessment of acceptability remains a human endeavour, we can take away the menial elements of the CDD process. Why spend time assessing whether the type of document the customer provided to you is acceptable against a policy document, when that 'acceptability data' can be automatically retrieved and presented to you alongside the document from a quantified policy? Why in fact not detect the type of document provided, and offer an automated assessment of acceptability alongside a human decision?
Continuous monitoring of data
Monitoring the data generated within CDD operations is also key. Quantifying policy in this way and tying it directly to process allows targeting of 'problem areas' in CDD. We can identify specific areas of policy which lead to the longest case processing times, and then put in place a continuous process improvement plan around them.
We can drive targeted training and ongoing competency checks in areas of policy that lead to the biggest risks, or where issues have been encountered in the past. When the approach is seeing a policy and a process as 'part of the data', this doesn't require traditional business analysis to ascertain where the issues are. Automated reporting which calls out specific policy areas that are leading to problems, is possible.
KPMG can support you with a data-driven customer due diligence solution. We have combined our technology, regulatory and operational experts to launch KPMG Smart CDD, an 'out of the box' customer due diligence solution designed and built in the cloud. Smart CDD's capability delivers a customer centric, digital experience to manage the end to end journey for onboarding, periodic review, remediation and ongoing monitoring.
For more information on customer due diligence and how KPMG can support your business, please visit the KPMG CDD webpage or contact a member of the Managed Services team.