Do you really know your clients? How pKYC is transforming customer verification and due-diligence

Perpetual KYC (Know Your Customer) known as pKYC is an emerging concept within the world of compliance, but what exactly is it and why should regulated firms care?

In a nutshell, where traditional KYC is a transactional process, pKYC is a dynamic one. Instead of undertaking KYC checks on customers at onboarding and then, typically, on a one, three and five year cycle, pKYC checks customers continually to take what is increasingly becoming known as a ‘Customer Lifecycle Management’ approach to compliance and risk. Under a pKYC programme, businesses run an initial check on a new customer, and then use a wide range of data sources to perpetually maintain and update their profile throughout the entire customer relationship.

In practice, this means that in addition to verifying and screening the customer at the onboarding stage, monitoring their name against sanctions and PEP lists regularly and then rerunning a full check at regular intervals, a pKYC business also utilises external and internal data sources to ensure any relevant changes to the customer are immediately identified, recorded and automatically risk-assessed to maintain an up-to-date risk profile of that individual or business.

Not only is pKYC a more reliable way for firms to manage their risk strategy - because changes are identified immediately - but there are huge cost benefits too due to the reduced demand on time and resource.

As a relatively new concept, there is no standard on what exactly pKYC is or how it should be run, but there are a few things that are widely agreed - pKYC is digital, it is automatic, and it provides a single customer view. Therefore, in addition to the global data partners used for identification, verification, screening and monitoring - such as Experian, Equifax, Dow Jones etc - businesses that want to transition to pKYC will also need to integrate other free and paid-for public data - as well as any internal data they own - into their KYC process.

Unfortunately, there is currently no easy way to do this; firms who want to try and develop a more dynamic KYC solution need to invest a huge amount of technical and financial resource into APIs and other integrations, as well as hosting systems to process it all.  Some of the bigger banks have started outsourcing functionality to tech and data partners - but it is a complicated and expensive way to build solutions, and due to the number of third parties involved, difficult to create anything truly dynamic.

There is, therefore, a huge opportunity for third parties to create affordable solutions that will enable all regulated businesses to transition from KYC to pKYC and given the strong fintech and RegTech sectors in the UK, home grown solutions are certainly not far away.

At SmartSearch, we are already three quarters of the way there, because, unlike our competitors, we already offer a single customer view by hosting every part of a KYC check - identification, verification, screening, and ongoing monitoring - within one easy to use platform, which itself can be integrated with clients’ existing customer databases.

SmartSearch also automates KYC checks; clients can ‘recheck’ their customers at regular intervals of their choice, while our ongoing monitoring ensures all customers are screened against PEP and sanctions lists every night.

We are now developing a pKYC solution that builds on our existing platform. It will integrate and overlay additional external and internal data, automatically risk-assess changes and host all updates in one place. pKYC has the ability to completely transform customer due diligence and our aim is to create a solution that is affordable to all businesses, one that is more reliable, more efficient, more cost-effective than any existing KYC programme, and gives regulated firms the confidence that they really doknow their customers.

So, what are you waiting for? Contact us today to find out how we can help you transition from KYC to pKYC to ensure that you really do know your customers.