One of the most important areas in any organization is compliance. In the case of legal and financial institutions, it is imperative for due diligence to be conducted accurately and as quickly as possible. Organizations in these sectors are no doubt familiar with the importance of complying with checks to satisfy Anti-Money Laundering regulations, as well as customer identity verification – “Know Your Customer”.
The regulations that affect the way in which due diligence should be carried out are often subject to change, depending on prevalent trends in financial crime. During COVID-19 especially, criminal activities such as money laundering, fraud and terrorist financing have increased, which means that organizations should expect further changes to legislation in order to mitigate the repercussions of criminal attempts. Currently, the main pieces of applicable legislation are as follows:
- The Proceeds of Crime Act 2002 (as amended by the Serious Organised Crime and Police Act 2005);
- The Money Laundering, Terrorist Financing and Finance of Funds (Information on the Payer) Regulations 2017;
- The Terrorism Act 2000 (as amended by the Anti-Terrorism, Crime and Security Act 2001);
- The Terrorism Act 2006;
- The EU 5th AML Directive (this applies because it came into force during the UK’s membership of the EU, however, the EU 6th AML Directive will not be incorporated).
The adoption of Robotic Process Automation (RPA) has been vital in increasing operational efficiency by decreasing administrative time spent on compliance. With the ever-changing scope of AML regulations, it is increasingly becoming more difficult to rely on manual administration to conduct due diligence accurately and efficiently. Studies conducted by Oliver Wyman and Thomas Reuters found that in the case of banks, the average onboarding time for corporate banking customers took 90 to 120 days, with a $40m average spend. For legal organizations, compliance checks generally average 32 days, depending on the size of the administrative compliance team. In order to carry out more checks at a faster pace, organizations may turn to hiring more administrators which can quickly become costly.
With RPA, organizations make an investment in a Digital Robot that can work 24 hours per day, 7 days a week. This results in more compliance checks per day, resulting in less spend for the business on due diligence and increased operational efficiency. It is not only the act of carrying out the checks that are time consuming and costly. Organizations must maintain suitable audit-ready reporting. When using RPA, organizations can have a 100% accurate audit trail.
Digital Workers can also be programmed to run automated ongoing due diligence checks as required, removing any risks of these tasks being left behind or delayed. By implementing RPA, the following could be implemented:
- Scheduling of automated ongoing due diligence checks.
- Automated notification, termination and account closure for customers identified as risky.
- Automated verification of the beneficial ownership and CDD status of clients from reliable and independent sources.
- Automated Suspicious Activity Reports (SAR) to the NCA when potential money laundering activity is detected.
- Automated monitoring for financial crime controls applicable to intermediaries.
- Daily sanction, PEP, SIP and RCA screening with automated reports.
Effective compliance means that organizations avoid fines, sanctions and potential closures. RPA is the way forward to ensure effective compliance. Administrative workers can work on more strategic pursuits, as well as remaining knowledgeable on the latest evolutions in AML / KYC regulations. RPA is in place to augment your current workers, not eliminate the need for humans in the workplace.
If your organization is interested in decreasing time and cost spent on compliance, then get in touch with one of our experts.