Introduction

KYC Hub, an industry leader in Know Your Customer (KYC) and Anti-Money Laundering (AML) solutions, partnered with a major digital bank, serving millions of customers and processing over 5 million transactions annually. The challenge was to overcome their transaction monitoring and AML compliance hurdles by implementing an efficient, flexible, and robust solution.

Client’s Challenges

The client faced numerous challenges with their existing transaction monitoring system:

No real-time alerts: Transactions were processed with a delay (T+1), meaning suspicious activities were only identified after they had already been processed. This delay impaired the bank’s ability to detect and address these activities quickly, increasing their risk of exposure.

Limited flexibility:  The bank’s existing transaction monitoring system was inflexible, only catering to predefined transaction monitoring scenarios. As the bank sought to expand its services and adapt to evolving regulatory requirements or emerging fraud patterns, this lack of flexibility became a significant hurdle, limiting its ability to respond swiftly and effectively. 

Lack of integration: The absence of downstream integration meant a disconnect in the transaction monitoring process. For instance, once a suspicious transaction was flagged, there was no established pathway to investigate and resolve the alert. Moreover, there was no option for alert remediation. As such, the bank was left with several activities, slowing the response time, increasing the chances of errors, and potentially allowing fraudulent transactions to slip through.

Poor analytics:  In transaction monitoring, analytics infrastructure refers to the systems and tools used to analyze transaction data for signs of suspicious activity. These tools could include algorithms that detect patterns, and machine learning systems predict threats. 

Our client was struggling with an analytics infrastructure generating a high rate of false positives. The problem with a high rate of false positives poses two challenges. First, it means that the bank’s compliance team was spending significant time and resources investigating these false alarms. Second, a high rate of false positives led to ‘alert fatigue,’ where the sheer volume of alerts caused genuine suspicious activities to be overlooked or not investigated thoroughly.

Extensive manual interventions: The digital bank was heavily dependent on thorough manual processes, which involved manually inspecting and scrutinizing a significant number of transactions that their system had identified as potentially suspicious.

KYC Hub Comes To The Rescue

KYC Hub stepped in with a comprehensive suite of tools and services. 

• No-Code Rule Creation: The bank was equipped with the ability to tailor and roll out transaction monitoring rules, all without needing a background in coding, thanks to KYC Hub.
• Customer Risk Rating and Assessment: Our team of experts introduced a sturdy risk profiling system. This allowed the bank to uncover suspicious transactions and uphold regulatory compliance effortlessly.
• STR Builder: Creating and submitting Suspicious Transaction Reports (STRs) to authorities became a smoother process with our STR Builder.
• Real-time Data Ingestion via API: KYC Hub provided continuous, real-time transaction monitoring and screening, keeping the bank’s data current.
• Intuitive Customer Screening and Monitoring: With our tech savvy solutions, the bank was able to bolster their customer due diligence (CDD) using sanctions, watchlists, politically exposed person (PEPs), and real-time payment screening.
• Risk-Based Approach to Alert Prioritization: KYC Hub’s approach guided the bank to concentrate on high-risk alerts, allocating resources effectively.
• Alert Categorization: Our state-of-the-art system allowed the bank to differentiate between false positives and genuine alerts, improving accuracy.
• Numerous AML Detectors: KYC Hub offered a range of detection tools, enabling the bank to identify potential AML risks effectively.
• Configurable and Modular Workflow Automation: Manual processes were minimized, and compliance processes streamlined, all thanks to KYC Hub’s automated workflows.

Results

Collaborating with KYC Hub led to the following transformative results for the digital bank:

• 80% reduction in false positives. This allowed the bank to zero in on actual risks, enhancing operational effectiveness.
• The time to close alerts was slashed by 73%, guaranteeing swift identification and resolution of questionable transactions.
• A significant 38% dip in operating costs was seen, thanks to smoother processes and a notable reduction in manual tasks.

Conclusion

KYC Hub’s partnership with the digital bank is a testament to its commitment to providing robust, reliable, and efficient compliance solutions. If you’re looking to automate your compliance, due diligence, and onboarding processes, KYC Hub’s award-winning platform is the solution you need. For more information about our offerings, or to find out how we can help automate your compliance, due diligence, and onboarding processes, visit our website and book a demo.