Advise #1: KYC analysts must not spend too much time examining individual transactions

When designing the Financial Crime Defence in a bank, it is important that each control activity provides a unique contribution without any overlaps between control activities and combined not leaving any gaps in the total defence.

All the employees working with the individual controls really want to contribute, and to do that optimally everyone needs to understand the various elements in the total defence to a level where it is clear how the employee’s own task fits into the total defence.

Otherwise, there is a risk that the individual employee or even an entire control function takes upon themselves to act as the total defence.

One example is that some KYC analysts examine single transactions to see if anything is unusual/suspicious. That should not be done by the KYC analyst, because the Transaction Monitoring control must – through the thresholds set in TM scenarios – secure that all individual transactions, that are outside the risk appetite of the bank, are examined by TM investigators.

Instead, the KYC analyst must focus on capturing and maintaining all the required KYC information on high-risk customers as the primary task. A part of this work is to evaluate if the total turnover across incoming and outgoing transactions are in line with expectations given the customer’s individual KYC information/profile. I also recommend including a relevance check of the top 5 credit- and debit counterparties.

In this way the KYC control and the TM control contribute differently, and overlap is avoided. There are a lot of situations where the two control functions must collaborate, but that will be a cliffhanger for a later advise in this series, which I hope you will follow in the future.

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