The objective of KYC process is to prevent the capital markets from being used, intentionally or unintentionally, by criminal elements for money laundering, identity theft or terrorist financing activities. KYC procedures also enable the intermediaries to know/understand their clients and their financial dealings better. This in turn helps them to manage their risks prudently.
In the face of seemingly endless KYC regulatory changes, many banks err on the side of caution and request more information than they actually need from their clients – just to be safe. But this has an unintended consequence in that bank clients, including investment managers, have to dedicate more time, money and effort to responding to these requests, instead of focusing on managing their products and services, and achieving alpha. Investment managers want banks to realize that KYC affects ALL stakeholders.
Many investment managers feel that partnering with specialist third parties to manage some or all of the KYC function would certainly solve many of their dilemmas, yet there seems to be a delay in adopting these solutions. The issue seems to be a lack of confidence and a degree of reluctance on the part of banks to relinquish some or all of the KYC function. One explanation is that banks may view the initial contact with clients as an integral part of relationship building. What investment managers want banks to understand, though, is that the customer experience is suffering – and that cannot be good for relationships.
Submitted July 18, 2018 at 02:15AM by elicitfely11 https://ift.tt/2zOaLR1
