Fraud prevention & security
Traditional KYC processes are time-consuming, cumbersome and offer ample opportunities for human error. They also leave banks open to fi nancial and reputational hardship. Yet as anti-money laundering regulations continue to tighten, and banks are dragged kicking and screaming into the digital age,
Tom Loonen, professor of fi nancial law and integrity at the Vrije Universiteit Amsterdam, explains why the old modus operandi is no longer viable – and what we can expect from the future of KYC.
Error terror F
inancial criminals, says Tom Loonen, can be like moles. As the professor of financial law and integrity at the Vrije Universiteit Amsterdam says, they go about their business, making money transfers within an intricate, hidden network of underground tunnels. But now and again, they have to pop their heads up into the legitimate world to get some air. That’s when financial institutions, law enforcement – or a combination of the two – can catch them.
Historically, explains Loonen, who also works as a special counsel at Amsterdam’s Pinsent Masons international law firm, the problem has been that know-your-customer (KYC) processes have been too cumbersome to keep up with the moles’ movements. Many opportunities to catch them are missed due to human error. In other cases, it just takes too long to get to the air holes. Yet as more banks implement digital processes, along the way partnering with their competitors
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