Perpetual KYC: Lessons for Compliance Teams

Is perpetual KYC (pKYC) just a buzzword that’s taking the compliance scene by storm, or does it actually hold value that could change the game for you and your compliance team? At spektr, we firmly believe it’s the latter. pKYC shouldn’t be deemed just a “nice-to-have” anymore – it’s a game-changing necessity for compliance teams striving to stay ahead of risk and regulatory demands.

Why Perpetual KYC Isn’t Just a Buzzword

Risk isn’t static. Just because a customer was deemed low-risk during onboarding doesn’t mean they’ll stay that way. Transactions change, external conditions shift, and behaviors evolve. Unfortunately, relying on periodic KYC to catch these changes often means risks go unnoticed for months — or longer.

pKYC helps to eliminate these blind spots. By enabling continuous monitoring, it ensures that compliance teams can track critical shifts as they happen, which means no more waiting for the next scheduled KYC review to uncover an issue that should’ve been flagged months ago.

Considering changes happen all the time, why should KYC reviews be confined to intervals of months or even years? This proactive, real-time approach is what makes pKYC such a vital tool. Ultimately, pKYC flips the script, giving compliance teams the power to tackle changes head-on the moment they happen.

Benefits From Shifting to 24/7 Oversight

During the intervals in periodic KYC reviews, key changes in a customer’s profile – such as shifts in ownership, significant transactions, or inclusion on a sanctions list – can go unnoticed. Such a delayed detection leaves organizations exposed to compliance risks, potential regulatory violations, and reputational damage.

This is where solutions like spektr step in with pKYC to bridge the gaps left by periodic reviews:

• Continuous Monitoring: With spektr’s pKYC capabilities, compliance teams benefit from real-time monitoring of changes in their customer base. So, instead of waiting for future reviews, spektr will immediately flag critical updates, e.g. any ownership changes.

• Automated Alerts: spektr ensures that when important changes take place, alerts are instantly triggered, so that compliance teams are notified without delay. For example, using automated integrations with external data providers like sanctions lists and beneficial ownership registries, spektr can detect the addition of a high-risk individual to a company’s shareholder structure.

• Automated Risk Assessment: spektr’s no-code platform helps to reassess any customer’s risk profile in real-time – providing compliance teams with updated risk insights and a summary of the triggered event for faster decision-making.

• Proactive Action: Equipped with the aforementioned information, compliance teams can act accordingly, and quickly, e.g. restricting account activity and initiating enhanced due diligence (EDD) procedures.

• Reduced Backlogs and Manual Work: Instead of manually sifting through outdated customer files, spektr’s automation reduces the workload of compliance teams and allows them to focus on mitigating the flagged risk.

pKYC: a Non-Negotiable

So, to answer the question we posed at the very beginning of this article: no, pKYC isn’t just a buzzword, even though it’s being used more and more amongst compliance professionals. Its tangible worth whittles down to gaining 24/7 oversight, being updated as and when critical changes take place, and making sure your teams aren’t faced with large amounts of data that have piled up over a concerning period of time.

The compliance landscape is changing rapidly, and so are the risks. With the sheer volume and speed of financial data today, traditional periodic KYC isn’t enough to keep up. pKYC ensures that compliance teams are able to remain agile and prepared for whatever comes next.

Speaking of what comes next, are you curious how spektr can reshape your compliance processes? Book a demo today and see firsthand how spektr can help you move from periodic reviews to continuous monitoring that doesn’t wait for the next scheduled update to catch potential risks.