KYC and Compliance using Blockchain APIs
Know Your Customer (KYC) and Anti-Money Laundering (AML) costs are enormous and continue to grow. Inclusive of regulatory penalties, banks spend roughly $18 billion on AML compliance and penalties each year.
The reasons for the high costs include:
Duplicate efforts in client onboarding. When a new client relationship is formed, financial institutions go through a process in accordance with “know your customer” (KYC) regulations. Many KYC checks are duplicative. Goldman Sachs Investment Research estimates proper KYC due diligence costs are $15k-$50k per client.
Manual reconciliation of false-positives in AML screening process. Although banks have spent a lot on transaction monitoring software to screen for suspicious behavior, 2%-5% of all payment transactions are manually reviewed by compliance personnel to determine if money laundering occurred. In these cases, false positive rates are around 99.9%. The false positives most occur because of poor quality of transaction data (e.g. missing sender/receiver identification details). Someone has to deal with the false
positives, even it if it’s due to incomplete information. The manual reconciliation process costs the industry $6 Billion.
