Published on 19, Jun 2023

https://docs.google.com/document/d/1y_rAcsZI50tohcntTwvAUq8le_C3vIyCFi688OKt4s4/edit?usp=sharing 

Osaigbovo Edegbe: Building a Strong KYC/AML Framework for Financial Services Companies

As financial technology solutions emerge rapidly in many countries, money laundering and terrorist financing activities have also increased globally. According to Deloitte, an estimated 2-5% of the global GDP, or as much as $2 trillion, is laundered yearly. 

Furthermore, the COVID-19 pandemic accelerated digital transaction volumes, changing customer behaviors, thereby worsening Know Your Customer (KYC) and Anti-Money Laundering (AML) compliance.  These innovative tools and platforms have revolutionized how we manage our finances, providing convenience, accessibility, and efficiency. However, with these advancements come challenges, particularly in ensuring transactions' trust, security, and legitimacy. In addressing these concerns, businesses must constantly familiarize themselves with Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations to safeguard the integrity of their products and platforms. 

According to the Founder/CEO of Sascon LLC and Author of “Mastering KYC and AML Compliance: A Comprehensive Guide for Startups and Small Businesses," Osaigbovo Edegbe, it is the joint responsibility of all businesses in the financial services space to maintain good processes and avoid money laundering and fraud. Failure to comply with these regulations can result in hefty fines, loss of reputation, and even legal consequences. She advises fintech startup founders on the best practices for building a strong KYC and AML framework.

Identify Your Customer Base

Ms. Edegbe submits that the first step in building a strong KYC program is identifying your customer base. She states that businesses must determine their customers, their type of business, and the nature of transactions.  

She says, “Identifying your customer base is essential because it helps determine the risk level associated with your business. High-risk businesses, such as money service businesses or those dealing with high-value transactions, require more stringent KYC procedures than low-risk businesses, such as retail stores”.

Collect and Verify Customer Data

The expert mentioned that after a company has identified its customer base, it should also collect and verify customer data to ensure the information provided is accurate and authentic. She advises that companies can do this through various methods, such as ID verification, document verification, or biometric verification, and must collect such data following the relevant data and privacy laws. 

Implement Ongoing Monitoring

To help companies identify potential money laundering or terrorist financing activities and report them to the appropriate authorities, Ms. Edegbe advises companies to monitor customer transactions and behavior continuously. 

She says, “Ongoing monitoring is essential to any KYC/AML program and detecting suspicious activities.

Conduct Risk Assessments

In the words of Ms. Osaigbovo Edegbe, risk assessment is critical to building an effective KYC and AML program. She recommends companies conduct regular risk assessments to identify high-risk customers, transactions, and countries. 

“This will ensure that the company’s compliance programs remain practical and up-to-date,” She said.

Train Your Employees/Team

“If you don’t train them, you can’t blame them,” says Ms. Edegbe as she advises companies to provide adequate employee training and resources. 

She hinted that employees and team members should be trained to identify and report suspicious activity, collect and verify customer data, and conduct ongoing monitoring.

Stay Informed About Regulatory Changes

Regulatory changes are inevitable, Edegbe warned, and staying informed about any changes that may affect your business is critical. She advised companies to review regulatory updates regularly, attend industry events, and join relevant networks to stay up-to-date with changes in KYC and AML compliance regulations. 

In her submission, building a strong KYC and AML framework is critical for all companies to comply with regulations and avoid potential legal and reputational consequences. She emphasized that by following these best practices, companies can develop effective KYC and AML programs that protect themselves and their customers.

Furthermore, Ms. Edegbe reiterates that building a strong KYC and AML framework is critical for small businesses to comply with regulations and avoid potential legal and reputational consequences and recommends that companies develop effective KYC and AML programs that protect themselves and their customers.

About Osaigbovo Edegbe

Osaigbovo Edegbe is an award-winning entrepreneur,  Author, and CEO of Sascon LLC, a US-based company utilizing digital technology to transform the financial services sector. With a team of highly skilled professionals with over 15 years of combined experience, they provide consulting services to support organizations with data analytics & insights, cybersecurity & risk management, digital transformation, payments & transaction solutions, blockchain & cryptocurrency, etc. She holds a Masters's Degree in Finance from the University of Technology, Dublin, with several years of experience working in large corporations and startups in the financial and IT sectors. Her finance, digital technology, and compliance expertise have helped organizations and industry professionals establish frameworks to mitigate risks and ensure compliance with industry standards.