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AML and KYC Compliance in the COVID-19 Era

 

Vaibhav Goel

Head, Analytical Products Industry Advisory Group, Banking, Financial Services and Insurance, TCS

Swati Singh

Product Consultant, Analytical Products Industry Advisory Group, Banking, Financial Services and Insurance, TCS

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Adopting AI backed tools to proactively detect fraud and prevent losses

Lockdowns and social distancing restrictions imposed as a result of the COVID-19 crisis have resulted in financial institutions directing customers to digital channels. Increased usage of digital channels, disbursal of government aid through banks, staff shortage, and remote working models have created challenges around fraud and money laundering, adversely impacting anti-money laundering (AML) and know your customer (KYC) compliance in the COVID-19 era.

In our view, an assessment of banks’ supervisory and fraud detection processes will reveal gaps rendering them inadequate to deal with the prevailing situation. To contend with the impact of COVID-19 on money laundering and KYC compliance, banks must adopt intelligent technology backed solutions. Key measures that must form a part of strategies for AML compliance under COVID-19 include:

  • Replacing physical document verification with government issued digital IDs

  • Using virtual collaboration tools

  • Leveraging analytics to identify anomalies in customer behavior

  • Adopting mechanisms to track illicit activities

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