KYC/B (Know Your Customer/Business) and CDD (Customer Due Diligence) are vital for financial and other institutions operating in regulatory-intensive arenas. They act as a shield against financial crime by verifying customer identities and helping organizations understand their activities.
KYC/B and CDD also help manage risk by assessing customer profiles, which enables institutions to tailor services and implement more effective controls. What’s more, KYC/B and CDD procedures build trust with customers, who value their information being protected and financial crime being taken seriously. Ultimately, KYC/B and CDD are essential for financial institutions to operate with integrity, mitigate risk, and ensure long-term stability.
The need for a News API
Keeping pace with customer and business information is a constant battle for financial and other institutions obligated to conduct KYC/B and CDD. In the digital landscape, customer details can evolve rapidly owing to frequent social media updates, company acquisitions, leadership changes, and more. This creates multiple challenges for traditional news data sourcing:
- Data silos and lag – Legacy systems often struggle to integrate information from various sources, creating data silos. This fragmented data makes it difficult to obtain a holistic view of a customer or business, potentially leading to outdated information being used for KYC/B and CDD checks.
- Real-time updates – Regulatory bodies are increasingly demanding real-time data for KYC/B and CDD. Traditional methods, relying on periodic checks, struggle to capture the constant flow of information online, potentially missing critical red flags.
- Manual workload – Verifying information manually is not only time-consuming but also prone to human error. This can lead to delays in onboarding new customers or missed opportunities to identify suspicious activity.
Advanced News APIs offer a robust solution to these challenges, enabling institutions to proactively gather comprehensive, real-time data and automate tasks – revolutionizing KYC/B and CDD monitoring for a more efficient and secure financial landscape.
Drill down: verifying digital identity verification KYB
The digital world has introduced a layer of complexity to identity screening for KYB and CDD. Companies can easily create synthetic corporate identities using scattered online data, making it difficult to distinguish legitimate business customers from potential risk actors. What’s more, digital footprints are fragmented across various platforms – making manual verification of company activity and identity a time-consuming and potentially incomplete process. To make matters worse, online information is constantly evolving, meaning that traditional one-time checks easily miss crucial updates on negative news or changes in risk profiles.
To combat these complexities, comprehensive company digital identity checks have become essential during KYB and CDD. Ideally, these checks should go far beyond basic verification and delve into the world of news, public, and corporate records. By incorporating sanctions screening, institutions can identify businesses tied to illegal activities or restricted countries, reducing the risk of engaging with sanctioned entities. News monitoring can also be used to identify PEPs (Politically Exposed Persons) and their associates, establishing possible connections between them and corporate customers, which helps institutions avoid potential corruption and reputational risks. Similarly, News APIs can be used to scan for negative news articles or public records that might indicate high-risk business behavior, such as fraud or money laundering. This empowers institutions to identify red flags and take appropriate action.
What are the risks?
Cutting corners with KYC/B and CDD exposes institutions to a multitude of risks:
- Compliance risks – Regulatory bodies heavily penalize non-compliance with KYC/B and CDD rules. Fines can be hefty, and regulators can restrict an institution’s operations until proper procedures are in place.
- Supply chain risks – Sub-standard KYC/B on third-party vendors can introduce high-risk actors into the supply chain. This can lead to inadvertent involvement in money laundering or financing of illegal activities.
- Reputational risks – News of an institution onboarding a sanctioned entity or high-risk individual can severely damage its reputation. Customers may lose trust, and attracting new business can become more difficult.
- Legal risks – Failure to identify and report suspicious activity can lead to legal action by authorities. Institutions can also face lawsuits from victims of financial crimes facilitated through their platform.
How real is the risk? By way of recent examples:
- In July 2023, the Federal Reserve Board fined Deutsche Bank a whopping $186M for sanctions compliance and anti-money laundering deficiencies.
- In December 2023, the Royal Bank of Canada was imposed an administrative monetary penalty of $7.47M for AML/KYC/B violations.
- In February of this year, Paytm Payments Bank was found to have violated KYC/B regulations and suffered severe restrictions on its activity by Indian regulators.
Get the bigger picture: streamlining KYC/B with News API
To avoid the pitfalls of KYC/B and CDD, financial institutions and other organizations
need to ensure they get the right data in the right context at the right time. They need a 360-degree view of all aspects of KYC/B and CDD – lowering the false positives that slow processes, dramatically lowering the risk of non-compliance, lowering the risk of supply chain requirements, and identifying and managing money laundering and terrorist financing risks more effectively and quickly.
A News API can facilitate this. Webz.io’s News API offers:
- Comprehensive coverage – Regularly updated news sources from multiple countries, in 170+ languages, that encompass major global sites alongside smaller niche websites
- Low latency – Near-real-time data that’s constantly gathered and updated by smart, adaptive web crawlers
- High quality – Noise-free, contextual data filtered by advanced AI by category (conflict, financial, political, etc.) and sentiment, that includes clean metadata with entities, sources, categories, author names, publication date, and more
- History – 50TB of historical data from news, blogs, online forums, and reviews from across the web dating back to 2008
Additionally, Webz.io offers a wide range of supplemental intelligence feeds – including a Blogs API that offers blog content from around the world in multiple languages, a Forums API with structured data from forums, discussions, and message boards, and a Dark Web API that crawls millions of sites, forums, and marketplaces in the dark web.
Talk to one of our data experts today to see how News API can deliver real-time, reliable data to mitigate KYC/B and CDD risk for your organization.
