KYC/AML compliance as a competitive advantage for financial institutions

KYC/AML compliance shortcomings and opportunities

4 min readOct 23, 2020


By Vanessa Malone

In the last few months, major cracks have been revealed in the current Know Your Customer “KYC” and anti-money laundering “AML” compliance landscape for financial institutions.

In May 2020, a leaked bulletin prepared by the U.S. Federal Bureau of Investigation reported that bad actors are likely using hedge funds and private equity firms to launder money and avoid anti-money laundering roadblocks. The FBI reported that it assumes AML programs are not adequately designed to monitor and detect threat actors’ use of private investment funds to launder money.

Last month the “FinCEN Files,” a culmination of a 16-month long investigation led by BuzzFeed News and the International Consortium of Investigative Journalists (ICIJ), revealed that major banks have continued to process payments identified as being at high risk of money laundering and other crimes.

The files also brought attention to the potential lack of KYC best practices. In half of the Suspicious Activity Reports “SARs” financial institutions reported to FinCEN that were part of the investigation, banks didn’t have information about one or more entities behind the transactions and often failed to perform the most basic checks on their customers, such as verifying where a business is located when someone opens a new account.

Seemingly in response to the FinCEN Files, FinCEN came out with an announcement to make significant reforms to the U.S. anti money laundering system.

We believe that this series of unfortunate findings will lead to major amendments to the existing KYC/AML compliance requirements financial institutions and other regulated firms must follow.

It’s not the time to take a defensive approach and wait. We believe that those that leverage technology in their KYC/AML strategy and begin working to make critical updates to their current onboarding compliance programs now are going to end up on top.

It’s truly time for compliance to stop being a check-the-box pain point and start being recognized as a competitive advantage. Here’s how integrating with fintech solutions like KYCware and AMLcop could enhance your firm.

1. Modernize the onboarding process for your clients

Just because compliance requirements are increasing, doesn’t mean the amount of time it takes to onboard a user has to change. What Horizon’s compliance solution showcases is the ability for KYC and AML to be integrated into the onboarding process without disrupting the user experience. KYCware offers a high-tech, high-touch solution customized to match your firm’s brand. We believe that keeping identity verification under a company’s likeness maintains trust, reliability, and offers an on-brand experience from start to finish. With features like advanced ID and document verification technology, and auto-adjusting compliance questions depending on a customer’s location, the onboarding process can be sped up and create a positive customer experience.

2. Streamline reporting

The right technology partner has the ability to free compliance managers from repetitive, tedious, yet vital tasks like compliance reporting. Using Horizon’s integrated onboarding solution, a record of all KYC/AML transactions are logged on an unalterable storage medium for detailed record keeping. This also includes timestamped records of when someone is cleared and who cleared them for internal record keeping. Compliance officers can also review KYC submissions, streamline the approval/rejection process, and submit verification requests on the turn-key platform.

3. Position your company at the forefront of KYC/AML compliance

Deploying a robust KYC/AML compliance program doesn’t just protect an institution from regulatory pressure, it could also protect your firm’s reputation and in turn, your bottom line. Just hours after the FinCEN Files were released, shares for the banks involved dropped sharply and the banks had to put out statements to address the report. Much of the criticism surrounding the compliance shortcomings had to do with the lack of basic checks and outdated methods to identify or flag bad actors. Taking on a technology strategy to simultaneously meet KYC/AML compliance demands and stop fraud in its tracks is a win/win.

Concluding thoughts

Currently KYC and AML policies are expected to be “reasonably designed” to verify identities and screen them for money laundering. With the latest findings and loopholes in this language, we can expect there to be substantial and objective additions to the existing requirements. Add in the measures put in place to combat COVID-19, and there is arguably no better time to take a hard look at your firm’s current compliance measures and technology. Click here to schedule a demo and learn how Horizon’s proprietary KYC/AML compliance solutions can work to enhance your KYC/AML compliance program.

About Horizon

Horizon offers a suite of integrated securities software applications for compliant issuance through secondary trading of electronic securities. Truly a compliance-first business, our solutions combine Wall Street and Silicon Valley to power the next generation of exchanges and securities offerings in the U.S. and globally. Visit us at




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