As businesses are faced with greater regulatory demands, companies are placing more emphasis on building stronger compliance regimes. In its 2016 global Cost of Compliance annual survey, Thomson Reuters found that over a third of companies spend at least a full day every week to keep up with the continual changes in regulations. Eighty-three percent of major financial institutions surveyed said that they expect their compliance budgets to increase this year due to increased costs.
Despite the concerns expressed by banks and other regulated entities, there are others who see the positive side of compliance. Compliance expert Michael Volkov has referenced research studies showing how businesses can benefit economically when strong ethics and compliance programs are in place.
With emerging RegTech solutions like online identity verification, due diligence checks for AML and KYC can be carried out more efficiently and effectively, lessening the compliance burden, especially for businesses expanding into new markets where a host of new hurdles exist.
AML/KYC Cross-Border Challenges
AML and KYC compliance can be especially challenging for companies that are looking to expand outside their home country. Being compliant requires staff to learn and understand the laws, regulations, rules, and standards applicable in each market to ensure adherence. Because regulations often vary between different jurisdictions, compliance departments may be faced with a heavy workload as they face a steep learning curve.
In addition, if online identity verification is available in the country where a business wishes to set up operations, there are lengthy approval processes and cumbersome integrations that must be accomplished to secure reliable and trusted data sources onto their platform, which can take anywhere from three to nine months to set up for each vendor depending on its maturity and technical requirements.
Zac Cohen, General Manager at Trulioo, explains the process for integrating new data sources for identity verification:
“To find a suitable in-country data vendor, the company must first align the business and compliance requirement to a risk-based selection process. Next, they would negotiate critical business and legal terms to ensure, for example, InfoSec, privacy, and data usage obligations. Finally, you’d test and integrate the data set while configuring rule criteria, matching algorithms, and more. Unfortunately, however, these one-offs are not always user-friendly and can lack the streamlined and consultative approach needed by global businesses today.”
While all of this work is necessary and essential when integrating new in-country data sources, imagine having to carry out this work for every new market that the company wants to do business in. The cost in terms of time, money, and resources would be tremendous.
Compliance-as-a-Service: Harnessing the Power of Technology and Data
Trulioo’s industry leading online identity verification solution, GlobalGateway, provides access to over 4 billion identities in 50+ countries via 200 data sources to help clients scale their business into new markets. Our award-winning Normalized API provides streamlined integration with in-house or third-party platforms, helping clients verify consumers in new countries faster and easier, and at a lower cost.