There are several regulations that businesses must navigate when it comes to compliance. The various compliance terms, which might indicate different things, just serves to further the confusion. However, the two words “AML-KYC” are by far the most commonly used when discussing compliance. Here, Know Your Customer (KYC) is the procedure for gathering data on the client and confirming their identity. Depending on the jurisdiction, different identity details may be requested. Typically, businesses require at least the following information:

• Name;
• Birth date;
• Address.

Customers provide companies with their identification documents as part of the verification process. Businesses must make sure that any provided papers are authentic and that any customers are who they claim to be.

On the other hand, AML refers to a set of policies and practices used by financial institutions and other regulated organizations to stop financial crimes. For enterprises that are subject to regulation, this entails investigating clients and their transactions, maintaining records, alerting the AML authorities when there is a suspect of money laundering, and so on.

Let’s understand this better!

What is KYC?

Know Your Customer, or KYC refers to the procedures an organization does to verify that its clients are who they claim to be and do not present a danger to the firm. Despite the fact that AML and KYC are frequently used interchangeably, they both fall under the broad umbrella term of AML. The standard KYC key measures:

• confirming the client’s identity to avoid fraud.
• checking the customer’s information against banned lists.
• determining whether a consumer has a greater risk profile by looking at their risk profile.
• to ensure their risk profile hasn’t altered, ongoing monitoring, including transaction tracking.

What is AML?

The term “anti-money laundering,” or “AML,” refers to the measures that financial institutions and other businesses must take to stop criminals from depositing or transferring money obtained via illegal means. AML policies are specifically intended to combat the funding of terrorism and the profits of crimes like human trafficking. An AML program will typically consist of:

• KYC from the beginning of the client’s lifetime and throughout.
• financial activity observation.
• the authorities of suspected activities.
• meticulous record-keeping that can withstand an audit.
• policies and training to keep staff members current.

Differentiating AML-KYC:

• AML compliance programs often involve a wide variety of actions that are all related to AML. Since KYC is only one part of this program, AML also applies to it.
• The criteria for AML programs might differ between jurisdictions. However, they typically contain the following:
• Customer due diligence (CDD), enhanced due diligence (EDD), risk assessment, anti-money-laundering (AML) policies, and internal controls, ongoing surveillance, suspicious activity, and transaction reports, the appointment of an AML compliance officer, and employee training in AML.
• Furthermore, businesses must identify and validate customers—or perform KYC checks—during the CDD process. Businesses must also establish client risk profiles at this point.

Uses of KYC and AML:

According to AML/CFT legislation, regulated firms must comply with AML requirements, which involve KYC. Throughout countries, regulated entities’ jurisdiction varies. This often includes:

• Financial institutions
• Credit institutions
• Insurance companies
• E-money institutions
• Payment institutions
• Virtual Assets Service Providers (VASPs)
• Gambling service providers
• Art dealers

Role of Automation in KYC/AML compliance

Businesses can use either manual KYC/AML checks, which are carried out by human compliance staff, or automated checks. By raising pass rates, automated KYC/AML and penalties screening systems lower the risk of losing candidates.

Automatic KYC verification:

Businesses may collect client identification information through online identity verification by automating KYC. There are typically five phases in this procedure, which can take place on a mobile or online platform:

• The user chooses the type of ID document.
• Photographs of the document are uploaded by the user.
• The document is screened and verified by the KYC platform.
• The document is photographed by the user while holding it.
• The KYC platform confirms that the user is a real individual.
• Biometric verifications may also be a part of automated KYC processes. One of them, known as liveness, is a facial authentication procedure that confirms the client’s identity.

Automated screening for sanctions and AML:

In terms of costs and effectiveness, automated AML and sanctions screening systems are advantageous. By obtaining accurate information from dependable sources like:

• PEP lists
• Sanctions lists
• Watchlist
• Adverse media lists
• Businesses can create verification flows in accordance with AML/KYC standards in a certain jurisdiction by using automated AML solutions.

Career pathway for AML-KYC Analyst

The people who attach by collaboration with the Compliance and Control team, the AML KYC Analyst function is an entry-level position dedicated to taking part in Anti-Money Laundering (AML) monitoring, governance, supervision, and regulatory reporting tasks. The main goal of this position is to support Citi in the creation and administration of an internal KYC (Know Your Client) program.

Responsibilities:

• Work together with the Relationship Management and Compliance teams to build, review, and approve the electronic Know Your Client (KYC) record and any necessary supporting documents.
• By gathering data from internal and external sources, create and manage KYC records (firm website, regulatory websites, etc.).
• Work together with the Relationship Management and Compliance teams to update system data from the time the KYC record is initiated until the time it is approved, and to advise the supervisor of process progress.
• Verify the quality and completeness of the data contained in the Customer Identification Program (CIP) papers and KYC records.
• Make that local regulatory requirement and Global Business Support Unit (BSU) Standards are incorporated into KYC records.
• Utilization of BSU tool.
• Assess risk appropriately when making business decisions, showing particular regard for the company’s reputation and protecting Citigroup, its clients, and its assets. To do this, one must ensure compliance with all applicable laws, rules, and regulations, adhere to the Policy, use sound ethical judgment when it comes to one’s personal conduct and business practices, and escalate, manage, and report control issues in a transparent manner.

Basic Qualifications:

• 1- 3 years of experience in banking operations, AML, and KYC.
• University or bachelor’s degree, or similar work experience

Salary of an AML-KYC Analyst:

The average yearly compensation for an AML KYC Analyst in India is 3.8 Lakhs, with salaries ranging from 2.5 Lakhs to 6.5 Lakhs. 

Top Companies

The top companies hiring for the role of an AML-KYC analyst include:

• KPMG
• Capco
• Citi
• Pwc
• JLL
• Deutsche Bank
• Barclays

Top AML-KYC Interview Questions

1. What do you mean by Money Laundering?

Money laundering is the process of turning the proceeds of illicit conduct into what appear to be legitimate finances by hiding the sources of the funds, changing the way the monies are held, or relocating the assets to an area where they are less likely to draw notice.

2. Define Name screening.

The term “name screening” relates to checking to see whether any institution customers are on any regulatory or “blacklists.”

3. What does a customer means in terms of KYC?

A customer is any person or business who maintains an account, forms a connection, has an account maintained on their behalf, or benefits from accounts kept by intermediaries.

4. When it is required to provide induction training to employees?

At the beginning of their job, employees get induction training. In order to prepare new hires for their employment in a new profession or job function inside a corporation, induction training is a type of introduction (or establishment).

5. Name the various stages of money laundering.

Integration, layering, and placement are the three phases of money laundering.