KYC Case Study: A Large US Bank (Big 3)

Context: Key Challenges Faced by Client for KYC/AML Regulatory Compliance

Figure 1: Changes in the international financial institution economic environment and

the high cost for KYC and AML regulatory compliance have impacted how the financial
industry operates and how it is perceived by users and the public.

Important issues facing the global financial industry include:

▪ Lack of a significant institutional data bases outside of the US, Canada and European
Union.
▪ The reliance upon Respondent Banks to provide adequate KYC/AML support.
▪ The high cost of individuals and the infrastructure associated with these processes.
▪ The large fines levied by regulators around the globe for compliance failures.
▪ The impact of advances in technology and greater availability of and access to data.

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Case Study: A Large US Bank (Big 3)
Our team worked with the client to analyse the opportunity costs in KYC compliance
processes. Two major factors were identified:
1. The time it took to complete the on-boarding compliance process (as much as 4
months)
2. The cost of initial and ongoing evaluations. Specifically, in international banking,
these were mainly paper records and used manual intervention which was costly, time
consuming and posed significant risk of non-compliance due to lack of automation.

This large US bank (big 3) calculated the time it took to receive funds or deposits and the cost to
complete the initial and ongoing processes. This global institution determined that the cost of manual
KYC/AML compliance for international banking was at least $41M per year based on the cost of
those employees dedicated to this function. The vast majority of their time was spent in the
collection, authentication and verification of information provided to them in paper format. There
were additional uncalculated costs for the storage and management of records.

Figure 1: Annual cost of KYC/AML Compliance assurance faced by the bank

Figure 2: Revenue loss faced by the bank due to new-client on-boarding delays resulting from
manual KYC/AML checks
Revenue Improvement

This bank took up to 4 months to on-board new customers with an average revenue of over
$100,000 per customer. As a result, it was losing $27M in terms of potential revenue due to
client on-boarding delays as shown in the tables in Figure 2 and 3. By utilising the GRADA
technology the bank dramatically reduced the new client on-boarding time by 80% and to
carry out KYC process. Moreover, it was estimated that the automation offered by GRADA
technology would eliminate 80% of their KYC staff needs.

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Current KYC Audit Process and Time taken?

Figure 34 shows current KYC audit process used by the banks. Manual process not only
affects new client on-boarding but also auditing of existing clients for regulatory reporting,
e.g. FACTA. When using GRADA technology, all the customer database is always up-to-
date as these checks are performance regularly (up to 4 times a day) and automatically.
As a result, banks save cost & time as well as avoid risks in fulfilling their regulatory
compliance requirements.

Figure 3: Current KYC Audit Process

AuditXPRT GRADA

The following pages uses screen shots of GRADA deployed by AuditXPRT for the Large
Banking (Big 3) client to illustrate our solution

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Below we have shown the overview of the solution delivered to the client across their branch network

Figure 4: Key Features of KYC Solution provided to the large bank

GRADA Web based User Interface is simple and intuitive

Figure 5: Individual Data Entry (not a real person): User Interface for bank customers to add
personal information as well as answer due diligence questions provided by the bank.

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Figures 6: Compliance Dashboard: Used by the bank to have a quick overview of status of new-
client boarding, KYC/AML due diligence as well as to check any new risk alerts.

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Powerful Outcomes Are Being Realised by The Bank As A Result Of Using Grada:

By utilising the GRADA technology the bank dramatically reduced the new
client on-boarding time by 80% and to carry out KYC process. Moreover,
it was estimated that the automation offered by GRADA technology would
eliminate 80% of their KYC staff needs.

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