The Cost of KYC and AML

Chau Nguyen
Today every business needs to provide their banks the information needed to meet the regulations for Know Your Customer (KYC) and Anti-Money Laundering (AML). This has increased the cost of doing business with implementing systems to collect required information.
The banks have been fined $26 billion for non-compliance during the last decade.
In Europe, 18 of the 20 biggest banks, including BNP Paribas, Société Générale, Santander, ING, Deutsche Bank, RBS, Barclay’s and other big banks have all been fined. This demonstrates that no bank is immune to fines for offenses relating to money laundering since the financial crisis. This is an indication of how widespread money laundering has become.

The U.S. Department of Justice is the regulator that has fined banks the most — nearly $14 billion. The New York Department of Financial Services comes in second, with $3.6 billion. In fact, U.S. regulators have fined European banks nearly five times more than fines to U.S. banks.
Fines of top U.S. banks such as Bank of America, JPMC, Citibank and others have been in the billions of dollars. The cost of non-compliance is huge, and it is no wonder that banks are overly cautious with the companies and persons that they do business with. This has opened a rapidly growing industry in KYC and AML solution providers. Ocular as one of the leading companies that provides businesses with the latest technology for KYC and AML.

What is KYC and AML?

KYC stands for Know Your Customer and recently is expanding to KYCC, Know Your Customers Customer. KYC is a regulatory and legal requirement for banks verify the identity of their customers. This is also used by businesses for similar processes.
AML is Anti-money Laundering, this is a set of procedures, laws or regulations designed to stop the movement of illegal money through a series of steps that make it appear that the money was earned legitimately. Every criminal activity drugs, kidnapping, extortion, bribery, etc. and every organization; terrorist cells, cartels, syndicates, hackers, etc. need to launder the money they have illegally gained. They do this cover their crimes and spend the money illegally earned without the authorities knowing, additionally they avoid paying taxes and other costs of doing business.
FATF (Financial Action Task Force on Money Laundering) is the central organization that calls upon all countries to bring their national systems into compliance with the FATF recommendations, and to effectively implement these measures.
The cost to the banks for a mistake are large, and companies are looking to reduce their financial crime risk. This has increased their need for partners, like Ocular, that can provide a fully automated KYC and AML screening solution. A partnership with Ocular provides access to the global databases covering sanctions, regulatory and enforcement watchlists.

How does KYC Help?

KYC is designed to prevent banks and companies from becoming involved with criminal activity. With Ocular, KYC is done by verifying documents obtained from reliable sources. This information may include the following; legal name, valid birth date, phone number, passport or a valid government issued ID, physical address (a utility bill or similar document), etc. The goal is to verify the identity and confirm that the person is correctly known. In addition to protecting for criminal activities, the KYC process also helps avoid identity theft and fraudulent account activities.
This gathering of information is what most companies do today. This information lets the company know that the customer they are working with is truly who they say they are. Most companies doing this level of identification will meet most standards and typically end their KYC/AML activities at this point. Now as a business you know that the customer you are dealing with is the customer you know. What you do not know is has this customer been involved with any activities that would show up on any of the may watch lists. The danger for a company is that you may have a bad player in your customer base which puts your business at risk.
Protect Your Business!
Many business’s do not realize the risks that not doing proper bank level watch list checking is. This is the protection that a partnership with Ocular can bring to your business. Ocular’s solution integrates with your onboarding or registration process for your clients and will automatically check their names with the many global databases. It allows for instantly checking profiles of your clients on global and national sanctions lists including OFAC, AML, PEP, WMD, BSA, HMT, etc. and thousands of other governments, Interpol, United Nations, regulatory, law enforcement watchlists for financial and other crimes. A joint solution with Ocular enables compliant-conscious businesses the use of a best-of-breed identity verification and AML screening solution. This can dramatically reduce the risks of a bad player in your client base, excessive manual reviews, reducing fraud and more importantly the scrutiny of your bank which could potentially damage this key business relationship.
The protection that Ocular provides is based on the usage of the latest technologies. Ocular is an Anti-Money Laundering (AML) compliance platform that provides instant verification of a customer`s background (KYC). The platform leverages Blockchain technology to prevent any possibility of data tampering. Ocular uses name and personal data background checks that can be combined with state-of-the-art identity based proprietary facial and voice recognition.

This safeguards against ID theft, false registrations, Sybil attacks and other attacks which compromise and circumvent compliance. Using advanced technologies such as artificial intelligence (AI) and machine learning, Ocular can continuously monitor and upgrade its capabilities and defenses of cyber security.

 

Ocular provides a transparent method to verify and validate that prevents fraud and your expose to fraudulent activities. Ocular is a multi-purpose, customizable and configurable solutions that works for both FIAT and cryptocurrencies satisfying global bank level compliance requirements. This requires the automatic and instant checking of OFAC (Office of Foreign Assets Control), Interpol, PEP (Politically Exposed Persons), and other criminal databases to confirm an applicant’s eligibility. A significant user convenience is the ability to enter their KYC/AML data only once into the Ocular Blockchain to be available for use with multiple platforms, websites, banks, merchants, financial institutions, etc.
We hope this information helps in understanding how important KYC/AML regulations are and how to protect your business. With Ocular as your partner, a positive user experience and more effective fraud prevention is possible, and that is a win for everyone (except the criminals). Importantly, strong KYC/AML procedures must be set up front. Best practices for using an automated identity process that safeguards customer information provides an accurate check and reduced manual review.
Whether you run a business, or you are a customer, KYC and AML matters. Everyone is affected by the cost of fraud and illegal activities. Business must do everything possible to keep improving these important functions. Companies are on the front lines, everything must be done to maximize the effectiveness of fighting financial crime.

Gold Demand Trends Full year and Q4 2018

Annual gold demand gained 4% on highest central bank buying in 50 years

Annual gold demand gained 4% on highest central bank buying in 50 years

Gold demand in 2018 reached 4,345.1t, up from 4,159.9t in 2017 and in line with the five-year average of 4,347.5t. A multi-decade high in central bank buying (651.5t) drove growth. Demand was bumped up in Q4 by 112.4t of ETF inflows, but annual inflows into these products (of 68.9t) were 67% lower than 2017. Investment in bars and coins accelerated in the second half of the year, up 4% to 1,090.2t in 2018. Full year jewelry demand was steady at 2,200t. Gold used in technology climbed marginally to 334.6t in 2018, although growth ran out of steam in Q4. Annual gold supply firmed slightly to 4,490.2t, with mine production inching up to a new high of 3,364.9t.

4% growth in annual gold demand driven by highest central bank buying in 50 years

Highlights

Central banks added 651.5t to official gold reserves in 2018, the second highest yearly total on record. Net purchases jumped to their highest since the end of US dollar convertibility into gold in 1971, as a greater pool of central banks turned to gold as a diversifier.

Annual jewelry demand was virtually unmoved: down just 1t from 2017. Gains in China, the US and Russia broadly offset sharp losses in the Middle East. Indian demand was stable at 598t (-4t).  

ETFs and similar products saw annual inflows of 68.9t down from 206.4t in 2017. Stock market volatility and signs of faltering economic growth in key markets fueled a global Q4 recovery, but Europe was the only region to see net growth over the year. 

Retail investment in gold bars and coins posted annual growth of 4%. Coin demand surged to reach a five-year high of 236.4t, the second highest on record. Demand for gold bars held steady at 781.6t, the fifth year in succession of holding in a firm 780-800t range.

2018 saw marginal gains in the volume of gold used in technology, crimped by Q4 slowdown. After healthy gains during Q1-Q3, a combination of slowing smartphone sales, the trade war and mounting uncertainty over global economic growth, contributed to a 5% decline in Q4.