Redesigning common KYC processes to increase trust across a Tier 1 bank

PwC’s Financial Crime Managed Services team worked with a UK bank to carry out due diligence on thousands of clients across two books in its home market and in the European Union.

Banks are acutely aware that failing to comply with anti-money laundering (AML) regulations carries a huge reputational risk. If regulators find their client due diligence is inadequate, they can face hefty fines. But for the largest financial institutions, it can be a challenge to put in place streamlined, common procedures, technology and policies that keep up with changing regulatory requirements across different jurisdictions.

This was the position one large UK-headquartered bank found itself in during 2021. After the UK left the European Union in January 2020, the bank was onboarding clients in both the UK and the parts of the EU, but without a common process for gathering and documenting know-your-customer (KYC) data. There were not only disparities in the standards applied to books of clients onboarded, but also a range of regulations to comply with and policies and procedures needing to be followed. An internal assessment found that files for between 4,000 and 5,000 clients needed to be reviewed to confirm it met the requirements of UK and Dutch regulators. 

To complete a task of this size without overwhelming its internal teams, the bank turned to PwC, as it was already working with the firm on a number of other projects including AML reviews. The bank put in place a managed service contract with PwC’s financial Crime Team to urgently address its capacity requirements to support the new policies. Further the bank discovered that the operational guidance, technology and data needed uplifting in parallel.   

The first step was a full review of the bank’s KYC policy and procedures. The bank had recently established a new policy, but PwC’s assessment found that detailed procedural steps had not been updated to align with it, meaning there was no common standard across the bank. As advisers in such a highly regulated industry, PwC had a duty to make clear where the processes fell short of regulatory requirements, and to work with the bank to change them.

Remediation work then started on the thousands of clients PwC had identified, with four PwC teams in Belfast, three in Gdansk, Poland, and two in Manila providing the scale the project needed. 

As well as processes, PwC also introduced new workflow technology to accelerate the KYC assessment process, and to guide analysts through the revised procedures, to avoid steps being missed or only partially completed. It also enabled PwC to provide more granular detail to the bank on its progress and how teams were delivering against agreed targets.  

A new common standard 

The remediation work finished, on time and within budget, and PwC handed over a global delivery model for KYC. The managed service team is part of PwC’s overall financial crime practice, and having access to specialists from the PwC's UK advisory practice meant the updated quality standards met compliance requirements with regulatory demands across jurisdictions.

This has created a consistent governance standard for the investment banking arm across the entities locations. Clients have also benefitted from a more efficient KYC process when they first start working with the bank.  

PwC was able to pass on the training standards it used for its own analysts during the project, and the bank has also carried on using the acceleration tools added to its systems as part of PwC’s managed services.

“The global nature of PwC meant we were well-placed to deliver the managed service,” said Cadman. “There was also a relationship based on trust because we had built up our reputation over time and through other projects with the bank.”