NICE Actimize Survey Finds That More Than 50 Percent of Financial Services Organizations Face Challenges With Keeping ‘Beneficial Ownership’ Information Current

PRESS RELEASE: NICE Actimize, a NICE business and the largest and broadest provider of a single financial crime, risk and compliance software platform for the financial services industry, released a global survey today indicating that more than 50 percent of financial services organizations are having difficulty keeping beneficial ownership-related customer information up to date.

The Financial Crimes Enforcement Network (“FinCEN”) recently released its most comprehensive AML regulations since 2001, requiring that covered financial institutions adopt customer due diligence (CDD) procedures to identify and verify a legal entity customer’s beneficial owner(s) at the time a new account is opened. Covered financial institutions must comply with the final FinCEN rule by May 11, 2018.

The NICE Actimize survey, titled “Beneficial Ownership & CDD Imperatives in a Dynamic Regulatory Environment,” focused on the top challenges financial institutions face when managing beneficial ownership operations. In addition to the customer information issues that are cited as the number one concern, approximately 43 percent of the global survey respondents stated that the increased length and complexity of the onboarding process was the number two factor that made achieving compliance difficult. About 39 percent of the institutions noted concerns with the skillset or experience levels of personnel collecting the information as a leading factor in securing accurate beneficial ownership data.

The survey also addressed broader challenges when it comes to CDD/KYC compliance, specifically highlighting data collection processes and related issues. In order of concern, respondents cited data availability/quality; reliance on manual processes; and new risk scenarios as their greatest operational challenges related to their current CDD/KYC programs.

Additional beneficial ownership challenges currently addressed by the institutions included, in order of priority as reflected in the survey: information that cannot be validated; updating existing IT systems to be able to hold the information; the increased cost of compliance programs; and the difficulty associated with using the data for risk assessment purposes.

Other general CDD/KYC issues cited by survey respondents as impacting compliance capabilities included difficulties with maintaining or updating existing IT infrastructure, a lack of qualified AML compliance staff, and the complexities with enforcing risk policies on a consistent basis.

According to David Kwan, VP and General Manager, Anti-Money Laundering, NICE Actimize, “Financial institutions are facing a host of operational issues in getting their organizations up to speed to meet the looming FinCEN regulation deadlines coming their way. With the increased regulatory focus in the CDD/KYC space, beneficial ownership related issues stand out as one critical area requiring a decisive plan of action from compliance teams from both a data and IT related perspective.”

The NICE Actimize survey “Beneficial Ownership & CDD Imperatives in a Dynamic Regulatory Environment” was conducted in May 2016 by a third-party, anti-money laundering-focused industry trade group. Nearly half the survey respondents came from financial institutions across North America, with EMEA and APAC comprising the balance of the 345 total survey respondents. In terms of market segment, about two thirds of the respondents represent financial institutions (about 40 percent retail and 40 percent commercial), with an additional 8 percent from money service bureaus, 5 percent from securities firms and 4 percent or less from other industry segments.

About 20 percent of the institutions surveyed had assets greater than $100 billion, 6 percent of the institutions surveyed had assets between $60 and $99.9 billion, 3 percent had $40 to 59.9 billion and 39 had less than $10B in assets.