According to a recent PwC report, this creates a new phenomenon in the correspondent banking world known as de-risking. Facing tighter regulation and potentially damaging fines and penalties, bankers have estimated they have dropped as many as a third of their correspondent banking relationships. One executive said money laundering screening prompted his bank to close more than 100,000 accounts.
Retail banks, which have direct relationships with their customers can apply detailed KYC and customer identification procedures, such as verifying passports and performing more intense screening and transaction-monitoring of customers who have occupations or transaction patterns that appear high-risk.
Analytic processes can help correspondent banks rationalize names and build customer profiles, and then they can enrich those profiles with information about transaction patterns, activities, types of business, alerts, third-party relationships and more. Essentially, correspondent banks could begin to apply a customer-relationship-management approach to AML-KYC compliance.
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