Money matters: Getting Private Banking AML compliance right for a smooth customer journey

Blog | 18 Jan 2022
 

Charmian Simmons explains why private banking AML compliance is just the ticket for a seamless customer experience

Private banking (PB) wealth managers have long played an important role in improving and managing personal finances for high-net-worth individuals (HNWI), ultra HNWI and also cash-rich youth digital natives.

But can they continue to dominate in today’s Covid-digital new world where consumer options seem plentiful? The answer lies in customer experience satisfaction. Having an anti-money laundering (AML) and Know Your Customer (KYC) screening system and process that caters specifically for private banking is key to a successful customer journey.

The Covid digital effect

The pandemic affected the way PB relationship managers (RMs) and advisors interacted with their clients by slowing face-to-face meetings and forcing the interaction to be more digital or less frequent. This interaction is not only key to maintaining healthy portfolios, it’s also key to on-boarding and ongoing due diligence aspects of AML compliance programmes.

The disruption also gave rise to newer fintechs playing in this space and increased investment on ones-own. This meant that an abundance of new(er) players and apps became available, enabling greater access to investment instruments and options, in a somewhat easy do-it-yourself manner.

Sounds fantastic right? Well, perhaps for a short while and until the novelty wears off or the losses amount up. Individuals become more confident and bold in their choices – making substantial allocations and diversifying their portfolios with less guidance and expert advice to help achieve desired gains and manage risk.

Unfortunately, it’s likely this behaviour has exacerbated the already high risk of money laundering, terrorism financing, corruption and foreign tax evasion that exists in the PB and wealth management sector.

The relationship manager

Traditional RMs and advisors have more to juggle these days. As well the perennial search for new business, they also now have to deal with the abundance of fintechs, apps, contemporary HNWI and ultra HNWI, global investors, and new cash-rich youths.

They are navigating other factors, too, such as hyper-personalisation, holistic services, socially responsible investing opportunities and multi-channel approaches. This is on top of their already existing responsibilities to maintain and follow effective policies, procedures, systems and controls that enable them to identify, assess, monitor and manage the risk that they will be used to finance terrorism or launder the proceeds of crime.

The role RMs play in fighting AML fincrime is one that can’t be relaxed or played down in these current times – they are integral to KYC, identifying source(s) of wealth and funds, understanding personal/business connections requirements and handling criminal property processes. Alongside their AML compliance colleagues in the second line of defence, of course.

And there’s the tools RMs use to aid them in this unique role – firstly in adhering to regulatory and policy requirements in an easy manner, and secondly, in minimising customer friction while guiding personal and business financials.

Getting private banking AML compliance right

A smooth and frictionless experience is what every client wants. And it’s also what RMs and advisors want too – especially for initial and ongoing AML compliance.

The majority of fincrime-AML software solutions available today are designed for retail banks and their workflows cater for the segregation of duties between first and second lines of defence. Specific aspects in the workflows and process supports how KYC, together with customer and enhanced due diligence transaction screening and ongoing monitoring in PB, relies upon the RMs and their interactions to gather necessary information. They also identify changes in circumstances to adequately support AML, bribery and corruption and the potential exposure every transaction and business relationship has throughout the investment lifecycle.

It is reassuring, then, that certain AML software providers have honed in on this and have detection scenarios, workflows, segmentation and risk scoring methods to specifically cater to the private banking and wealth management industry. Our own NetReveal solution is one of them.

Utilising the right AML compliance solutions and practices, goes a long way to working smarter, not harder, in fulfilling regulatory and ethical duties. More so, when the technology, workflows and detection scenarios for AML compliance are set up from the get-go to address the private banking sector, RMs and advisers are better positioned to engage with their clients, transact and create a smooth customer experience.