Cutting costs and increasing accuracy with automated periodic reviews.
Our client faced a challenge with a large volume of KYC/CDD reviews that needed to be conducted periodically, but many did not contain material CDD risks. Zanders supported the development and management of the PR automation model, which automates cases requiring limited research and allows analysts to focus on more complex, high-risk cases.
The traditional approach to CDD case handling requires significant manual effort by analysts. However, many cases that require minimal investigation are still reviewed manually. As a result, the current approach is neither risk-based nor cost-effective.
Typically, a Client Risk Rating model classifies clients as low, medium, or high risk. These clients are then reviewed at set intervals, such as every five, three, or one year(s), respectively. During these periodic reviews, analysts spend considerable time reviewing cases with no significant changes since the last manual review. This process is inefficient, and improvements can be made to make it more risk-based.
The PR automation model identifies cases that require minimal research and processes them automatically. The process begins with analyzing the current group of clients. From this large dataset, a subset of low-risk clients is identified based on expert knowledge combined with data analysis.
Next, the model determines which additional automated checks are necessary to ensure that the case has not undergone material changes since the last manual review. With these additional checks in place, the case can be processed automatically.
Automating PRs is only possible with a strong data foundation. Zanders assisted not only in developing the PR model but also in ensuring that data quality meets the necessary standards.
The PR automation model delivers significant cost savings while improving the efficiency and effectiveness of CDD case handling. Additionally, Zanders supports clients in demonstrating to regulators that this model helps transition to a more risk-based CDD approach.
For more information, visit our Financial Crime Prevention page, or reach out to Johannes Lont, Senior Manager.
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