Financial institutions today are under continued pressure to meet stringent and evolving regulatory requirements, which necessitate significant investments to strengthen compliance capabilities and prevent financial crime. These efforts are typically centered around:
- Organizational structure: Enhancing the three-lines-of-defense model with a robust Target Operating Model (TOM).
- Technology and tools: Modernizing systems to optimize operational efficiency and resilience.
- Client portfolio reviews and remediation: Ensuring client data remains compliant with current regulatory standards.
The challenge
As part of ongoing regulatory obligations, a Tier 1 global bank partnered with Capco for a large-scale remediation initiative aimed at reviewing their existing client profiles (KYC files). The project’s goal was to identify documentation gaps, address risks, and enhance client KYCs to align with the latest regulatory requirements. This effort was particularly urgent: (1) to meet regulatory deadlines for periodic client reviews (2) to prepare the bank for client migration in the context of a merger.
The project covered thousands of mid- and high-risk clients across diverse client types (e.g. private banking, offshore companies, foundations), business units (wealth management, corporate clients, lending), and multiple jurisdictions.
Our approach
For this challenge, several skills and competences were required, such as extensive industry expertise in AML (Anti-Money Laundering), FCC (Financial Crime Compliance), Transaction Monitoring, and Front-Office Operations to ensure the bank’s compliance objectives.
Key actions included:
- KYC Review: Confirming and corroborating Know-Your-Client (KYC) information, including Source of Wealth (SoW) and Source of Funds (SoF), with relevant supporting evidence or publicly available data.
- Documentation Verification: Conducting a fully comprehensive review of relevant customer data, such as the verification of ownership structures (ultimate beneficial owner or controlling person).
- Transaction Analysis (Flow of Funds): Assessing transaction history to ensure alignment with the client profile and the defined account purpose, addressing AML risks or sanctions concerns as needed.
- Negative News Screening: Investigating the presence of adverse media or internal database flags for accountholders, beneficial owners, originator of assets and related entities etc.
- Plausibility Assessment: Conducting evaluation of the completeness, accuracy, and plausibility of KYC records.
- Actionable Recommendations: Proposing tangible, corrective measures to mitigate potential reputational or ML-related risks, close information or documentation gaps and achieve compliance audit readiness.
Capco successfully executed this plan by deploying a skilled and competent team to carry out the outlined approach with precision.
Value delivered
Capco’s approach delivered concrete outcomes, offering both strategic insights and practical execution:
- Streamlined Front Office Workload: Delivered actionable mitigation recommendations to alleviate Relationship Managers’ workload in updating client KYCs, ahead of regulatory deadlines.
- Faster completion: Specialized team completed the reviews in a timely manner, leveraging rigorous operational and project management techniques and deep SMEs skills.
- Enhanced Compliance and Risk Mitigation: Robust compliance review for mid- and high-risk international clients while reducing potential exposure to financial crime risks or sanctions breaches.
Through the application of rigorous methodology and expertise, Capco empowered the bank to achieve critical compliance objectives within tight regulatory deadlines. Leveraging a tailored, structured approach, Capco ensured that the client’s KYC portfolio was meticulously reviewed, updated, and aligned with the most stringent bank-internal and external requirements.
As a direct result of Capco’s contribution:
- The bank successfully achieved its compliance goals within defined timelines, meeting all inspection and audit-readiness thresholds.
- The client’s risk exposure to financial crimes and sanctions violations were significantly reduced.
- Efficiency gains in the client management process translated into long-term cost savings and optimized resource allocation.
Capco’s commitment to delivering excellence ensured the bank not only fulfilled its immediate regulatory obligations but emerged stronger, more efficient, and well-prepared for future challenges.