Closing the Gaps:

How to navigate global KYC, AML and anti-fraud data with smart, auditable EDD workflows.


The results, below, are based on answers received from 131 compliance-focused users working at a wide range of global enterprises.


Webinar summary

The Arachnys/Chartis webinar discussed the general push to tighten supervision of the financial system and the renewed crackdown on money laundering and terrorist finance which have led to the introduction of rafts of new regulations over recent years.

As a result, regulators are increasingly demanding greater evidence of well-developed AML programs, processes, systems and controls, and for firms to be able to validate, document and evidence the effectiveness of their compliance controls.  Firms must now look to focus their attentions on closing the gaps that are contributing to their inability to comply with regulator demands.  Regulators are also demanding more direct involvement by management, boards, and directors in risk management and crime prevention, and not afraid of holding individuals responsible for failings.   Sponsorship of and commitment to compliance does not stop at the compiance team, it must be the responsibility of the entire enterprise.

One of the most difficult aspects of AML compliance for cross-border institutions is the complex and frequently changing number of international and domestic regulations and watch-lists they must comply with.  It's a difficult undertaking that these institutions must cope with much more screening, a much larger volume of watch-list names, globalistion and heavier regulation.   Equally, institutions must ensure that their AML programs have sufficient flexibility to deal with frequent changes to sanctions and watch-lists. The associated risk of PEPS, reputationally exposed persons and their roles as beneficial owners or involvement with or as third party vendors can expose great risks.  

All of these factors, and more, are driving the demand for better, faster and more accurate due diligence solutions.   

And this is where solutions, such as Arachnys D3, play key supporting roles.  Arachnys D3 offers a single, automated approach for compliance practitioners to collect, filter, process and present Know Your Customer, Anti Money Laundering and other risk-relevant data.   Compliance practitioners set parameters for their searches, D3 then conducts them automatically and presents the user with filtered findings for further investigation.  Advanced workflow tools empower users to understand and review information quickly and easily while creating an audit trail of their work. These workflows are configured to represent the operating procedures and risk appetites of each customer, ensuring consistency and efficiency on an enterprise level.  Recent product testing shows this cuts the time required to conduct a basic KYC check by more than 80 percent, and an enhanced due diligence check by over 70 percent, while reducing the chance of human error.

Today’s companies are exposed to a wider range of risks than ever before.  As they continually implement new technologies and open up new channels to customers in a bid to remain competitive.  Meanwhile, regulators continue to pressure firms to devote greater resources to assessing and reporting on financial crime and other risks.


Poll Results

Following the Arachnys / Chartis webinar on Wednesday 9th December, 2015, we are pleased to publish the poll results, as follows:

Poll #1 - In 5 years, how do you think data and automation will affect the size of compliance teams?


View from Arachnys - poll #1:  It was interesting to hear that, like Arachnys, the majority of our audience are firmly in the 'techno-optimist' camp.  In this poll, we can see that just over 45% of our audience believe technology and automation will have an effect on the size of compliance teams of the future, and in five years' time they believe we will see a slight decrease in compliance staff numbers.   Our view at Arachnys is that automation and technology is an enabler of efficient EDD.  It isn't so much about less staff, it is more about human expertise leveraging their skills and applying those to the technology, and helping good analysts become great and enhancing due diligence, making it better, faster and more robust, leaving the human expertise to concentrate on the high risk.

Arachnys’ product testing shows this typically cuts the time required to conduct a basic KYC check by more than 80 per cent, and an enhanced due diligence check by over 70 per cent, while reducing the chance of human error.


Poll #2 - In your existing due diligence practice, which of the following do you consider to be the greatest challenge?


View from Arachnys - poll # 2: Insufficient and inconsistent availability of quality data and intelligence seems to be the single biggest challenge faced by today's compliance team and with inconsistency of approach coming a close seond.  Quality and availability of reliable data is the bedrock of Arachnys.  Arachnys provides deep dive data collection, covering global and local news sources, corporate registries, government information, court documents and global sanctions lists.  All Arachnys data and information is curated constantly by risk and language experts to ensure reliability.  In addition, Arachnys D3 allows users to safely navigate their way through the huge amounts of risk-related data - going far and beyond basic sanctions and PEP list screening.  Solving the consistency issues, firms can build bespoke processes from a choice of over 20 steps including everything from Google, international sanctions and PEPs to adverse media sceening and local court data.  These repeatable processes can be standardised across your global teams to match internal processes exactly.


Poll #3 - On average what percentage of analyst time is spent creating reports and audit trails?


View from Arachnys - poll #3 - Following this poll, David Buxton, CEO Arachnys posed two further questions:

As a former investigator, here is David's view from the trenches.  In 5 years' time, we may have better technology to manage the data, but we are also very likely to be managing vastly larger quantities of data.  And poll #1 majority responses alludes to the audience believing that better technology will affect only a slight decrease in the size of tomorrow's compliance teams.   Arachnys set out to overcome two things: cost (in terms of staff and project costs).  Aligned with cost is the delays in business processes.  Typical examples are a tier one financial institution that has an AML/EDD team of 4,000 people and another financial institution that recently spent 45 days to onboard a private banking customer.  

Another challenge is the global nature of business in general.  Single jurisdiction companies have a lot less regulation red-tape to deal with.  But, companies of all types, in today's world, are operating internationally and that, in itself, causes regulatory issues - what works in Brighton, doesn't necessarily work in Bangkok. Also, where the internet solves many globalisation issues, it has also created a whole host more.  Today, there is easy availability to so much information, that quantity now makes it difficult to get to the right and relevant information.  The amount of data that firms must gather during due diligence processes has increased significantly.  And with more incoming and changing regulations likely over the coming years, plus, the continued growth of data available via the internet, this is set to get worse for due diligence practitioners.  This is another area Arachnys sets out to solve - filtering and aggregating data.  

There are many solution providers out there offering solutions that help respond to regulatory pressures, however, a number of them have simply rebranding their 'watch-list' product as an 'enhanced due diligence' tool.  This is fundamentally flawded approach to the EDD challenge.  The size of a typical list screening data file is 10GB (the size of the iPod memory back when it was first introduced), and the idea that some institutions are running their global EDD operation on that is a real worry.   Aracnhys believes that instead of a narrow set of information, companies should take advantage of the incredible information resources available, open and premium.   We (Arachnys) also believe that data without processes is a bit like empty calories in junk food.   Without processes it is very difficult to exact meaningfulness and value from your EDD.   Process is only as good as the data, and Arachnys believe that good data and good analysts working in harmony make for great analysts.  

Arachnys firmly believe that it is not about making humans cheaper, but allowing them to do what they do best, supported by the right tools   We also provide what we call a data supermarket, meaning that analysts don't need to worry about what data is best out there, they simply visit Arachnys and pick from the shelf.   


Poll #4 - What level of efficiency improvement do you believe could be gained by standardising workflows across jurisdictions?

Untitled_presentation_3.jpgView from Arachnys - poll #4: More than 24% of our audience believe that institutions will realise between 10-30% efficiencies through standardisation of workflows across jurisidictions, with over 15% believing that insttitutions will realise between 30-50%.  As we've seen through history, process standardisation can be achieved without technology, however, it is also true that the automation of global processes and standardisation can have a significant impact on the efficiencies gained across globally dispersed teams.   Technology and automation enables the immediate performance measurement and visability needed to drive improvement and best practice EDD across the enterprise.

Poll #5 - Which of the following technologies do you think will have the greatest impact on compliance efficiency over the next 3 years?

Untitled_presentation_4.jpgView from Arachnys - poll #5:  There is an even balance with regards technology and automation underpinning human expertise in this poll.  Clearly, our audience believe technology and automation is/will have significant impact on the current repetitive and often manually-based due diligence processes undertaken at today's institutions.  Customer identification and EDD are critical processes for regulated firms.  Performing KYC and EDD on prospective and exisitng customers is a time-consuming and often duplicative task requiring strong research skills.  By adding reliable open-source and premium data and news to Arachnys D3, KYC and EDD checks become deeper, safer and more agile - allowing analysts to focus more time on the potentially higher risk entities. 



Why Arachnys?

Arachnys’ D3 platform allows due diligence professionals to process AML, KYC and other compliance checks in seconds while opening up emerging market data for research which would previously have taken days or even weeks to compile and review.

Arachnys covers global and local news sources, corporate registries, government information, court documents and global sanctions lists. All Arachnys data and information is curated constantly by risk and language experts to ensure reliability.

Advanced workflow tools allow users to understand and review information quickly and easily while creating an audit trail of their work. Ongoing monitoring also allows users to keep up to date on the available data related to specific research projects while flagging changes or new information.

Who uses the Arachnys platform?

The Arachnys D3 platform is used by several of the world’s largest investment banks, financial institutions and law firms while we also support the research functions within a number of corruption and risk consultancies as well as NGOs. If you would like to take a live look at the Arachnys' D3 enhanced due diligence solution, please get in touch here

If you would like to receive the slides and webinar recording, please take a look here.