Compliance management has been a major headache for businesses for a long time now. A compliance violation can have severe consequences for businesses, which is why businesses want to ensure that their compliance levels are as high as possible.
The problem is that it has always been extremely difficult to implement compliance controls due to the scope of activities covered by compliance. However, Regtech and Fintech solutions now provide an answer to the problems faced by compliance managers across the world.
Why KYC aml compliance solutions is so difficult to enforce?
The issue with compliance is that there are many different regulations that need to be complied with, and they apply to almost every employee of the business. Think about what this means for a large bank. Large banks have thousands of branches and hundreds of thousands of employees in these branches.
Each employee deals with multiple customers per day and engages in multiple business transactions. What this means is that every single day a large bank has around millions of processes going on. Each of these processes must be fully compliance, and any problem can result in a compliance violation.
The violation doesn't even have to be a major one – maybe an employee fails to collect enough KYC information – but the consequences can be severe. The problem for banks was that there was no way to enforce compliance. They couldn't put a camera on every employee and study each action they take to ensure compliance.
Doing so would require them to hire so many people just to monitor people that they wouldn't be able to make any profits. There were checks and balances in place and most banks gave the local branch manager a lot of power to investigate all issues but when we are talking about millions of actions per day there are bound to be a few misses here and there.