Historically, most corporate treasury teams only have the perspective of KYC (Know your Customer) from replying to banks who often request different information related to their company that is difficult and time consuming to gather. Treasury teams often see KYC as a nuisance.

However, global economic uncertainty and increasing fraud exposures have Treasury teams at many companies widening the scope of KYC “Know your Customer” to more of a KYC “Know your Counterparty” perspective. This lens means identifying and understanding AML (Anti-Money Laundering) and other risk and regulatory exposures related to sourcing from (suppliers) and selling to (customers) across the globe. Treasury teams are realizing that a KYC program can be a valuable tool to understand current and emerging financial and regulatory risk exposures.

Treasury teams with the most comprehensive view of KYC also include managing critical company information, knowing their own companies (KYOC), under the umbrella of “KYC”. This is a critical function at any company and can get Treasury leaders a seat at the strategic table with legal, tax and the C-suite during M&A discussions and financial planning that shapes the future of an organization.

The dimensions of a comprehensive view of KYC include being a responder and a requester for information that helps companies understand and assess the risks that counterparties pose and the risk exposures that impact the financial health of your company. The scope of comprehensive KYC program can encompass the following:

• As the Hub of KYOC (Know Your Own Company) Information
• As a Responder to KYC requests
  
  • From Banks
  • From Your Customers
  • Relate to M&A Activity
• As a Requester of KYC Information
  
  • From Banks
  • From Customers
  • From Suppliers
  • From Technology Solution Partner
  • From M&A Activity 

The challenges in defining and managing an effective KYC program can be examined in terms of data, identifying and interpreting relevant regulations, and identifying and assessing financial red flags.

The challenges related to date include:

• Requirements vary by counterparty.
• Requirements vary by country.
• Formats are not consistent.
• Collection is Often Manual and Difficult to Acquire.
• Requires the Collection and Management of Sensitive Information from Individuals.
• Retrieving Relevant Information in Response to Requests is Often Inefficient.
• Keeping Data Current is Never Ending and Time Consuming.

The challenges related to relevant regulations and red flags encompass:

• Anti-Money Laundering (AML) Dynamics
• Monitoring Regulations across Industries and International Borders
• Monitoring Sanctions Lists
• Monitoring Politically Exposed Person (PEP) lists
• Pro-actively Obtaining Information that Impacts the Financial Health of Counterparties

On the surface, defining and managing a KYC program seems to be a daunting task at best. However, there are solutions and advisory services that enable companies to have an effective KYC program. Companies that invest in technology that automate and empower efficient streamlined KYC practices, mitigate risk, ensure legal compliance, secure their reputation and empower growth at scale. A KYC program owned by Treasury and done right gets Treasury a seat at the strategic table and offers a company a competitive advantage.

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In Conclusion, Why Treasury’s Role in KYC Matters More Than Ever

As financial crime risks and global uncertainty rise, Treasury’s role in KYC must evolve beyond simply responding to bank requests. Forward-looking Treasury teams are now expanding the definition of KYC to include customers, suppliers, partners and even their own organization - embracing both a Know Your Customer (KYC) and Know Your Own Company (KYOC) mindset.

By taking ownership of their KYC program and taking strides to make it comprehensive, Treasury can help their organizations manage regulatory risk, improve data governance and identify red flags earlier. The result? Enhanced compliance, greater operational resilience and a stronger seat at the strategic table within the organization.

With the right tools and technology, KYC becomes not just a regulatory necessity, but a competitive advantage for you and your team.

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