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Managing KYC when you have rapid growth. A guide for Real Estate companies.

A large number of real estate companies are experiencing rapid growth and rapid growth typically involves opening a large number of new legal entities. This leads to overwhelming Know-Your-Customer (KYC) requirements from banks and other third parties.

Each new development project usually results in one to three legal entities. And while your legal and administrative teams may be prepared to handle, say, 100 legal entities, rapid growth can quickly result in more than 1000 legal entities.

That’s what happened to NREP, the leading Nordic real estate investor with a focus on sustainability. Growing rapidly, it established more than 300 legal entities in 2020 alone and is expecting the same rate of growth in the years to come.

Collect and store information about UBOs

Avallone is a platform for handling all workflows and documentation related to incoming KYC requests. It allows companies to securely collect and manage all information and documentation necessary for KYC requests in one place and then submit it to banks and other third parties as needed.

The platform eliminates the need to collect and supply documentation manually for every new entity and makes sure the information is stored confidentially and according to the requirements of the GDPR.

Anders Meinert Jørgensen, CEO of Avallone, points out that the banks’ KYC processes tend to have been developed under significant regulatory pressure and to be under-digitalized, which means that much of their work is manual and document-intensive. He notes that this lack of mature and digitized processes hits banks’ more complex customers especially hard. Providing banks with required documents can mean hours of repetitive work for in-house administrative teams at real estate companies.

But the documentation requirements cannot be avoided. Given the regulators’ increasing focus on money-laundering in the real estate industry, it’s crucial for real estate companies to make sure all of their KYC information is accurate and up to date.

“When you’re having a lot of success in the real estate industry, you have to have the infrastructure and processes to cater for that success. But most companies lack the processes and technology to handle this proactively and efficiently,” Anders points out. “And without that, you cannot grow and continue to attract funding.”

KYC is document-intensive

Bo Holse Rasmussen of NREP says that their fast-growing company is familiar with the headaches of repetitive documentation: “If you create a company once, it’s a one-time pain, but if you do it 300 times like we do and you do it with the same banks, you have to basically copy all that information,” he says.

And he says having a solid corporate relationship with a bank doesn’t always help when it comes to KYC: “Even if you are a key client of the bank or a VIP client, the KYC work is a lot of people sitting in other jurisdictions or other geographies, so you don’t talk to the same person every time,” he notes. “And that requires you to resend the information and answer the same questions over and over again. Even if you have a longstanding relationship with the bank on a VIP basis.”

The Avallone platform helps you automate information gathering, structuring, and sharing with your financial institutions and other third parties so you can focus on your core business.

Read this article as a PDF here.

Relevant products

Avallone products and services that can help you

KYC Hub

Immediate, secure and easy management of all your KYC efforts including built-in organization.

KYC Collector

Collect KYC - including information and documentation - from anyone outside of your organization.

KYC Responder

Quickly and easily respond to KYC questionnaires coming in from your counterparties - such as banks, law firms, auditors and more.