Market Trends of Anti-Money Laundering Solutions Industry
Know Your Customer (KYC) Systems to Witness Major Growth
- Identification and verification of customers or knowing your customer's (KYC) process is a vital part of financial institutions' anti-money laundering (AML) activities, the development of which has been on the rise for the past decade. As the KYC process is also a part of banking operations for the customers of financial institutions, the functionality of the KYC process significantly impacts customer satisfaction, further increasing its importance.
- Corporate and institutional clients have complicated ownership arrangements, different business lines, and many subsidiaries within large banking institutions. To increase data accuracy and eliminate redundancy, it becomes essential for them to share clients' KYC information across the bank. Thus, banks increasingly embrace technology and automated KYC solutions to enhance operational efficiency. For instance, in order to leverage Fenergo's CLM and KYC technologies across the group, BNP Paribas Bank has developed a global KYC service called One KYC. This resulted in the creation of a repository for standardized, reliable, and fully know your customer data and documents that could be shared with all its business clients across the group.
- As monitoring customer activities becomes necessary for financial institutions, the need for KYC verification has increased rapidly during the last decade. Thus, adopting advanced solutions such as scan-based digital identity verification (IDV) solutions as a part of KYC tools has become a new trend in the market, as it helps in real-time identification assuring sufficient KYC processes and avoiding possible fraud activities.
- The demand for KYC systems is growing due to increased focus on regulatory compliance to prevent money laundering, fraud, and terrorist financing. The government and financial institutions are enforcing stringent regulations of KYC to ensure transparency and accountability.
- According to the Reserve Bank of India, in FY2023, more than 13 thousand bank fraud cases were recorded across India. This was an increase compared to the previous year by about 48% and turned around the trend of the last decade.
- Furthermore, in January 2022, the People's Bank of China, the China Banking and Insurance Regulatory Commission, and the China Securities Regulatory Commission combinedly released new administrative measures for Financial Institutions on Customer Due Diligence Investigations and Keeping of Customer Identity Information and Transaction Records. These new measures, implemented on March 1, 2022, introduce a strict and more structured customer due diligence investigation system to intensify prevention and restrain the risk of money laundering and terrorist financing. Such changes in KYC-related measures and initiatives by various countries support the growth of KYC solutions in the market.
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Asia Pacific to Witness Significant Growth
- China is anticipated to register significant growth in the Anti-Money Laundering Solutions Market during the projected period due to the several innovations done by the regional players coupled with initiatives taken by the government to heighten the security of the financial landscape in the region.
- The transaction monitoring solutions are expected to create considerable demand in the coming years in Japan as the volume of financial transactions continues to increase. Further, the cryptocurrency-related initiatives by the government are likely to boost further growth.
- In India, various financial institutions, banks, and other organizations are implementing AML solutions in response to rising anti-money laundering cases. For instance, recently, IDBI Intech Ltd., (Intech) a technology solutions provider to the BFSI verticals, implemented an i-AML (Anti Money Laundering) solution at one of the key insurance players of India, the Life Insurance Corporation of India (LIC). This solution provides an Enterprise-Wide Single View of Risk & Compliance at the transactions & customer level, harnessing Advanced Analytics, Workflow, and Artificial Intelligence with a comprehensive set of pre-built rules and scenarios.
- The rising awareness of financial crimes amongst businesses and the responsibility of financial institutions to be vigilant against financial frauds, the regulations imposed by the government of countries covered under the Southeast Asia region are expected to further drive the market studied.
- Overall, the anti-money laundering solutions market is observing substantial growth due to the rising need for financial institutions and businesses to comply with regulations and combat money laundering activities. The market was being driven by advancements in technology, the rise in financial crimes, and stricter regulatory frameworks globally.
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