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Thomson Reuters forKnow Your Customer (KYC)No one can help you Know Your Customer like Thomson Reuters.

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Thomson Reuters for Know Your Customer (KYC)Executive SummaryAs KYC due diligence requirements continue to grow exponentially,banks and financial institutions (FIs) – along with their customers –are facing wave after wave of increasingly complex regulations.That means they must find new and more efficient ways to integratethese regulations into their daily processes. While compliance is a legalrequirement, banks and FIs must also define the crucial line betweensatisfying the regulator and delivering a positive customer experience.The complexity of this challenge should not be underestimated.A complete and connectedapproach to a complex issueRegardless of the size or nature of your business, Thomson Reuters canact as your trusted partner. We offer broad and connected KYC solutionsthat combine to provide a truly unique answer. We have both the depthand breadth of knowledge to provide a true end-to-end KYC solution –from data and to hosted or deployed solutions to managed services.At the same time, our products are modular and can be adopted aspoint solutions to meet specific needs. No matter what stage yourorganization currently finds itself, Thomson Reuters can complementyour existing KYC program and customer due diligence initiatives toenhance efficiencies and allow you to adopt a risk-based approach.Rely on us to be your single trusted provider in KYC compliance.3

Thomson Reuters for Know Your Customer (KYC)Do you really know your customer?The financial crisis of 2008, along with othersignificant events like 9/11, heralded a new eraof regulatory scrutiny. They brought into sharpfocus the pitfalls of an inadequate regulatoryframework and highlighted the many riskshiding in human and business networks.Regulators responded by introducing a plethora of complexregulations governing the financial community. That means,banks and FIs are increasingly concerned with makingcertain they are not doing business with any organization orindividual with connections to financial crime or funding ofterrorist organizations – or where they cannot quantify therisk. Understanding the risk of doing business with an entityor individual has become more crucial than ever. These factorsunderscore the need to ensure that information on customersis maintained, valid and appropriate.It is vital to understand customer activities involving: Their business partnerships Their business locations Their business entities Their sources of wealthThis information enables organizations to make informedjudgments about whether or not to provide – or continue toprovide – services to particular customers. Those engaged ininappropriate, suspicious or non-compliant/illegal activity canonly be identified if the due diligence conducted is thorough,accurate and complete.

5An ever-changing regulatory landscapeFinancial industry players have increasinglycome under the regulatory spotlight, and thesheer number of regulations governing antimoney laundering (AML) and counter terroristfinancing (CTF) continues to rise. Tighterregulations, while necessary to maintain theintegrity of the global financial system, havecreated very real challenges for banks and FIs.Costs, time and effort have spiraled nearly out of control,with one estimate suggesting that there are approximately170 changes to regulation, or regulatory activities, every singleday. While not all of them concern customer due diligence, alarge part of the challenge lies in understanding and analyzingthis volume of regulations in order to decide what is relevant;accommodating new and changing regulation; and ensuringthat procedures are watertight from an audit perspective.The 2012 Financial Action Task Force (FATF)Recommendations, in particular, set new guidelinesthat require the regulated sector to hold relevant,up-to-date ownership information on all customers. Theserecommendations are already filtering into legislation (notably,the EU’s Fourth Money Laundering Directive or 4MLD) aroundthe globe, with regulators interpreting the new legislationin different ways, further adding to the complexity thatcompliance professionals face.

Thomson Reuters for Know Your Customer (KYC)KYC affects banks and end-clients alikeCompliance is never optional; it is simplya requirement. The cost of getting it wrong iswell-documented. Banks have a regulatoryobligation to conduct thorough KYC duediligence on all their clients and further, tomaintain up-to-date customer profiles. Butthere are indirect consequences that affectboth banks and their end-clients.Time, cost and effortDetermining who you can and should do business with hassignificant implications for both banks and end-clients in termsof cost, time and effort. Additional strain is placed on existingresources, and this often leads to frustration. Not only has thesheer volume of required due diligence information increasedexponentially, but the supporting documents will reside inseveral different locations within your company. Finding,extracting and organizing this information has becomeincreasingly burdensome and time-consuming.No consistent standardAs regulators move from a tick-box to a risk-based approachto compliance, banks are left to interpret AML legislation anddevelop their own processes to comply with KYC regulation.With no consistent standard, banks request end-clientinformation in their own unique formats, leading to furtherduplication of effort.Data securityThe security of end-clients’ strictly confidential informationoften cannot be guaranteed. Information is often disseminatedvia traditional mail or email and can easily be lost orintercepted. Emailed information, especially, is easy to hack if itis not encrypted. The alarming rise in cyber-crime and identitytheft has been well documented in recent headlines andserves to highlight the dangers of business-critical informationfalling into the wrong hands. Even if delivery is successfullysecured, end-clients frequently have no control over how thisinformation is stored and who can access it. These are very realsecurity concerns. Understanding exactly who you are doingbusiness with is of the utmost importance, as is using a trusteddue diligence provider, as KYC issues affect all stakeholders.Slowing the pace of businessWhether you’re a trading firm, corporation, hedge fund orasset manager, the due diligence process required for KYCcompliance with a new FI can now take more than six months –just to open a new account. And there are also intermittent andongoing identity verification requirements to ensure that banksmaintain an up-to-date single view of each client and identifyany emerging risks. Additionally, FATF recommended in 2012that it should be a legal requirement for an organizationto provide their bank with the most up-to-date legal entityinformation available at any given time.KYC issues affect all stakeholders. Both banks andend-clients want to spend more time on running theirbusinesses and less time on KYC.

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Thomson Reuters for Know Your Customer (KYC)A holistic solutionHow can we help you?By adopting a risk-based approach to KYC –rather than simply ticking boxes in an attemptto satisfy the regulator – our clients areempowered by Thomson Reuters to identifythe real risks hiding in business relationships.We manage every step of the KYC process,because we understand the importance ofbeing able to demonstrate a complete audittrail to the regulator - from onboarding thoughto remediation.We bring together a wide variety of trusted assets that leveragethe depth and breadth of our expertise to offer you a holisticsolution that effectively addresses the myriad challengesassociated with KYC.Our solution suite caters specifically to the needs of: Retail clients Institutional clients Wealth management clients Corporate clientsClient OnboardingOur Client On-boarding platform offers an end-to-end clientlifecycle management solution, leveraging best-classThomson Reuters data, technology and partner community.Our platform delivers a combination of the necessarycomponents of an entity data model, workflow, businessrules, data management and documentation managementto support FIs with compliant, automated onboarding of newclients and facilitates continuing refresh cycles. Importantly,client onboarding works seamlessly with the FI’s incumbentsystems with multiple access points for all of those who needto collaborate on the onboarding process.ScreeningThomson Reuters offers a solution that collects, structuresand ethically and responsibly monitors financial crime datain line with strict global data privacy policies. World-Checkis the world’s trusted, authoritative and accurate source ofrisk intelligence data, using intensive research conducted byhundreds of qualified analysts who utilize credible sources ofinformation delivered to our customers via partnersand platforms.Information in World-Check enables customers to requireit to carry out due diligence or other screening activities inaccordance with their legal or regulatory obligations or riskmanagement procedures designed to combat financial crime.This includes KYC, AML, CTF or anti-bribery and corruptioncustomer and counterparty due diligence and screening.CLEAR offers an easy-to-use dashboard interface that allowscustomers to quickly flag possible risks on subjects of interestand identify possible material associations. Pulling togetherunique data streams from sources that include public andproprietary records, news reports, and watch lists, CLEAR isa powerful investigative solution that allows customers toview important and potentially risky associations betweenbusinesses and individuals that might otherwise havebeen missed.