The market data, trading systems and news giant can count LGIM, Candriam Investors Group and Fund Channel as new clients.
Three European asset managers, Legal & General Investment Management (LGIM), Candriam Investors Group and Fund Channel, have signed on to use know your customer (KYC) managed services from Thomson Reuters as a way to ease their due diligence burdens.
The three firms are using the Org ID Know Your Customer (KYC) platform to meet KYC and anti-money laundering (AML) requirements that involve public and private documentation, verification and screening processes, and the monitoring of legal entities, officials say.
The Thomson Reuters global AML/KYC offering “provides key support in jurisdictions where we conduct our client business,” says Jason Cule, head of financial crime with Legal & General Investment Management Group, in a prepared statement. “We expect to continue driving operating efficiencies, reducing costs and enhancing our risk management procedures by using the tools optimally provided by the Org ID managed service.”
For Candriam Investors Group, the Thomson Reuters Org ID “undertakes sustained due diligence on our behalf, and identifies risk flags in accordance with AML/KYC standards,” says Pierre-Guillaume Veaux, global head of legal and compliance at Candriam, in a statement.
Before the Thomson Reuters service, Fund Channel officials estimate that approximately 90 percent of their time was spent “on collecting documents and 10 percent on actually analyzing them,” says Richard Lepere, managing director at the firm. “With the Thomson Reuters KYC managed service, we look to reverse this ratio of deployed activities by our team, while significantly reducing the overall time allocated to these critical responsibilities on our B2B distribution platform,” Lepere says in a statement.
The new deployments for the Thomson Reuters service does not mean that these firms will replace internally developed systems at these firms, says Dominic Mac, global head of KYC industry solutions, risk managed services, Thomson Reuters.
“Our KYC managed service seamlessly integrates via APIs with clients’ platforms, whether they be vendor- or internally-developed. We do not therefore replace these systems that are in place,” Mac tells FTF News. “However, we feed our data (sometimes bi-directionally) into the client’s data repository, workflow and policy systems to allow for more efficient and faster risk decisions on clients.”
In addition, Thomson Reuters offers a related client on-boarding and life-cycle management software platform that more than 20 global banking institutions “have deployed to manage their own client lifecycle processes. Again, this platform fully integrates into our KYC managed service,” Mac says.
Mac says that Thomson Reuters is “experiencing increased levels of participation from the buy-side in our solution in Europe and worldwide, notably since the recent acquisitions and integration of Clarient and Avox.”
Mac adds that the increased demand is driven by four key factors:
- Poor on-boarding experience: “Clients must deal with multiple stakeholders in the KYC process, inconsistent requests for documentation, and face lengthy and complex processes,” Mac says. A recent Thomson Reuters survey shows that “an average of 11 banking relationships globally sending documents 110x to different banks with 47 percent of corporates reported that a lack of a common standard in the KYC documentation required by each bank was the biggest challenge they face.”
- Rising price of complex KYC processes: “While there is a rising number of KYC professionals, an overall lack of people resources continues to be a major challenge for banks,” Mac says. “An average of $60 million a year is spent by financial institutions (FIs) on KYC procedures and on-boarding costs are expected to rise by 16 percent over the next 12 months. Banks face a number of issues, including expensive consultants, high turnover, and retention of intellectual capital.”
- Revenue gap: “Tier 1 FIs are struggling to measure how time-expensive their on-boarding processes are, and how it impacts on the realization of transaction value, i.e. a Tier 1 investment manager took over 5 (five!) months to open a custodian account,” Mac says.
- Regulatory pressure: “Fragmented regulatory regimes make it difficult for banks to streamline their KYC processes across multiple jurisdictions,” says Mac, citing that 87 percent of banks and 56 percent of investment managers think that a regulatory of legislative change “is the most influential factor for their KYC processes.” One in 10 FIs fails to have “any formal customer profile refresh process in place.”
Another area driving demand are the new sanctions issued by the US and international organizations “Yes, they have influenced demand,” Mac says. “Increased sanctions require banks to keep ahead of managing risk or ceasing doing business with regions, and with sanctioned or related sanctioned entities.”