accuity.com

What type of customer do you currently screen?

What are the current challenges in your compliance screening process?

31%High net worth individual customers

11%Others

A 2019 snapshot of how financial institutions tackle KYC and AML compliance in China

Across our Financial Crime Compliance conferences in China, Accuity conducted a market survey with the leading financial institutions’ compliance & AML professionals. Highlighted below is a synopsis of some of the key findings from the survey.

Repeated checks and manual processes

57%44%

44%

40%35%

10%

Lack of audit trail & evidence / records of checks performed

Others

Financial institutions in China are screening the ultimate beneficial owners of correspondent banks and corporates, proving they are putting more effort into applying enhanced due diligence measures.

Lack of quality reference data

Extended working hours

Repeated checks, manual processes and the lack of quality reference data are the biggest challenges for China’s financial institutions.

Difficulty in setting up internal compliance policy for all staff to follow

65%Correspondent banks and their ownership structure and ultimate beneficial owners

64%Corporate customers and their senior management and beneficial owners

56%Counterparties or third party payers

Require AML/CFT lists by the People's Bank of China

State Owned Enterprise (SOE)

Sanctions List

Politically Exposed Persons (PEP)

64%

50%

50%Adverse Media and Enforcement Data

67% 67%

What data sets are you currently lacking that would help you enhance your KYC performance?

What improvements are needed to your financial institution's current AML/CTF screening system?

Have an automatic on-going screening function

Improve the screening accuracy and set alerts for high risk accounts / payments

Have better audit trail and record keeping functions

42%

38%

44%

58%

40%

49%

The majority of financial institutions require automation, accuracy and being able to set alerts for high risk accounts/payments to be improved in their screening system.

PEP data, Sanctions List and required AML/CFT lists by the People's Bank of China are the most important data that financial institutions in China would like to have access to.

50%

accuity.com

What are the main challenges of identifying PEPs?

database with comprehensive coverage

46Lack of PEP

%Hard todefine a PEP

47

%of foreign passport

Most financial institutions find that their greatest challenge is how to define a PEP, and identifying them from their data sets.

Other

8%

31%Identification

Set up workflows for different layers of personnel to review the screening results

Reduce the false positive rate

Add on-going monitoring functions / automatically alert users for new matches

Have more updated and higher coverage for data (i.e. sanction lists / PEP data)

What type of screening system do you currentlyhave?

What reference data sources are used in your current screening process?

Public sources (OFAC, EU, HMT etc)

Reference data provided by partner/associations

35%

54%Third party systems

29%

6%Other

accuity.com

%

Transaction monitoring systems

67

%10Internal system integrated with screening function

03%Others

The vast majority of financial institutions only have a transaction monitoring system. This shows a lack of KYC automation.

By using data from 3rd party systems, respondents have seen an improvement in the quality of the data they use.

How do you check the ultimate beneficiary owners of your customers?

Public Sources

17% Third-party

data provider

In-houseresearch

Do not know how to check

50% 29 %

4%

56   

%

To learn more about our solutions contact an Accuity representative or visit accuity.com/cn

Most financial institutions in China are collecting UBO information either direct from their customers or from public resources e.g. annual reports. This shows that financial institutions are spending a lot of time and resource gathering this key information.

Direct from customers