The KYC process involves a significant amount of data collection from sources such as documents, photographs and fingerprints, among others. Often, this data needs to be cleaned up before it can be stored in a format which is suitable for practice use and which meets regulatory recordkeeping requirements. In the process, the large amount of data involved needs to be prioritized so as to focus on high-risk accounts. This process is known as data remediation. Let’s look at what data remediation is in a KYC context and what the process involves.
1. What is KYC Data Remediation?
From the same root word as “remedy”, data “remediation” refers to the process of correcting errors in data and organizing it so that it can be stored in a form which is useful for its intended purpose and is compliant with regulatory standards. To make data useful, high-risk accounts are flagged so they can receive priority attention, while outdated accounts and irrelevant information may be purged.
The remediation process involves tasks such as:
- Screening data according to a set of rules to apply sanctions regulations and flag high-risk accounts
- Prioritizing data from high-risk and current accounts for remediation, while giving outdated information lower priority or deleting it
- Using automated database cross-matching to verify names, addresses and identity documentation and identify inconsistencies
- Collecting any required data which is missing from customer accounts
- Migrating data to storage or to other apps such as CRM tools
- Monitoring accounts to keep data updated and flag ongoing risks
Performing these tasks helps isolate high-risk accounts and prepare data from these accounts for verification and investigation. It also saves time and money by allowing resources and storage to be dedicated to high-risk accounts.
2. What Is the Process for KYC Data Remediation?
The data remediation process typically involves a few key steps:
- Reviewing data to assess which data is important and how much storage is needed
- Organizing data and segmenting it based on criteria such as which data should be prioritized to meet regulatory requirements and which data is outdated and should be archived or deleted
- Indexing data so that it can be retrieved efficiently
- Migrating data to its designated storage area or app
- Cleaning up data to meet regulatory requirements and other criteria
KYC data remediation tends to be an involved process. For best results, consult a data remediation analyst and use an identity platform which supports the remediation process.
To understand more about KYC, please read the following:
Chapter 1 – KYC Verification
Chapter 2 – KYC Compliance
Chapter 3 – KYC and AML Differences
Chapter 4 – KYC Checks
Chapter 5 – KYC Data Remediation
Chapter 6 – KYC for Banking and Finance
Chapter 7 – KYC Solutions