Budapest Post

Cum Deo pro Patria et Libertate
Budapest, Europe and world news

Why technology is key

Why technology is key

Enhanced due diligence, including Know Your Customer (KYC), when completing complex acquisitions of businesses or assets is not only a basic expectation under current Anti-Money Laundering (AML) regulations, but also makes commercial sense for all parties involved.

Minimising your exposure to financial risk through KYC

Performing KYC checks when completing acquisitions is crucial both from a regulatory standpoint, to avoid sanctions, fines or reputational damage and from a risk standpoint to avoid financial losses. Recent high-profile cases, such as the merger between JP Morgan Chase and Washington Mutual where subsequent regulatory issues came to light, have illustrated the consequences of not carrying out adequate due diligence, including KYC checks, before completing company acquisitions. 


Regulatory crackdown on KYC/AML breaches

Regulators have cracked down heavily on AML breaches in the past few years – recent research suggests that 2019 will be a record year for AML fines, with USD7.7 billion’s worth handed out to financial services firms globally in Q1 2019. To complicate matters further, the Fifth Anti-Money Laundering Directive (5AMLD) is due to come into force in January 2020. 5AMLD features a new ‘blacklist’ of high-risk countries, a call for enhanced due diligence and the necessity to verify beneficial ownership among other changes. Post-Brexit, AML law could be even more complex in the UK, as the FCA have stated that Brexit may present an opportunity for the UK to rethink its laws, which might mean some fast-paced changes in the regulatory sphere.

RegTech, like Lawson Conner’s Max Comply, can handle regulatory nuances across different jurisdictions, updating new directives regularly, which is essential as part of the ongoing compliance requirements of an acquisition.


Essential components of KYC checks

M&A activity has an overall success rate of only 50 per cent. Reasons for failure often include unidentified risks within the target, which could be identified earlier in the process with effective and systematic KYC checks.

Regulators across jurisdictions have tightened up regulatory requirements around mergers and acquisitions, with the implementation of directives such as the Dodd-Frank Act demanding more detailed financial statement information from target companies.

Carrying out such a high level of due diligence can be a time-consuming and onerous task, traditionally weighed down by manual processes. It can also be costly, with some major financial institutions spending up to USD500 million annually on KYC and due diligence, according to recent research from Thomson Reuters.


How technology can transform the process

Robotic process automation (RPA) is the simplest way to automate some of the manual tasks and make KYC and due diligence faster and more cost-effective. Through RPA, rule-based functions are executed, based on data from internal and external sources and the results are directly inserted into workflows. RPA and AI have started to revolutionise the financial services industry – recent research from Deloitte, for example, reveals that 64 per cent of organisations have started to use RPA but its value is not always recognised in acquisitions.

The due diligence process can also be transformed by transactional analytics, by combining and manipulating data and rapidly examining financial and operational metrics. A recent survey from Raconteur of UK-based dealmakers found that 50 per cent desired closing twice as many deals a year as they did, and that due diligence was a key factor in transaction delays.

At Lawson Conner (part of the IQ-EQ group), we have developed our own regulatory compliance platform, Max Comply, which incorporates RPA, AI and analytics. The award-winning software platform has been proven to reduce cost and processing time significantly and can make a dramatic difference to the speed and efficiency with which acquisitions are successfully completed.

AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
Newsletter

Related Articles

0:00
0:00
Close
Vatican hosts first Catholic LGBTQ pilgrimage
Apple Unveils iPhone 17 Series, iPhone Air, Apple Watch 11 and More at 'Awe Dropping' Event
France joins Eurozone’s ‘periphery’ as turmoil deepens, say investors
France Faces New Political Crisis, again, as Prime Minister Bayrou Pushed Out
Nayib Bukele Points Out Belgian Hypocrisy as Brussels Considers Sending Army into the Streets
France, at an Impasse, Heads Toward Another Government Collapse
The Country That Got Too Rich? Public Spending Dominates Norway Election
EU Proposes Phasing Out Russian Oil and Gas by End of 2027 to End Energy Dependence
More Than 150,000 Followers for a Fictional Character: The New Influencers Are AI Creations
EU Prepares for War
Trump Threatens Retaliatory Tariffs After EU Imposes €2.95 Billion Fine on Google
Tesla Board Proposes Unprecedented One-Trillion-Dollar Performance Package for Elon Musk
Gold Could Reach Nearly $5,000 if Fed Independence Is Undermined, Goldman Sachs Warns
Uruguay, Colombia and Paraguay Secure Places at 2026 World Cup
Trump Administration Advances Plans to Rebrand Pentagon as Department of War Instead of the Fake Term Department of Defense
Big Tech Executives Laud Trump at White House Dinner, Unveil Massive U.S. Investments
Tether Expands into Gold Sector with Profit-Driven Diversification
‘Looks Like a Wig’: Online Users Express Concern Over Kate Middleton
Florida’s Vaccine Revolution: DeSantis Declares War on Mandates
Trump’s New War – and the ‘Drug Tyrant’ Fearing Invasion: ‘1,200 Missiles Aimed at Us’
"The Situation Has Never Been This Bad": The Fall of PepsiCo
At the Parade in China: Laser Weapons, 'Eagle Strike,' and a Missile Capable of 'Striking Anywhere in the World'
The Fashion Designer Who Became an Italian Symbol: Giorgio Armani Has Died at 91
Putin Celebrates ‘Unprecedentedly High’ Ties with China as Gazprom Seals Power of Siberia-2 Deal
China Unveils New Weapons in Grand Military Parade as Xi Hosts Putin and Kim
Rapper Cardi B Cleared of Liability in Los Angeles Civil Assault Trial
Google Avoids Break-Up in U.S. Antitrust Case as Stocks Rise
Couple celebrates 80th wedding anniversary at assisted living facility in Lancaster
Information Warfare in the Age of AI: How Language Models Become Targets and Tools
The White House on LinkedIn Has Changed Their Profile Picture to Donald Trump
"Insulted the Prophet Muhammad": Woman Burned Alive by Angry Mob in Niger State, Nigeria
Trump Responds to Death Rumors – Announces 'Missile City'
Druzhba Pipeline Incident Sparks Geopolitical Tensions
Cost of Opposition Leader Péter Magyar's Economic Plan Revealed
Germany in Turmoil: Ukrainian Teenage Girl Pushed to Death by Illegal Iraqi Migrant
United Krack down on human rights: Graham Linehan Arrested at Heathrow Over Three X Posts, Hospitalised, Released on Bail with Posting Ban
Asian and Middle Eastern Investors Avoid US Markets
Ray Dalio Warns of US Shift to Autocracy
Eurozone Inflation Rises to 2.1% in August
Russia and China Sign New Gas Pipeline Deal
Von der Leyen's Plane Hit by Suspected Russian GPS Interference in an Incident Believed to Be Caused by Russia or by Pro-Peace or by Anti-Corruption European Activists
China's Robotics Industry Fuels Export Surge
Suntory Chairman Resigns After Police Probe
Gold Price Hits New All-Time Record
UK Fintechs Explore Buying US Banks
Greece Suspends 5% of Schools as Birth Rate Drops
Apollo to Launch $5 Billion Sports Investment Vehicle
Bolsonaro Trial Nears Close Amid US-Brazil Tension
European Banks Push for Lower Cross-Border Barriers
Poland's Offshore Wind Sector Attracts Investors
×