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
IMF Upgrades Global Growth Forecast as Weaker Dollar Supports Outlook
House Republicans Move to Defund OECD Over Global Tax Dispute
France Opens Criminal Investigation into X Over Algorithm Manipulation Allegations
Trump Steamrolls EU in Landmark Trade Win: US–EU Trade Deal Imposes 15% Tariff on European Imports
ChatGPT CEO Sam Altman says people share personal info with ChatGPT but don’t know chats can be used as court evidence in legal cases.
Intel Reports Revenue Beats but Sees 81% Rise in Losses
Politics is a good business: Barack Obama’s Reported Net Worth Growth, 1990–2025
UN's Top Court Declares Environmental Protection a Legal Obligation Under International Law
"Crazy Thing": OpenAI's Sam Altman Warns Of AI Voice Fraud Crisis In Banking
The Podcaster Who Accidentally Revealed He Earns Over $10 Million a Year
UK Government Considers Dropping Demand for Apple Encryption Backdoor
Japanese Man Discovers Family Connection Through DNA Testing After Decades of Separation
Russia Signals Openness to Ukraine Peace Talks Amid Escalating Drone Warfare
Switzerland Implements Ban on Mammography Screening
Pogacar Extends Dominance with Stage Fifteen Triumph at Tour de France
President Trump Diagnosed with Chronic Venous Insufficiency After Leg Swelling
CEO Resigns Amid Controversy Over Relationship with HR Executive
NVIDIA Achieves $4 Trillion Valuation Amid AI Demand
Tulsi Gabbard Unveils Evidence Alleging Political Manipulation of Intelligence During Trump Administration
Centrist Criticism of von der Leyen Resurfaces as she Survives EU Confidence Vote
Trump Announces Coca-Cola to Shift to Cane Sugar in U.S. Production
FIFA Pressured to Rethink World Cup Calendar Due to Climate Change
Zelensky Reshuffles Cabinet to Win Support at Home and in Washington
"Can You Hit Moscow?" Trump Asked Zelensky To Make Putin "Feel The Pain"
Church of England Removes 1991 Sexuality Guidelines from Clergy Selection
Superman Franchise Achieves Success with Latest Release
Hungary's Viktor Orban Rejects Agreements on Illegal Migration
Air India Pilot’s Mental Health Records Under Scrutiny
Jamie Dimon Warns Europe Is Losing Global Competitiveness and Flags Market Complacency
Moonshot AI Unveils Kimi K2: A New Open-Source AI Model
Martha Wells Says Humanity Still Far from True Artificial Intelligence
Nvidia Becomes World’s First Four‑Trillion‑Dollar Company Amid AI Boom
EU Delays Retaliatory Tariffs Amid New U.S. Threats on Imports
Trump Proposes Supplying Arms to Ukraine Through NATO Allies
US Opens First Rare Earth Mine in Over 70 Years in Wyoming
Bitcoin Reaches New Milestone of $116,000
Severe Heatwave Claims 2,300 Lives Across Europe
Declining Beer Consumption Signals Cultural Shift in Germany
Emails Leaked: How Passenger Luggage Became a Side Income for Airport Workers
Polish MEP: “Dear Leftists - China is laughing at you, Russia is laughing, India is laughing”
Western Europe Records Hottest June on Record
BRICS Expands Membership with Indonesia and Ten New Partner Countries
Elon Musk Founds a Party Following a Poll on X: "You Wanted It – You Got It!"
China’s Central Bank Consults European Peers on Low-Rate Strategies
France Requests Airlines to Cut Flights at Paris Airports Amid Planned Air Traffic Controller Strike
Poland Implements Border Checks Amid Growing Migration Tensions
Emirates Airline Expands Market Share with New $20 Million Campaign
Amazon Reaches Milestone with Deployment of One Millionth Robot
Yulia Putintseva Calls for Spectator Ejection at Wimbledon Over Safety Concerns
House Oversight Committee Subpoenas Former Jill Biden Aide Amid Investigation into Alleged Concealment of President Biden's Cognitive Health
×