Pawel Kuskowski talks to Dr. Henry Balani, Global Head of Industry and Regulatory Affairs at Encompass Corporation and part-time academic on the topic of KYC. Defining privacy versus transparency is important to take into account when crafting money laundering regulations. Dr. Balani also mentions how 4AMLD has boosted banks’ valuations. Regulations bring about greater transparency in terms of what banks have to do, how they detect money laundering activities and the process by which they report issues and encourage clarity for investors and shareholders.
Onboarding and KYC is not the problem, the problem is that the fintech industry has failed to make these processes less cumbersome. A key challenge with corporate KYC is the presence of shell companies which are designed to hide beneficial owners for privacy purposes. There is also the systemic issue of corruption in hiding PEPs and banking officers turning a blind eye to hidden beneficial ownership information if they think the potential client is good business for the bank.