Deltec Bank, Bahamas - Blockchain technologies could simplify that process to reduce duplication, which would immediately improve the speed, cost, and efficiency of this work.

Some people say that blockchain tech is all hype. Others believe that it can radically change the way that we do business.

When looking at the blockchain applications for Know Your Client (KYC) and Anti-Money Laundering Laws (AML), the truth is closer to the latter observation.

Insurance companies, banks, and other financial services providers are finding that blockchain applications are useful in the improvement of their KYC and AML compliance.

Large Companies Could Save $500 Million Annually

The cost of compliance in KYC and AML programs is extraordinarily high. The most significant organizations in the financial services sector are spending up to $500 million each year following these regulations.

Global requirements in KYC and AML areas are becoming more complex as the developing world continues to evolve. The fines and penalties are punitive if an issue develops, which means these organizations must avoid any real or perceived improprieties.

Blockchain offers the option of the distributed ledger to solve the inefficiencies that can lead to compliance problems with existing KYC and AML processes. Proof-of-concept efforts have involved 19 countries and 39 institutions in proving that the application of this tech can save time and money almost immediately.

How Blockchain Works to Solve Inefficiencies

Existing processes for KYC and AML include information asymmetries, duplicate work, and manual validation that require significant overhead investments.

Financial institutions must prepare and submit compliance reports regularly. The aspects of many workflows require a manual review and reconciliation with paper documents. That means there are significant risks of human error and lost items that can prolong the process. Blockchain would keep track of everything in transparent ways while increasing the speed of verification.

Most financial institutions do not share KYC and AML data. If a transaction involves multiple banks, each agency expends resources to ensure that they remain in compliance. According to Deltec Bank, Bahamas - Blockchain technologies could simplify that process to reduce duplication, which would immediately improve the speed, cost, and efficiency of this work.

Financial institutions are spending up to 80% of their resources for KYC and AML on reconciling their documentation. That means little remains to assess client risk or to review the available data. Blockchain technology would let an organizations human capital spend more time analyzing risks while streamlining the processes.

How Much Money Could Blockchain Save in KYC and AML?

BIS Research suggests that the usage of digital ledger technologies from blockchain could reduce the administrative costs of KYC and AML compliance by up to 90%. That means a total global cost savings for all agencies in this industry could reach $8 billion annually.

Even if those gains are not achievable, blockchain immediately addresses the inefficiencies that exist in current systems. It would become a secured and fully auditable source of digitized information that can be verified once instead of repetitively.

Disclaimer: The author of this text, Robin Trehan, has an Undergraduate degree in economics, Masters in international business and finance and MBA in electronic business. Trehan is Senior VP at Deltec International http://www.deltecbank.com. The views, thoughts, and opinions expressed in this text are solely the views of the author, and not necessarily reflecting the views of Deltec International Group, its subsidiaries and/or employees.

About Deltec Bank

Headquartered in The Bahamas, Deltec is an independent financial services group that delivers bespoke solutions to meet clients unique needs. The Deltec group of companies includes Deltec Bank & Trust Limited, Deltec Fund Services Limited, and Deltec Investment Advisers Limited, Deltec Securities Ltd. and Long Cay Captive Management

Media ContactCompany Name: Deltec International GroupContact Person: Media ManagerEmail: Send EmailPhone: 242 302 4100Country: BahamasWebsite: https://www.deltecbank.com/

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Deltec Bank, Bahamas Blockchain Technologies could Simplify the KYC and AML - Press Release - Digital Journal