Compliance Experts Urge Firms: Transition Your KYC Model to Stay Ahead of the Curve
Firms around the globe are facing mounting regulatory pressure and the risk of hefty fines for noncompliance, criminal gangs have been trying to launder illegal funds and the sanctions against Russian oligarchs have pushed many customers into the spotlight, leaving firms without the right checks in place, vulnerable to unknowingly becoming enablers. Vice President of Enterprise Sales at SmartSearch, data expert Zowie Lees-Howell, believes the current climate demands firms to modernize their processes.
New KYC Models Must Reduce Compliance Burden
Traditional KYC is no longer suitable, and firms must build a more complete picture of their clients, actively monitoring for any changes in their status. This is especially important in the current climate, as both old and new customers may face new restrictions.
By introducing a next-generation platform that helps firms modernise their processes and gain a competitive advantage. Customer experience must be a frictionless journey, with digital onboarding and reduced risk of false positives. This, combined with automated risk management and reliable accuracy checks, is a clear step forward in easing the compliance burden for regulated firms.
One cannot emphasize enough the importance of automation and streamlining processes when it comes to compliance. “Our primary focus was eliminating manual processes and increasing automation to streamline our compliance workflow,” said Brousse, CEO of Fincapital Partners.
Deloitte Doubles Down on Blockchain Technology to Revamp KYC Conditions
Also according to Deloitte, current KYC conditions are not ideal due to their reliance on paper-based certificates, the use of multiple platforms to store customer data, and the inability to use KYC details more than once. The collaboration is the latest in a string of moves from Deloitte as the firm continues to double down on blockchain technology. In April, the firm announced the hiring of 300 Web3 staff in the U.S., while other big four companies have refrained from similar hiring sprees.
VC Capital Flows Into EU Crypto Businesses Due To Regulatory Clarity?
While venture capital valuations continued to decline in the first quarter of the year due to a lack of initial public offerings, a retreat by non-traditional investors, and ongoing economic challenges according to PitchBook research), venture capital investment into European crypto projects increased nearly tenfold in the span of a year, from 5.9% in the first quarter of 2022 to 47.6% in the first quarter of 2023.
This influx of investment could be attributed to the progressing clarity of regulation and welcoming crypto stance across Europe, which has attracted capital and entrepreneurs from around the world – a significant development for the crypto industry in Europe.
MiCA Legislation to Boost Crypto Adoption in Europe
The European Parliament has given its approval of an important proposed piece of legislation, a sign of confidence in the new sector. 517 European lawmakers voted in favour of MiCA (Markets in Crypto-Assets) and only 38 against it, indicating an overwhelming approval of the regulations.
MiCA provides the much-needed clarity to crypto businesses by introducing systematized regulatory guidelines including on licenses, KYC and AML. This would also allow investors to know expected levels of protection while investing in crypto assets.
With MiCA, the EU’s estimated 450 million consumers of crypto assets can expect increased activity of developers, more exciting projects and protocols, which could lead to increased adoption and further capital inflows. MiCA is set to come into effect in mid-2024 and if successfully implemented, could turn the bloc into a major hub for crypto projects.
Bottom Line
Despite growing regulatory pressure and the risk of hefty fines, businesses in Europe are adapting to modern compliance standards, doubling down on blockchain technology and venture capital investments into European crypto projects as new clarity on regulations paves the way for EU blockchain innovation.
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