It takes more than just one piece of software–often many more–to carry out anti-money laundering (AML) and know-your-customer (KYC) checks. This expensive accumulation ties back to the ambition of mutualising KYC procedures within Luxembourg’s financial sector.

How many software solutions do you use for AML procedures in general, and specifically for KYC? It’s a simple question, but few banks in Luxembourg are willing to answer it. After all, it touches on a very sensitive issue.

“KYC is one of the biggest obstacles to the profitability of European banks,” says Nasir Zubairi, CEO of the Luxembourg House of Financial Technology (Lhoft). “Compliance costs in Europe amount to around €100bn annually, with KYC accounting for a significant share of that–between 10 and 15%, depending on the source. It’s becoming increasingly complex and is also creating friction with customers, who are frustrated by the processes they have to go through to open accounts.”

The topic was highlighted when ING announced in May that it would end its retail banking activities in Luxembourg. “Challenges involved in opening and monitoring accounts probably influenced ING’s decision to leave the market, judging the business to be insufficiently profitable given the regulatory constraints,” commented Jerry Grbic, CEO of the Luxembourg Bankers’ Association (ABBL), in an interview with Paperjam at the time. “The ING case crystallises the difficulties linked to KYC,” he summarised.

From Delano –> Full article