Know Your Customer (KYC) Guidelines for Australian Banks


As we wrap up our series on KYC, we head to Australia to check up on the latest in KYC regulation and ongoing investigations.  In case you missed the rest of the series, check out KYC in the U.S. and KYC in the EU.

Current Scrutiny

In December 2017, the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry was established to investigate banking misconduct.  Royal Commissions hold the power to recommend criminal charges and propose legislation.  This commission represents the first time the Australian banking industry has been scrutinised as a whole, rather than just an individual bank.  Hearings began in March 2018 and are focusing on a host of issues and internal processes, such as those to prevent breaches in money laundering regulations.

Within the last year, two of Australia’s big banks were found to have weaknesses in their KYC processes and requirements.  As a result, Austrac, the federal financial intelligence agency, hit one of the banks with a multi-million dollar fine, emphasising the importance of creating and adhering to a strong KYC program.  Both banks have since committed to strengthening their KYC processes.

The Royal Commission issued an interim report on their initial findings at the end of September.  The results were not good.  It suggested there may be the need to improve not only internal bank requirements and processes, but also the federal regulations and responsibilities of the regulatory agencies.  The final report is due 1 February 2019 and will include formal suggestions for improvement.

Building an Effective KYC Program for AU Banks

Just as important as back office review processes and record keeping is the customer experience.  Submitting and verifying all the necessary information upfront to conduct KYC reduces the number of pending applications and back office reviews, and streamlines the customer experience, enabling instant decisioning and avoiding repeat requests from the customer for additional information.

Avoka enables you to transform your banking customer experience to make this possible.  Avoka Transact® is a software platform for delivering outstanding customer acquisition journeys in banking.  It increases speed to market, addresses compliance requirements and risk management, and improves the experience for applications such as account openings, loan applications, and business onboarding.  Avoka Transact provides:

  1. Increased Agility and Speed to Market: As we’ve seen, the regulatory regime is changing.  Banks need a platform that can accommodate these changes and implement new requirements quickly to stay in compliance.  By leveraging re-usable components, real-time design reviews, and the ability to quickly build proofs of concept, a KYC process can be designed and implemented faster than internal development projects.
  2. Omnichannel Digital Experience: Make it easy for customers to apply, complete their information, and upload additional documents when necessary.  Omnichannel means customers can apply from any channel and even branch and call center employees have access to the application to help customers through the process.  Digital also makes record retention easy.  Everything is saved, providing a simple audit trail and documents can be saved to other systems or printed.
  3. Adaptive Forms: Avoka Transact’s adaptive forms can be customised to ask for information dependent upon previous answers, significantly streamlining the amount of questions needed to ask customers during the onboarding process.
  4.  Leverage Leading FinTech: Digital customer journeys need digital ID, KYC, risk analysis and more. Avoka has pre-integrated with a wide range of FinTech services, as well as systems of record that can be used to deliver and receive customer data from KYC databases.
  5.  Security, Privacy, and Local Hosting: Avoka Transact meets the most stringent requirements for security, encryption, personally identifiable information (PII) and hosting location.

Together, these capabilities help to make what is typically an expensive and very complex process more efficient and cost-effective.  If you are in the process of building or improving your KYC process for your customers, contact us today to learn how we can help.

Lisa Adams