Knowing Your Customer: A Users Guide to Section 326

September 24, 2003

Abstract

Boston, MA, USA September 24, 2003

Knowing Your Customer: A User's Guide to Section 326

A new report by Celent examines the current state of know-your-customer (KYC) compliance at US financial institutions as well as the vendor solutions that can help institutions meet the new, heightened KYC requirements of Section 326.

In 2002, over US$850 billion in illicit funds were passed through financial institutions, and fraud and identity theft cost them over US$3 billion. Over the past decade, the triple threats of fraud, terrorism and money laundering have driven increased operational and regulatory pressure on firms to develop effective methods for managing customer risk. Moreover, financial institutions risk fines and damage to their reputations if they have harbored容ven unwittingly庸unds from terrorists, money-launderers, or politically proscribed entities.

In a new report, Knowing Your Customer: Solutions That Tackle Section 326 of the USA Patriot Act, Celent Communications analyzes the existing compliance environment of US financial institutions and addresses their preparedness for complying with the more robust customer identification program (CIP) called for by Section 326 of the USA PATRIOT ACT. The report also provides a close examination of 16 vendor solutions that have emerged to assist financial institutions with meeting the new預s well as old幼ompliance requirements. Some are focused on one specific compliance function, while others run the gamut to supply a full and comprehensive solution.

"KYC-related compliance has long been required of banks and, as a result, banks have procedures and solutions already in place," comments Ariana-Michele Moore, co-author of the report. "However, with the release of the USA Patriot Act痴 CIP rules, not only brokerages and insurance firms, but also many banks are finding it necessary to enhancing their existing protocols."

Vendors included in this study are: Americas Software, Attus Technologies, Bankers Systems, Bridger Systems, ChoicePoint, eFunds (ChexSystems), Equifax, Experian, FircoSoft, LexisNexis, Primary Payment Systems, Prime Associates, Regulatory DataCorp (RDC), Thomson Financial Publishing, World-Check and WorldCompliance.

The 36-page report contains 9 figures and 11 tables.

A is available online.

of Celent Communications' research services can download the report electronically by clicking on the icon to the left.  Non-members should contact info@celent.com for more information.

        

Send mail to info@celent.com with questions or comments about this Web site.

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned subsidiary of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
mpace@celent.com
Tel: +1 212 345 1366

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81 3 3500 3023

Table of Contents

 

Boston, MA, USA September 24, 2003

Knowing Your Customer

Return to report Abstract

 

EXECUTIVE SUMMARY 3
INTRODUCTION 5
  The Impetus 5
  Regulatory Atmosphere 7
  Section 326 8
  Before The USA Patriot Act 9
  Current State of Compliance 10
  Accessing the Risks 12
  Plans of Action 13
IT SPENDING ON COMPLIANCE SOLUTIONS 15
MARKET SOLUTIONS 17
  Software vs. Database Providers 25
  Market Segmentation 27
  Simple vs. Enhanced Solutions 28
  Packaging 30
  ID Verification 31
  Broadening AML Capability 33
CONCLUSION 35
OBJECTIVITY & METHODOLOGY 37

Sign in to download reports and access personalized information