Ongoing due diligence solution design
An effective ongoing due diligence solution requires an ecosystem of technologies and data as opposed to a single out-of-the-box solution. This solution should address process changes, integrated systems, data clean up, third-party data sources and workflow to enable end-to-end performance built with the proper controls. An effective ongoing due diligence solution will require baseline technology focused on the following:
Trusted data sources
Implementing an ongoing due diligence framework requires a reliance on trusted data sources to identify changes to customer information, such as a name change or exchange delisting, which may vary in reliability depending on global footprint and customer types.
Orchestration layer
Integrated data feeds, trigger events and decisioning logic will need to connect to a case management tool that manages tailored journeys based upon an initial risk triage:
Event hub
As the orchestration layer connects the ecosystem of data sources, the event hub uses a series of business rule logic to determine whether review is required and, if so, what level of review, based on the trigger event identified.
Straight-through processing
As a default mechanism, a sophisticated system will determine appropriate actions based on the trigger and attempt to resolve systematically through activities such as automated data sourcing and validation of updated customer information. Hands-on analyst intervention would occur only when straight-through processing rules do not resolve the trigger.
Digitized customer experience
Ongoing due diligence programs will need to be agile. Whether assessing customer information as part of a new product or service or based upon a risk event, the outreach process and customer experience should be enabled by digital portals that support a direct and interactive experience. This is particularly true for commercial banking and corporate and investment banking customers with cross-border and multi-person outreach within a single organization to efficiently process refresh activities.
The definition and monitoring of risk triggers will require integration with transaction monitoring or frontline monitoring programs assessing customer behavior. Leading firms should take this principle forward and continually assess segments of customers (e.g., charities, pawn shops, cash-intensive businesses) to understand irregular vs. expected activity within peer groups. These typology findings should inform additions or updates to risk triggers.
