ABCs of KYC
Friday, 27th February 2009
You really do wonder whether there is any point in doing 'know your customer' or client due diligence research for our internal clients after reading about Bernard Madoff's truly fabulous Ponzi scheme in the last couple of months. If it sounds too good to be true, it probably is, so best not to take people at face value. These days, you really should know your customer pretty well before you do business, if only because the regulators are increasingly telling your companies they must and can punish them for not doing it.
So, building on Donna Fryer's Insider column on people information in January's VIP, this month we focus on the specialist approach to people information required for KYC research and learning to avoid the Madoff problem. Penny Crossland, who has a wealth of research experience in this area, reviews products from Dow Jones and LexisNexis that provide know your customer services, and Shirl Kennedy's Insider article also looks at due diligence and recent FUMSI articles on the topic.
Due diligence is not just about individuals and their companies but also the environment in which they operate. The further away they are from the main financial centres, the more difficult it gets. Tim Buckley Owen talks to Robin Bew from the Economist Intelligence Unit about its business and his take on providing research and analysis to help companies mitigate political and economic risk in some of these places.
Few of us will be unfamiliar with the EIU's products and Robin has some interesting insights on how they add value. He is certain that the EIU's proposition should be the ability to demonstrate a high return for the investment that his clients make and not cutting costs and quality in response to economic pressures. Due diligence research is one of the easiest types of information research to demonstrate a high ROI, as the potential reputational or financial damage is huge compared to the initial cost of screening clients.
But smart information managers will use this as a model to apply to the other types of research they do as a way to make a case for demonstrating value in tough times.
Editor's note: Mark Jewell served as guest editor for VIP No. 63, published in February 2009. Mark is Vice President, Account Implementation and Programme Management at Integreon http://www.integreon.com, a leading global legal and knowledge services outsourcing company. He was previously Director, Global Offshoring for Business Information Services and Computer Graphics for Lehman Brothers. He developed Lehman Brotherís European programmes for records management and for new client and counterparty due diligence.
Read more about this issue and purchase it here: http://web.vivavip.com/go/vip/