Advancing modern financial crime prevention with KYC utilities – interview with Invidem

Marit Bø Bornstein, CEO of Invidem, shares with The Paypers how the Nordic banks tackled the KYC cost and efficiency dilemma using a KYC utility

What is Invidem for those who do not know it yet and how does your professional background tie into the company’s objectives?

Invidem is a company that collects, verifies, and validates generic KYC information for corporate customers and provides this information to entities under AML regulations.

The work required to prevent financial crimes such as money laundering and terrorism financing is labour-intensive as well as time-consuming. Invidem was founded in 2019 by six leading banks in the Nordics as a joint venture for the common good. The company utilises technology to create an efficient and effortless KYC process with great customer experience while at the same time advancing modern financial crime prevention. Invidem acts independently and is accessible to all businesses requiring generic and compliant KYC information.

Personally, I have worked most of my career aligning IT initiatives with business objectives. I also have extensive experience of regulatory activities as well as prior experience from building companies. I would still like to stress the fact that Invidem is a team effort. The Nordic company employs a team of ~40 hardworking employees, of ~10 different nationalities, including handpicked experts in KYC and tech. The headquarter is situated in Stockholm.

How are now banks handling KYC processes in general? In your opinion, do they do a good job, how are they overcoming hurdles?

First and foremost, KYC processes are challenging for all businesses subject to AML legislation. We must also remember that the field of KYC, from a historic point of view, is relatively new – both the individual and the collective knowledge will continue to increase in the years to come.

The conditions and prerequisites vary a lot from one bank to another. For this reason, comparisons and general statements are difficult. I believe most banks address this challenge very seriously. As for the Nordic market, the very existence of Invidem is a living proof of that.

What are the benefits of a KYC/AML utility for banks and for its customers?

The answer will of course depend upon the utility in question and the services provided. Not all solutions are alike. Different banks and customers may also value specific advantages differently.

In the case of Invidem, these are the key advantages for the banks:

• reduced risk of being exposed to money laundering and terrorism financing;

• a simplified and harmonised KYC process with a common data standard;

• lead time reduction;

• automated data gathering made available through the Invidem digital platform;

• data reliability: validation and verification of data with audit trail;

• ongoing monitoring and up-to-date KYC files.

And these are the key advantages for the customers:

• provide your generic data once (with periodical reviews thereafter);

• fast and smooth access to digitally provided data;

• always up-to-date KYC information to share with multiple parties such as banks, insurance companies, etcetera;

• harmonised requirements across different organisations that comply with AML regulation;

• better control of your own KYC data;

• decreased need to invest in a separate system for structured KYC information;

• faster access to financial services.

For the last decade there have been several KYC utilities created across the globe – Clipeum in France, Clarient in the US, Mansa on the African continent. However, there haven’t been any major announcement coming from them in the last two years. Why is that?

We cannot speak for our potential competitors and/or partners. On a more general note, though, I would like to point out that these issues are incredibly more complex than the majority of people probably give them credit for. There are sometimes interdependencies that are not identified and understood until very late. Furthermore, the KYC challenges are often international, which creates additional complexity when it comes to agreements and collaborations. To summarise, all this complexity takes time to properly address. This has been the case for Invidem as well, despite our advantage of an agreed upon Nordic standard.

What are the reasons attempts to create KYC/AML utilities fell short?

I believe one must distinguish an established failure from the fact that an initiative has not yet been proven successful. This is a complex area with different interpretations of regulations in different countries which constitute a challenge in setting up and developing an efficient standardised service.

Could you please name some crucial factors required for a successful KYC/AML utility?

In our case, our agreed upon Invidem KYC data standard and the strong commitment from our founders have been crucial factors. Furthermore, we have opted for a customer centric approach – with a clear focus on the customer experience – and approach new technology with great interest and curiosity.

How do you see the anti-money laundering fight evolving in the next 5 to 10 years?

The creativity of the criminals is hard to fathom. The legislators and law enforcements struggle to keep up. In my opinion, the obvious solution lies in extensive collaborations between companies and authorities over the national borders. We need to enable and encourage all initiatives that result in superior KYC information. As a counterweight, of course, is the need to manage the privacy perspective.

To conclude, I find it practically impossible to foresee the future in this regard. For a provider such as Invidem, we need to monitor the development closely and aim for the right balance between compliance, efficiency, and customer satisfaction. One thing I know for sure, though: The KYC future is bright.

About Marit Bø Bornstein

Marit Bø Bornstein started as CEO at Invidem in March 2020. She is born and raised in Norway and has worked most of her career aligning IT initiatives with business objectives. She also has extensive experience of regulatory activities as well as prior experience from building companies.