Fenergo, a client lifecycle management (CLM) and regulatory compliance solutions provider based in Ireland, is addressing the complexities of electronic know-your-customer (e-KYC) and anti-money laundering (AML) compliance in the Asia-Pacific (APAC) region. Cengiz Kiamil, managing director of APAC at Fenergo, discusses how the company leverages automation, artificial intelligence (AI), and natural language processing (NLP) to streamline compliance processes.

The evolving regulatory landscape in Asia Pacific

The regulatory environment for e-KYC and AML in APAC is evolving, challenging banks to keep up. “The pace of regulatory change is consistent across regions and is accelerating quickly,” noted Kiamil. This is reflected in Fenergo’s claims of rising fines for non-compliance in Asia Pacific, which have increased by 30% in the last 18 months. “Until recently, being non-compliant in Asia was less punitive compared to other regions, but we’re seeing a shift,” added Kiamil.

Fenergo data shows global enforcement actions have risen by 57%, with fines in APAC rising sharply from $60 million to $1.4 billion. Regulatory oversight is extending to new sectors like digital assets and payment services. For instance, in December 2023, the Australian Transaction Reports and Analysis Centre (AUSTRAC) introduced AML compliance for digital currency exchanges and payment platforms.

Difficulties in justifying cost over compliance risks

Despite awareness of compliance risks, many banks struggle to justify investments in compliance systems that don’t generate revenue. “There is a push to direct resources towards operational efficiency rather than risk management,” noted Kiamil. Fenergo reports that compliance costs average $2,600 per KYC profile. This high cost makes it difficult for banks to allocate resources for training and compliance systems, risking non-compliance and reputational damage.

A seamless digital onboarding customer experience

As digital onboarding becomes essential, banks aim to streamline the process. “Banks are expanding their customer base, whether by entering new markets like APAC or acquiring other banks,” explained Kiamil. “They’re bringing in large numbers of customers through digital channels and focusing on efficient processing while ensuring a smooth experience.”

Fenergo’s platform addresses these needs by integrating automated KYC checks, intelligent document processing, and AI-driven insights. This allows banks to manage large volumes of new accounts while ensuring compliance with regulations and maintaining a positive customer experience.

Streamlining the compliance workflow for institutions

Kiamil highlights the importance of streamlining the compliance workflow. “70% of the time spent on KYC involves figuring out the required documents and waiting for them,” he explained. Fenergo automates tasks like document classification, data extraction, and compliance checks, speeding up onboarding and reducing customer frustrations. “Customers abandon the process because it takes too long, and they’re repeatedly asked for the same documents,” added Kiamil. Fenergo’s research shows abandonment rates during the onboarding process have risen from 53% to 67% in the past year, highlighting the need for more efficient systems.

Fenergo uses AI and ML to refine compliance rules and reduce false positives (incorrectly flagged transactions) in sanctions and transaction monitoring. A unique aspect of Fenergo’s approach is its use of NLP, which allows compliance experts to input complex rules in plain language. “This allows us to configure rules automatically, which is useful for adapting to changing circumstances,” noted Kiamil.

Ensuring data consistency and scalability across varying infrastructures

Data consistency and scalability are key challenges for banks operating across diverse markets, particularly in e-KYC and AML compliance. “Cultural and operational barriers complicate digital adoption,” said Kiamil. Markets with slower infrastructure development or lower digital maturity can make implementing e-KYC solutions difficult.

One example is the Philippines, where banks face volume challenges in onboarding a large unbanked population and serving a growing middle class. "Banks think the labour market in the Philippines is cost-effective, leading them to prioritise operational efficiency," explained Kiamil. “However, even with additional staff, you can’t train them fast enough, especially as regulations evolve.” This leads to banks finding sustainable and scalable solutions that reduce the training burden while ensuring regulatory compliance.

The varying local infrastructure also poses challenges in the necessary documents and information for customer onboarding and KYC. “We need a framework that can handle variability in data policies and infrastructure,” added Kiamil. “It’s unlikely everything will align perfectly in the next five years, so banks must focus on risk-based approaches and ensure access to reliable data.”

Fenergo’s platform addresses these challenges by using automation and AI to reconcile and standardise data across different infrastructures. “We can automatically split, classify, and extract the relevant data from documents to ensure it meets the necessary policy requirements,” Kiamil explained. This helps banks manage inconsistent or incomplete data while remaining compliant with local regulations. Kiamil noted that this ability to handle conflicting data is the reason why banks are investing in solutions that ensure accurate, real-time compliance.

Collaborations with experts and regulatory partners to combat threats

Fenergo’s community-based approach to tackling KYC and financial crime challenges focuses on regulatory interpretation both internally and with partners. “We have subject matter experts (SMEs) who perform horizon scanning, regulatory interpretation, and translate policies into our products,” said Kiamil. The company also works closely with regulators and customers to ensure a common understanding.

The community approach also helps keep compliance systems up to date with the latest policies. “We’ve invested significantly in making platform updates user-friendly, so business users or SMEs at banks, not just developers, can keep policies current,” explained Kiamil.

Moving ahead with technology and AI-driven compliance solutions

Banks have an opportunity to leverage technology to streamline e-KYC processes and comply with evolving regulations. However, successful approaches must rely on combining technology and human expertise to navigate regulatory complexities. The risk of AI lies in its transparency, auditability, and potential biases that could undermine the effectiveness of the KYC process.

As regulatory standards change, banks must implement adaptable solutions that can handle inconsistent data and meet local requirements. Banks, regulatory partners and platform providers like Fenergo must collaborate closely, ensuring that both technology and compliance practices are aligned to address emerging threats effectively.