A comparative analysis of KYC processes in the local banking and financial sector

Abstract

The purpose of this dissertation is to analyse and compare the 'Know Your Customer' (KYC) procedure in the Maltese banking and financial sector. In recent years, this process has been devoted importance, and much more scrutiny is being placed on the entities to see that they implement it in the appropriate manner.

The research mainly focuses on how KYC processes are being carried out to ensure minimising financial risk to the entities whilst protecting the financial system’s reputation. It will be based on the KYC changes brought by the AMLD4, AMLD5 (still in the works) and MiFID II (recently implemented in January 2018).

The research objectives of the study are the following:

i. To assess the impact of such legislation on the current KYC process

ii. To assess whether better reputation is being achieved through these changes

iii. To assess the effectiveness of such re-regulation and whether it could hinder business through increased compliance costs

iv. To assess how entities are preparing their employees for these changes

v. To assess to what level the MFSA and FIAU can serve as guides to financial institutions in this respect

Interviews with a number of financial institutions were conducted, along with the MFSA, which is the single regulator of financial institutions in Malta.