KYC and AML under pressure

By Hind Salhane, Head of Corporate & Government Affairs at GraydonCreditsafe Belgium

Everyone is talking about smarter compliance, but what does that actually

mean?

Financial institutions and companies subject to compliance obligations are facing a clear reality: the pressure surrounding KYC (Know Your Customer) and AML (Anti-Money Laundering) continues to rise. New regulations, increasing complexity and growing expectations from regulators make the playing field more challenging than ever. At the same time, the gap between what is expected and what is operationally feasible keeps widening.

The central question is no longer whether organisations are compliant, but how they can achieve this efficiently, and at scale.

KYC and AML as the foundation of trust

KYC and AML together form the backbone of financial integrity. KYC focuses on identifying and understanding customers, while AML ensures continuous monitoring of transactions and detection of suspicious activity throughout the entire customer lifecycle.

These processes are inseparable: without accurate customer data, effective monitoring is impossible.

Their importance cannot be overstated. According to the United Nations, financial crime represents an estimated 2 to 5% of global GDP - amounting to billions of euros in illegal money flows. The impact extends far beyond fines: reputational damage, loss of customer trust and operational disruptions can have long-lasting consequences for organisations.

The real challenges: operational complexity and context

Although regulations are often perceived as a barrier, the real issues lie elsewhere.

In practice, many organisations struggle with inefficient processes requiring a high degree of manual, time-consuming intervention. Fragmented data results in a lack of contextual insight and an overload of alerts - many of which are false positives. This context is crucial for strong KYC onboarding and effective AML screening.

In addition, compliance teams often rely on solutions that are difficult to scale during growth or peak volumes, and that lack flexibility when regulations change.

As industry analyses show, manual AML processes and poorly calibrated alerts significantly reduce productivity, driving unnecessary costs and delays.

As a result, compliance becomes a bottleneck instead of a strategic function.

From volume to relevance

Traditional AML systems are often rule-based and generate high volumes of alerts. But more alerts do not necessarily mean betterdetection. On the contrary: an excess of irrelevant signals leads to inefficiency and increases the risk of missing genuine threats.

A growing insight within the sector is that effectiveness lies not in volume, but in relevance. This means:

• Using better data context

• Correctly interpreting customer behaviour

• Assessing risks dynamically

• Filtering out irrelevant transactions

By using data and analytical models more intelligently, organisations can refine their monitoring and focus on what truly matters.

The role of data and technology

One of the most important levers for more efficient compliance lies not in hiring more staff, but in improving data quality and automation.

Incomplete, outdated or fragmented data leads to more manual work, more errors and slower decision-making.

Strong compliance organisations therefore invest in:

• Central and reliable data sources

• Continuous monitoring instead of periodic checks

• Automation of repetitive tasks

• Integration of different compliance processes

• Technology plays a crucial role in this. AI and machine learning make it possible to recognise patterns, detect risks more quickly and reduce false positives.

Human expertise remains essential, however, for interpretation and decision-making -especially given increasing regulatory complexity and the unique characteristics of each organisation. One organisation may require raw data, while another may need additional layers of enrichment. All of this while regulators continue to raise the bar on fairness and proportionality.

Regulation evolves, expectations too

The focus is increasingly shifting from mere compliance to demonstrable effectiveness and data ethics.

Organisations are judged not only on their processes, but on their impact. How effective are they at detecting and preventing financial crime?

“Compliance must evolve from an obligation to a strategic lever.”

This means the current approach must be critically reassessed. Small, incremental improvements are no longer enough to solve underlying issues. Companies must take a broader look at their entire operating model - from data and technology to governance and collaboration.Towards a future-proof compliance model

The future of KYC and AML lies in an integrated, risk-based approach that is scalable and adaptive. This includes:

• Continuous insight into customer and transaction risks

• Flexible systems that can quickly respond to change

• Reduced reliance on manual processes

• A clear focus on quality over quantity

Compliance must evolve from an obligation to a strategic lever. Organisations that succeed will not only be better prepared for regulatory demands but will also operate more efficiently and build stronger trust with customers and partners.

Conclusion

KYC and AML remain essential in the fight against financial crime. But the way organisations approach these processes is under pressure. Increasing complexity, rising costs and operational inefficiency make clear that a new approach is needed.

Companies want to grow, which means processes must be operationally scalable. And if contextual intelligence must be added to that, traditional solutions are no longer sufficient.

The key question is no longer whether organisations meet regulatory requirements, but whether their compliance is efficient and scalable. It has become a condition for remaining relevant.

Not more compliance, but smarter compliance.

Organisations that invest today in data, technology and efficient processes are not only building a robust compliance framework, but also a sustainable and competitive future.