Companies struggle with fragmented entity verification systems

Moody’s report shows that nearly two-thirds of companies describe their own as fragmented or inconsistent.

Entity verification (EV) is essential for managing business risks, yet many companies face significant challenges in this area. According to Moody’s, nearly two-thirds of companies describe their entity verification processes as fragmented or inconsistent.

Choon Hong Chua, Head of Financial Crime Practice Group for Asia-Pacific and Middle East at Moody's, said that key barriers to effective EV include data fragmentation, maturity, and governance issues. 

“The practical entity verification process ultimately really depends on the completeness and the accuracy of the information that the organisation is able to source when it comes to validating information to the customer,” Chua explained, “When your data is inconsistent and fragmented, it’s because you’re collecting information not from a single source that is trusted.”

Fragmented data sources and inconsistent departmental processes lead to high costs and compliance challenges. “There’s a lot of cost in this data collection process,” Chua said, noting that such issues prevent organisations from achieving a unified view of the customer. “When different departments are doing this, then you don’t have a single view of the customer.”

Chua emphasised, “The ultimate goal of the entity verification process is to give you this accurate and up-to-date information of a customer that is a master data view, a one single record view of a customer’s entity.” 

Currently, more than 20% of respondents in Asia-Pacific and the Middle East report being close to achieving this “golden record,” but there is still work to be done. To strengthen entity verification processes, organisations must not only collect and validate customer information from primary and external sources but also ensure this data is consistently updated. 

“You need to make sure that this information is always kept up-to-date and fresh,” Chua advised. A continuous, integrated approach to data collection and management can enhance the KYC process and improve overall data accuracy.

“The customer’s view and data is always kept up-to-date,” Chua said. This approach allows for a comprehensive view of the customer’s network, aiding in risk management and uncovering potential opportunities for expansion.