Digital KYC in Luxembourg: Key takeaways from Finologee’s “Digitising Finance Recipes” conference #2
On 4 July, industry experts gathered for an insightful event titled “How to enhance efficiency in fund asset servicing with digital KYC/AML?”. Hosted by Finologee at MALT’s Innovative Factory, with contributions from Arendt & Medernach, Hauck & Aufhäuser Administration Services, Fund Channel, Moniflo and ALFI, the second edition of the “Digitising Finance Recipes” series brought together professionals to explore the evolution and current frontiers of KYC digitalisation in Luxembourg, along with practical use cases and lessons learnt.
The event started with brief welcome words by Raoul Mulheims, CEO and co-founder of Finologee. He delved into the evolution of digital KYC process management in Luxembourg from 2017 to 2024.
His presentation covered initial expectations, progress in digital onboarding, integration of RegTech solutions and upcoming trends as well as regulatory developments impacting the KYC landscape.
Glenn Meyer, Avocat à la Cour at Arendt & Medernach, and Sandrine Périot, Partner at Arendt Regulatory & Consulting SA, stepped forward to deliver a thorough analysis of Luxembourg’s current KYC digitalisation landscape. They discussed digital onboarding and the legal background, examined where we stand as of today, and provided key recommendations for AML/KYC digitalisation projects. Their insights detailed the advancements and benchmarks within the EU, highlighting the legal framework.
Sandrine Périot commented: “There is an appetite for the digitalisation of KYC and AML in the EU, even if the implementation and realisation is perhaps not as fast as we would have like.“
The conference continued with a panel discussion with renowned figures from Luxembourg’s financial sector: David Lorscheid, Chief Compliance Officer at Hauck & Aufhäuser Administration Services; Andrew Cleary, Head of Relationship Management at Fund Channel; and Georges Bock, founder and CEO of Moniflo.
Moderated by Jonathan Prince, CSO and co-founder of Finologee, they discussed best practices, use cases and experiences with view to digitalising KYC/AML in Luxembourg.
In conversation with Jonathan Prince, David Lorscheid, Chief Compliance Officer at Hauck & Aufhäuser Administration Services (HAAS), discussed the complex challenges of AML/KYC processes specifically in the context of fund onboarding.
He pointed out issues such as manual procedures, incomplete data and excessive paperwork, which collectively lead to inefficiencies and extended onboarding times for clients:
“What I saw is just tons of documents and people just sending letters with their identity card scan. This was my biggest challenge as Chief Compliance Officer.”
Consequently, he explained that HAAS was committed to automating these processes to meet evolving regulatory standards and improve operational efficiency. David Lorscheid noted:
“We have achieved a 60-70% reduction in effort for reconciliation campaigns through digitising processes with KYC Manager.”
David Lorscheid then presented several slides with concrete examples of automated procedures, including an email template for client communication, automated risk assessments using LexisNexis and the implementation of the 4-eyes principle in Finologee’s KYC Manager.
The conversation on stage continued with Andrew Cleary from Fund Channel addressing the significant challenges posed by manual KYC/AML processes in client onboarding, remediation campaigns and the automation of internal and external reporting.
He highlighted the inefficiencies and resource-intensive nature of these tasks, underscoring the critical role of automation in improving operational efficiency. “Why we wanted to digitise you ask?”, he said on stage, “to better control the operational risks in a complex environment and offer a competitive advantage.”
Outlining Fund Channel’s objectives, he focused on streamlining digital client data and enhancing risk management capabilities. This included simplifying the client periodic review process and exploring opportunities to provide managed services, ultimately aiming to optimise compliance processes while elevating service delivery standards.
Delving into Fund Channel’s specific use case, he further explained the company’s approach to conducting “internal KYC” reviews while also offering managed KYC services.
“Facilitating mutual data exchange amongst clients with obtained counterparty consent is key”
he said, highlighting its role in fostering collaboration and enhancing the group’s compliance effectiveness.
Georges Bock discussed with Jonathan Prince the challenges associated with achieving fully automated onboarding for retail investors, emphasising Moniflo’s need to automate low-risk client checks and enable seamless mobile onboarding through the app. He underscored their solution focused on reducing onboarding time while maintaining rigorous compliance standards.
“We aim to reduce onboarding time significantly by ensuring seamless connectivity to our internal systems”, Georges Bock stated.
He elaborated on their approach, which includes implementing a customised and automated risk scoring system to expedite processes. Additionally, he highlighted the importance of smooth integration with preferred partners, ensuring a cohesive experience for clients.
“Our goal is to provide a user-friendly interface that enhances the onboarding experience for our clients”
Georges Bock emphasised, illustrating their commitment to leveraging technology for efficient client engagement and compliance adherence.
In his closing remarks, Jean-Marc Goy, Chairman of ALFI, highlighted the importance of the financial industry for Luxembourg and the major impact of digitalisation on the sector.
He then praised all initiatives where best practices can be shared and finally emphasised the multitude of excellent digital tools provided by local fintech/regtech companies, which are crucial for improving operational efficiency and leading the industry into a new era.
He concluded by pointing out the strong interest that the topic of digital KYC/AML solutions has in Luxembourg, which was clearly reflected in the high number of around 150 registrations for the Finologee event.
The latter concluded with an exclusive cocktail reception, providing attendees with the opportunity to network, share ideas and forge valuable connections in a relaxed setting.
