Why the next 24 months will redefine KYC for financial institutions in Europe
For many years, Know Your Customer (KYC) has been treated as a compliance box to tick: collect documents, file them, move on. That approach is no longer enough.
Across Europe, regulatory change, rising data expectations and operational pressure are converging. KYC is shifting from incremental adjustments to structural redesign, altering its governance, operations and oversight.
KPMG Luxembourg and Finologee have combined regulatory advisory expertise with a technology-driven KYC solution to help the financial sector meet these new demands. Together, they support banks and other financial institutions rethinking how KYC works in practice.
Why the next 12-24 months matter
These changes will drive the shift:
- European Anti-Money Laundering Authority (AMLA) operationalisation: more data-driven, cross-border supervision and stronger scrutiny of consistency across entities
- eIDAS 2.0 (Regulation EU 2024/1183) and European Digital Identity Wallets: verified, reusable identity attributes that support cross-border onboarding
- New Regulatory Technical Standards (RTS) on KYC data: introducing explicit requirements for KYC information to be structured, aggregatable and traceable, beyond basic storage
These developments mark a turning point for supervisory expectations and for how institutions must manage KYC. As Giovanna Giardina, Partner and Forensic & Financial Crime Leader at KPMG Luxembourg, observes:
Giovanna Giardina: “KYC is no longer just about completing a process. It is about demonstrating continuous control over KYC data.”
From processes to data discipline
Supervisors will still take a keen interest in how processes are documented but they will increasingly focus on the quality of the underlying data. They expect KYC information to be structured, consistent across entities, traceable over time and readily available on request.
The European Banking Authority’s (EBA) proposed RTS make it explicit: KYC data must be usable and aggregatable, not just stored. Many institutions still hold information in documents, PDFs or fragmented systems, hindering consolidation, reuse and reporting.
Giovanna Giardina: “Many institutions underestimate the operational impact of these new expectations. The challenge is not collecting information, but ensuring it is structured, consistent and available when supervisors request it.”
This is precisely why technology enablers such as Finologee’s KYC Manager are becoming central to modern KYC strategies.
Technology is now central to meeting this expectation. Platforms that create a central, auditable KYC data layer make structured data available for reporting, remediation and automation and form the essential foundation for future initiatives.
When digital identity is an accelerator, not a shortcut
As KYC data foundations improve, digital identity under eIDAS 2.0 will gradually move from policy to day-to-day operations. The European Digital Identity Wallet brings verified attributes, reusable credentials and cross-border recognition, delivering much-needed capabilities for a fragmented European market.
Yet digital identity only delivers value when integrated into a governed, structured KYC model. Used in isolation, it risks becoming another verification step. When identity attributes are integrated into a central data model, they become a trusted source that improves automation and data quality.
Giovanna Giardina: “Digital identity is not a shortcut around KYC obligations. It is an accelerator for institutions that already have strong data structures and governance in place.”
In other words, eIDAS 2.0 rewards preparation, not rushed adoption.
AMLA changes the conversation
With AMLA fully operational over the next two years, supervision will become more data-driven. Expectations will shift from “Do you have compliant processes?” to “Can you demonstrate control over your KYC data at any point in time?”
Institutions should expect more frequent supervisory interactions, stronger cross-entity scrutiny and higher reporting demands. Fragmented systems and manual data consolidation will become real compliance risks.
Centralised KYC data architectures aligned with RTS requirements enable rapid responses to supervisory requests, faster remediation and scalable compliance without constant firefighting.
Jonathan Prince, co-founder and CSO at Finologee: “With AMLA, institutions will increasingly be judged on their ability to provide accurate, consistent and timely KYC data. Our KYC Manager platform is designed precisely to support this shift, by providing a central and auditable KYC data layer aligned with supervisory expectations.”
Client self-care: a consequence of strong foundations
Client self-service is often presented as a starting point but it is actually an outcome. Only when KYC data is structured and identity sources are reliable can institutions let clients update information safely, reduce back-office work and focus human resources on exceptions and risk analysis.
Jonathan Prince, co-founder and CSO at Finologee: “Without governance, self-care increases risk. With strong controls, it becomes a powerful efficiency lever”
Getting the sequence right
The biggest risk is poor sequencing. The recommended order is:
- Build strong KYC data foundations and governance.
- Integrate digital identity as a trusted data source.
- Prepare for AMLA’s data-driven supervision.
- Roll out client self-service to optimise operations.
Jonathan Prince: “Institutions that invest early in strong KYC data foundations will be far better positioned to handle regulatory scrutiny and operational pressure.”
A shared approach for lasting resilience
By pairing KPMG Luxembourg’s regulatory and advisory insight with Finologee’s technology-led KYC data management, financial institutions can transition from reactive compliance to a more resilient, future-ready KYC model.
The next 12 to 24 months are not about moving faster. They are about building the right foundations: once and properly.
Contact us to discuss how to build your KYC data foundation, integrate digital identity and prepare for AMLA or request a demo of Finologee’s KYC Manager to see how a central, auditable KYC data layer supports compliance and automation.
