Perpetual KYC – a new paradigm

The future has already arrived

In the ever-evolving world of Client Lifecycle Management, “Perpetual KYC” (PKYC) has come to be considered as the next logical step for firms seeking to move their client onboarding and client experience to the next level. But what is Perpetual KYC? Is it a utopian ideal beyond the reach of most financial institutions? Or is it an attainable goal for firms as their CLM processes mature and evolve?

As experts in CLM and KYC, we believe Perpetual KYC is set to create a paradigm shift for an entire industry; a seismic shift in mindset alongside a significant investment in tools and upskilling of people

Here’s how firms can start to make the move.

What is PKYC?

The simplest way to think of PKYC is as a continuous review of clients and entities. Traditionally, KYC has been conducted on a time basis, laid out by policy in the form of periodic reviews, or on an event-driven basis. Using this approach allows a significant window of opportunity for change in your client between reviews. What perpetual KYC does is track and monitor entities in question, giving you real-time data.

Key benefits

Clearly, cost is an obvious change – but this should not be looked at in isolation. Firms will need to review and amend their internal structure, strategy and culture as well as train staff to bring them up to speed with the new technology required to facilitate a move to PKYC.

On the face of it, therefore, Perpetual KYC is a big ask. But you only need to look at its benefits to realise this is the future of KYC.  For example:

  1. Increased profitability

Let me be blunt: KYC and its associated infrastructure is a significant ongoing cost for a firm. With continual updates and amendments to the various regulations that firms are bound to comply with, it can seem that cost reduction is a pipe dream for most.

And this is where Perpetual KYC comes into its own.

In a PKYC environment, firms no longer have to perform periodic reviews, as their client data is accurate and up to date. This in turn allows firms to reduce their KYC operating costs and thus increase profitability on both a per client and per business unit basis.

2. Enhanced data

Data is the new oil. Logic dictates that having a greater volume of data on customers will allow for enhanced risk identification. For perpetual KYC to succeed, it will require large volumes of data from a wide variety of sources.

One important element in building a customer profile is transaction data. Intelligent use of such data will enable a firm to have a view on behavioural patterns by individual clients and use that insight to draw conclusions around the risk associated with given clients and whether it matches the risk appetite of a firm.

In the current periodic review-led operational model, firms look at this data retrospectively, which precludes these valuable insights and also means that the data being assessed may be stale – as may be the judgements on which it is based.

By contrast, in a perpetual KYC environment, the ability to run any transaction abnormality against a customer’s profile can be done in real time, potentially raising a flag for further investigation. This use of data allows for an enhanced control environment, as any risks are captured upfront.

  1. Reduced risk

When a firm is calculating its risk exposure to a given client it needs this view to be as up to date and accurate as possible. Where a firm has a low risk client that you have always rated as low-risk, a full KYC check may only be carried out every five years. That makes you entirely reliant upon that client’s situation remaining static for five years. The KYC review is outdated as soon as it is complete and may not accurately capture the risk associated with a given client.

Assessing risk should never be seen as a one-time exercise. It must be something that firms should be monitoring on a constant basis. The ever-evolving regulatory landscape demands that firms no longer cut corners when determining how risky their customer base is. Risk is not a topic where any firm can afford a laissez faire approach and the best approach to managing it appropriately is to let data lead the way.

  1. An end to remediation

KYC remediation refers to the process of updating customer data and profiles in order to keep them up-to-date in terms of accuracy, regulatory requirements and risk mitigation. This is cumbersome and costly, draining internal department resources and occupying large numbers of staff.

How does perpetual KYC help KYC Remediation? In effect, PKYC negates the need for remediation. The whole idea behind perpetual KYC is the updating of customer data and profiles on an ongoing basis.

By doing so, firms are always following the latest regulatory requirements and will always be able to assess the true risk associated with an entity since the data you have on them is accurate.

  1. Enhanced Customer Experience

Currently the KYC process is based on a timed review of a customer. When a client is up for a periodic review, a firm must reach out to them requesting documents, pdfs, excel files and all the other paraphernalia that requires.

This process is not the most enjoyable activity nor is it especially productive for firms or the individuals tasked with carrying it out.  This can lead to situations where such requests are downgraded or forgotten entirely – creating tension between employees and between firms and their clients. Clearly that is a sub optimal outcome for all parties.

The beauty of Perpetual KYC is that it helps to resolve this relationship problem, by removing the need for periodic reviews and updating customer information based on event-based triggers. The email traffic back and forth between firm and client and internally in firms will simply cease to exist. Customers will focus on their job and the KYC process will run in the background, automatically updating data and triggering events where necessary.

And an additional bonus is that Perpetual KYC will promote the positive contribution of the onboarding function both in terms of risk management and the identification of revenue opportunities.


The benefits of moving to a PKYC environment are compelling. It would be remiss to suggest that this will be easy and for certain firms it can appear to be beyond their reach. But what is clear is that with the right changes in mindset, structure and technology that firms can embrace this new challenge and significantly enhance their KYC operating models.

Next steps

For any assistance with your KYC operating models or advice about your moves toward a Perpetual KYC environment, please contact us.  You can also:

Meet the expert

Eoin Davis


I have a proven track record of delivery for global investment managers and banks across both operating model and system implementation change.