By Iva Karen
KUALA LUMPUR, June 26: Financial institutions must assign clear roles and responsibilities in the execution of Ongoing Due Diligence (ODD), with greater involvement from business units and relationship managers rather than relying solely on compliance departments, says an industry analyst.
Muhamad Nazri Shaidon, an anti-money laundering and counter-terrorism financing (AML/CTF) expert, said that while compliance teams are crucial in developing policies and frameworks, the actual implementation of ODD should not rest entirely with them.
He said the day-to-day execution of ODD, such as spotting red flags and recognising behavioural shifts, should be driven by business units and relationship managers who interact directly with customers.
“Effective Know Your Customer (KYC) is not a checkbox exercise. Banks must actively verify customer information to ensure it aligns with declared business activities,” said Muhamad Nazri, who previously served in Bank Negara Malaysia’s Financial Intelligence and Enforcement Department.
He added that many institutions still view KYC processes as a one-time requirement, rather than an ongoing effort to monitor and understand customer risk profiles.
Muhamad Nazri noted that a disconnect often exists between written compliance policies and front-line practices, which could expose institutions to operational and reputational risks.
He urged financial institutions to empower business units and front-line staff with proper training, tools, and clear accountability to carry out continuous monitoring and risk assessment.
Muhammad Nazri also emphasised that embedding ODD into the organisational culture would not only strengthen regulatory compliance but also enhance customer trust and safeguard the integrity of the financial system.
–WE