How to Document Your KYC Process for Regulatory Inspections
How to Document Your KYC Process for Regulatory Inspections
When the Danish Business Authority comes knocking, it's not enough to have things in order – you need to prove it. Solid KYC documentation is your best ally during an inspection, and the difference between a smooth process and a stressful experience often comes down to preparation.
What Do Regulators Expect?
During an inspection, the Danish Business Authority will typically request documentation of your entire KYC process. This means you need to be able to present:
- Customer identification (ID documents, MitID verification)
- Information on beneficial owners
- Purpose of the business relationship
- Risk assessment for each customer
- Ongoing monitoring and updates
It's not enough to say you've checked a customer. You need to document when, how, and what the outcome was. The authorities want to see concrete evidence that you're following anti-money laundering requirements systematically and consistently.
Common Pitfalls
Many businesses have their KYC process under control but fail on documentation. The most common issues are:
- Missing timestamps on documents
- Unclear who performed the verification
- No documentation of ongoing updates
- Scattered documentation across multiple systems
- Outdated information that hasn't been refreshed
These mistakes can lead to warnings or even fines, even if you've actually done the necessary work. The problem is simply that you can't prove it sufficiently.
What Does Good Documentation Look Like?
Good KYC documentation is organised, timestamped, and easy to retrieve. For each customer, you should have a consolidated folder or file containing all relevant documents and notes. It should be clear when the customer relationship was established, what checks were performed during onboarding, and when the last update was made.
Remember to document your risk assessment as well. Why have you categorised the customer as low, medium, or high risk? What factors were considered? This type of documentation demonstrates that you're actively working with compliance.
Make It Easy on Yourself
A digital solution like ePact keeps all your KYC documentation in one place. When a customer verifies their identity through MitID via ePact, the timestamp, identity, and verification method are logged automatically. This gives you a complete audit trail that you can present during inspections with just a few clicks.
By digitising your KYC process with an e-signature solution, you don't just save time day-to-day – you also ensure your documentation is ready when it really matters. And if the Danish Business Authority calls, you can welcome them with peace of mind.
