Mortgage lenders are acquainted with the AML Act and Know Your Customer (KYC) regulations, but their compliance efforts may not always prioritize efficiency as a key element of a comprehensive cybersecurity plan. Tools and automation are making it easier to embed KYC into existing workflows to support both compliance and a strong cyber program. Read on for tips from Richey May’s mortgage cybersecurity experts on how to more seamlessly fit KYC into your operations and effective cybersecurity strategy.
How KYC Applies to Lenders
At its core, Know Your Customer is a framework designed to prevent financial institutions from being used for money laundering, terrorist financing, or other illicit activities. Under the AML Act, lenders must verify the identity of their customers, understand the nature and purpose of the relationship, and monitor for suspicious activity throughout the life of the loan.
For mortgage lenders, that means KYC is not just a onetime box to check at application. It is an ongoing responsibility to know who you are doing business with, how funds are flowing, and whether any changes in behavior should trigger closer review.
Key Components for Compliance
To stay compliant with KYC requirements, mortgage lenders should focus on three core elements:
Customer Identification Program (CIP)
Collect and verify essential customer information such as name, date of birth, address, and identification number, and validate that information against reliable sources. Digital identity and document verification tools can streamline this step and reduce manual error.
Customer Due Diligence (CDD)
Assess the risk level each borrower poses based on the nature of their transactions, income sources, geography, and overall profile. High-risk borrowers or entities may require enhanced due diligence, additional documentation, or more frequent review.
Ongoing monitoring
Continue to monitor activity associated with the customer and the loan, looking for red flags such as unusual payment patterns, unexplained payoffs, or funds flows that do not align with the borrower’s stated profile.
Why It Matters Now
Regulators and investors expect mortgage lenders to demonstrate that they have effective KYC and AML controls in place, not just policies on paper. Strong KYC helps protect your institution from regulatory penalties, reputational damage, and costly fraud schemes.
It also strengthens trust with warehouse banks, investors, and secondary market partners, who increasingly want evidence that originators and servicers have a handle on both financial crime risk and cybersecurity risk across their ecosystems.
How Richey May Cyber Can Make KYC Easier
Meeting AML and KYC obligations does not have to mean more manual checklists and siloed systems. Richey May Cyber helps mortgage lenders:
- Automate KYC checks where it makes sense, integrating identity verification, data validation, and risk scoring into existing origination and servicing platforms, so staff spend less time chasing documents and more time on true exceptions.
- Align KYC data flows with a robust cyber strategy, ensuring sensitive customer information is protected, access is controlled, and monitoring tools are tuned to detect both financial crime and cybersecurity threats.
- Design governance, policies, and workflows that connect compliance, risk, and IT, so KYC becomes a repeatable, defensible part of your broader control environment instead of a fragmented, manual process.
The result is a KYC program that is more efficient, more consistent, and better integrated with your overall cyber posture, so your teams can meet AML expectations while keeping pace with the way modern mortgage lending actually operates.
Reach out to the Richey May Cyber team at info@richeymay.com to improve your KYC processes and cybersecurity strategy today!
