KNOW YOUR CUSTOMER MECHANISMS AS A TOOL FOR ENHANCING RISK MANAGEMENT SYSTEMS IN COMMERCIAL BANKS
DOI:
https://doi.org/10.5281/zenodo.21233958Keywords:
risk management, commercial banks, Know Your Customer (KYC), compliance risk, antimoney laundering (AML/CFT), customer due diligence, digital platform, artificial intelligence.Abstract
The article examines the role of the “Know Your Customer” (KYC) mechanism as a key
instrument for strengthening risk management systems in commercial banks. The main types of banking risks
— credit, operational, and compliance risks — are analyzed, and their interrelation with the effectiveness
of customer identification procedures is substantiated. The structural stages of the KYC policy — customer
identification, ongoing monitoring of transactions, and reporting of suspicious operations — are examined
within the framework of the “prevent–detect–report” model. Based on the study, an integrated compliance
control mechanism is proposed, combining AML/CFT monitoring, KYC procedures, sanctions screening, and
operational risk indicators within a single digital platform, with the use of artificial intelligence, big data, and
blockchain technologies to increase the accuracy of risk assessment. The findings can be applied in improving
the risk management and compliance control systems of commercial banks.
References
Financial Action Task Force (FATF). International Standards on Combating Money Laundering and the
Financing of Terrorism & Proliferation: The FATF Recommendations. Paris: FATF/OECD, 2012, updated 2025.
Basel Committee on Banking Supervision. Sound Management of Risks Related to Money Laundering
and Financing of Terrorism. Basel: Bank for International Settlements, 2014, revised 2020.
Wolfsberg Group. Wolfsberg Financial Crime Principles for Correspondent Banking. Wolfsberg Group,
Republic of Uzbekistan. Law No. 660-II “On Combating the Legalization of Proceeds from Criminal
Activity, the Financing of Terrorism and the Financing of the Proliferation of Weapons of Mass Destruction”.
August 26, 2004. https://lex.uz/uz/docs/6808153
President of the Republic of Uzbekistan. Decree No. PF-5992 “On the Strategy for Reforming the
Banking System of the Republic of Uzbekistan for 2020–2025”. May 12, 2020. https://lex.uz/docs/-4811025
Demetis, D.S. Fighting money laundering with technology: A case study of Bank X in the UK. Decision
Support Systems, 2018, Vol. 105, pp. 96–107.
Naheem, M.A. Trade based money laundering: towards a working definition for the banking sector.
Journal of Money Laundering Control, 2015, Vol. 18, No. 4, pp. 513–524.
KPMG. AML Benchmarking Survey. KPMG AG Wirtschaftsprüfungsgesellschaft, 2021.
Deloitte. Revolutionising Due Diligence for the Digital Age. Deloitte, 2020/2021.
Downloads
Published
Issue
Section
License
Copyright (c) 2026 MUHANDISLIK VA IQTISODIYOT
This work is licensed under a Creative Commons Attribution 4.0 International License.