The world of financial crime prevention is changing fast. For years, financial institutions and fintechs in the UK and Europe have relied on a traditional, “point-in-time” approach to managing customer risk. This method, which involves scheduled, periodic KYC reviews, is quickly becoming outdated.
A new era of compliance is emerging, one where due diligence is continuous, not just occasional. This new model is known as Perpetual KYC (pKYC). It’s a fundamental shift from static checks to dynamic, real-time monitoring.
The Problem with the Old Way
The traditional KYC model has a big weakness. It creates critical gaps in visibility. A lot can happen between a scheduled review. A customer’s risk profile could change dramatically in a matter of days or even hours. They could get added to a sanctions list or become a politically exposed person (PEP). Under the old system, this information might be missed for months.
Alloy, an identity and fraud prevention platform, is tackling this problem directly. They’ve just launched a new pKYC solution specifically for UK and European banks and fintechs. The solution is designed to provide an “always-on” view of customer risk.
How Perpetual KYC Works
Instead of just running a check once a year, pKYC works continuously. It monitors both first-party data (like a suspicious transaction) and third-party data (like a change to a sanctions list) in real-time. If the system detects something unusual, it immediately triggers a new Customer Risk Assessment (CRA).
This proactive approach is a game-changer. It means compliance teams can react much faster to potential threats. It’s about getting ahead of financial crime, not just reacting to it after it happens.
According to Francesco Fulcoli, Chief Compliance & Risk Officer at Flagstone, this is a major industry trend. “The fight against financial crime is shifting from periodic checks to continuous intelligence,” he says. “Static, point-in-time KYC is giving way to dynamic monitoring, where customer behavior is analyzed in real time.”
More Than Just Security
The benefits of pKYC go beyond just better fraud prevention. It also makes operations much more efficient. By automating constant checks, pKYC solutions can increase the rate of Straight-Through-Processing (STP). This frees up compliance teams to focus their expertise on the most complex, high-risk cases that require human judgment.
This efficiency is crucial for financial institutions. They are under growing pressure from regulators to strengthen their compliance. Alloy’s 2025 State of UK Fraud Report found that 93% of UK fintech leaders are most concerned about the risk of regulatory penalties and damage to their reputation.
The Rise of Digital ID
Another key piece of this puzzle is the growing acceptance of digital identity. In Europe, more and more regulators are mandating the use of digital identity wallets. Alloy’s solution now includes electronic ID (eID) verification.
This makes the verification process faster and simpler for customers. Instead of uploading a photo of a passport and a selfie, they can use a secure digital ID. It also helps financial institutions expand into new markets where digital ID is becoming a requirement.
Ultimately, the shift to perpetual KYC is about creating a smarter, more adaptive compliance framework. It helps financial institutions meet their growth goals while staying ahead of complex regulations and protecting their customers from financial crime.