Banks are not short of compliance. They are short of time to rebuild it. That is why Know-Your-Agent should not be read as a replacement for Know-Your-Customer but as an extension of it — a layer that answers the new questions agents raise while reusing the controls banks already run. For institutions, the practical path is migration, not replacement.

Reuse, don't rip out

The foundation stays. Identity, sanctions screening, monitoring and client-profile checks remain the backbone. Know-Your-Agent adds what those controls were never designed to answer: whether a specific piece of software, acting for a specific principal, was authorised to make a specific operation now. The identity of the customer and the authority of the agent are separate questions, and both can be answered by the same underlying diligence.

The steps

A pragmatic path tends to move in stages:

  • extend client records to identify principals behind agents;
  • register agents as revocable, non-anonymous identities;
  • express mandates as limits, counterparties and thresholds, held below the model;
  • require a policy hash so each operation ties to a known rule set;
  • validate agents within the existing compliance step rather than a parallel one.

Each step reuses existing diligence; none requires a new compliance stack. A bank can begin where the risk is clearest — usually a single product line or corridor — and extend the model as confidence grows, rather than pausing everything for a rebuild.

Where reliance fits

Where several institutions are involved, reliance agreements help. FATF Recommendation 17 lets a regulated institution rely on due diligence performed by another, with the data accompanying each operation and access to KYC documents on request. It does not transfer legal responsibility, and cross-border reliance is not permitted everywhere — so local-law limits must be checked per jurisdiction.

In short

  • KYA extends KYC; it does not replace it.
  • Existing diligence answers most of the new questions.
  • Mandates and policy hashes add what KYC never covered.
  • Reliance helps across institutions, within local-law limits.

This is general information, not legal, compliance or financial advice.

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