KYB vendor Kyckr sacked senior leaders who identified technical issues causing 72% failure rate

Kyckr, a British and Australian Know Your Business (KYB) vendor, sacked its chief executive officer and chief technology officer after they identified technical issues with its UBO Verify product that caused a 72% failure rate. These caused inaccurate results that could “give rise to regulatory breach, refund exposure, and reputational risk”, according to an unfair dismissal claim filed with the Fair Work Commission in Australia.
Chief executive Kathleen Phelan and chief technology officer Rebecca Glover, who identified and investigated these issues, were dismissed in June. Glover filed the unfair dismissal claim in the Federal Court of Australia on September 22.

Kyckr, which calls itself “The Global Business Register”, is used by large banks, international law firms and multi-national corporates, according to its website. The firm counts at least 18 other due diligence and Know Your Customer (KYC) platforms as ‘partners’. However, it recently removed its partner list from its website.

Inaccuracies, low success rate
Glover’s claim — as well as other internal documents and reports seen by Compliance Corylated — alleges that a series of technical issues with Kyckr’s UBO Verify product negatively impacted its performance and misled customers.
The documents further allege that Steve Lamb, Kyckr’s new chief executive, sought to downplay the issues and not disclose them to clients.
The company expanded its marketing of UBO Verify and promoted a 99% success rate despite internal analysis showing it to be 28%, these documents claim.
Glover’s claim alleges there was a critical cyber security flaw “involving hard-coded passwords in Kyckr’s infrastructure”, which exposed client data and was a “major breach of technical and regulatory obligations”.
Her claim further alleges Kyckr’s own analysis of UBO Verify’s performance revealed that up to “6,000 results from 30,000 orders may have been inaccurate”.

How it works
The UBO Verify product is marketed as a tool that allows users to determine ultimate beneficial ownership (UBO) information quickly and easily.
Customers query a company name on the UBO Verify portal by setting an ownership threshold — for example, 25% — they seek to determine. They also select a maximum cost in credits they want to spend on the query.
The number of credits selected will determine the number of ownership layers the query will return. What should be returned is a report listing all the shareholders that have a total percentage ownership over that 25% threshold. UBO Verify uses an algorithm to “match the company’s shareholders to other entities and persons based on an index of registry data, immediately retrieving the next layer if a match is found”.
Kyckr’s website and marketing material claim to be able to query all public and non-public UBO data from more than 300 company registers globally, and construct a report 95% faster than a manual process.
Technical issues raised

In April this year, Kyckr’s product and engineering team found the UBO Verify product may not detect all available shareholder data. That was identified as a risk to the product’s accuracy, according to two internal reports seen by Compliance Corylated.
Kyckrʼs full response to this article
Kyckr’s UBO Verify is a productivity tool to aid ownership investigations by automating the building of ownership structures using publicly findable registry data and, as such, is subject to the limitations of available corporate registry data.

UBO Verify is used by analysts from over 50 global organisations, for whom it saves considerable time as a component of their internal Know Your Business (KYB) and investigative processes.
Kyckr regularly conducts internal reviews in order to improve its services and customer experience. As part of its usual product review process, Kyckr has taken proactive steps to further improve the product experience of UBO Verify.
Any attempts here to suggest that UBO Verify does not perform as intended are misleading and demonstrate a misunderstanding of both the product and the iterative, multi-source nature of the ownership verification process. These claims are related to an ongoing employment dispute which is currently in active legal proceedings before the Federal Court of Australia. Given this is a confidential matter currently before the Court, it would not be appropriate for Kyckr to comment further.

One, the “impact analysis” report, authored by Glover and seen by Compliance Corylated, raised two alarms. The first was that the product displayed a green “thumbs up” icon to indicate UBO results had been “generated successfully”, even when no shareholders added up to the total specified threshold of ownership.

Article Credit: https://www.compliancecorylated.com/news/kyb-vendor-kyckr-sacked-senior-leaders-who-identified-technical-issues-causing-72-failure-rate/