KYC Solutions – All You Need To Verify Your Clients
Banks and financial institutes are on the target list of fraudsters. Industries that face a majority of online theft are the ones that are related to financial services. According to a report, an estimated 3 million persons or about 1.25% of the U.S population reported that they were victims of financial fraud in 2018. Keeping the increase in mind, regulatory authorities are developing laws to protect the integrity of enterprises and the rights of customers. An efficient way of eliminating fraud associated with businesses is by undertaking KYC compliance.
Because of the digitization of financial institutions and associated risks attached to the industry, regulatory authorities are now looking for more sophisticated ways to protect businesses from identity theft. Because of the constant evolution of technologies, KYC is also evolving towards betterment.
Know Your Customers Compliance
Know Your Customer (KYC) refers to the process of verifying who your customers are. The process of checking if your customers are who they claim to be is the need of businesses if they want to sustain in the market. Many countries are adopting this way of verification to protect their annual revenue.
Money laundering is the biggest problem that financial institutes face, nowadays. It happens when businesses do not monitor the transactions made by the customer. Enterprises having a weak loophole in the system, are easily get targeted by fraudsters. It is on the firms’ end to have stringent KYC compliance policies to eliminate money laundering thefts.
KYC Anti-Money Laundering
KYC anti-money laundering laws deployed by the institutes can discourage launderers in their criminal acts. Anti-money laundering being a part of KYC, specifically focuses on transactions by transaction monitoring which is a process of regularly monitoring the transactions made by the customer to predict any suspicious activity.
Verification Processes That Ensure KYC Compliance
Regulatory authority Financial Action Task Force(FATF) designed laws like Know your Customer and Anti-money Laundering to reduce the crimes associated with businesses. The verification of customers is an essential step for businesses regardless of their type. KYC can be performed through facial recognition and document verification processes. It incorporates simple steps that are helpful for both the merchants and their customers. Let’s take face recognition and see how the process of KYC can be performed to verify the end-users:
- The end-user uploads the image of any government-issued ID documents like cards, driving licenses, passports at the time of registration.
- The user is then directed towards the page that requires them to take a selfie and upload it on the page.
- The software then matches the image on a document to that uploaded by the customer.
- After successfully identifying the customer, the results are displayed to the customer.
Perils of Lacking KYC Compliance In Banks
Know Your Customer or Know Your Client is the process of verifying customers at the time of onboarding and periodically over time. Banks being non-compliant to KYC regulations attracts a lot of risks in their name as follows:
- Money Laundering
The major risk associated with banks when they do not follow proper regulations is money laundering. A flaw in banks can cost them to experience unfortunate events. Money laundering and financing of terrorist activities are serious crimes against humanity and banks can become a bridge completing these activities by lacking KYC compliance in place.
- Hefty Penalties
Compliance professionals who make regulations to avoid the number of crimes happening in this age do not tolerate any negligence as per businesses’ end when they fail to comply with KYC. Verification processes save businesses from polluting their name and protect the funds of their customers. Therefore, companies when intentionally or unintentionally do not stick to laws, have to face legal repercussions and pay hefty penalties.
- Reputational Damage
Living in the age of social media and you think people would let any spicy news go without making headlines on it, never. Print media and social media do not let any news go which can bring them ratings. Financial businesses, when caught in any money laundering or related criminal activity, are publicized everywhere and earn themselves a bad reputation.
- Customer Loss
Who wants to associate with a name that is famous for all the wrong reasons. Banks and other related financial institutes when they make headlines for being involved in fallacious activities, experience customer loss. Enterprises themselves hand their customers to their competitors by being non-compliant with KYC.
- Decreased Revenue
After displaying themselves as a bridge to completing money laundering and terrorist financing like activities, and losing customers, companies automatically face loss in revenue.
Organizations nowadays can identify their customers through client KYC verification solutions. Industries that are involved in payments comply with KYC anti-money laundering to reduce money laundering and terrorist financing.