Know Your Customer (KYC) regulations are crucial for the world’s financial system, protecting it from being scammed to hinder cybercrime and money laundering for the funding of terrorist activity. Financial criminals are becoming more sophisticated than ever. Identity Verification of customers and completing due diligence has never been more important, or more difficult.
KYC Solution is crucial to protect identity theft which is very common these days and it is being used for all kinds of crimes that we cannot even imagine. It has been used for credit card fraud, online fraud, terrorist activities, terrorist funding, money laundering and security breaches of many kinds. These days many businesses are using identity verification services to filter their customers base for fraudsters, criminals, and terrorists.
How KYC Helps Businesses:
KYC regulations for identity verification help businesses :
- To comply with AML (Anti Money Laundering) compliances
- To detect identity thieves
- To mitigate the risk of credit card fraud
- To mitigate the risk of financial loss due to identity thieves
- To identify the criminals or terrorists
- To verify the identities of the businesses they trade within the B2B model
The challenges are driven by the rapid pace of regulatory change. In 2019, the regulatory authority has introduced more stringent requirements on beneficial ownership checks and ongoing customer due diligence. Banks have been actively seeking solutions to streamline onboarding and due diligence. But despite significant investments into compliance team staffing, KYC compliance is becoming more difficult and costly. Is there a way forward?
1. Better Data Sources Will Make Ownership More Transparent
Identity verification is a top priority on the regulatory authority agenda. However, banks are reliant on gathering beneficial ownership information directly from clients through a back and forth of forms until documentation is complete.
It’s all too easy for data inaccuracies to slip in or for an organization to conceal ownership structures. The emergence of better data sources will make ownership more transparent. Advances will introduce automation and artificial intelligence to find ownership information. Over time, this will potentially reduce the need to obtain documents from customers or at minimum detect flaws.
2. Hidden Financial Crime Will Result In New And Evolving Regulations
One thing is for certain, regulation will continue to intensify as media coverage draws attention to corruption in the shadows. Political pressure to crack the issue by new forms of financial crimes, resulting in further regulation.
One of the underappreciated values of a modern technology solution is the ability to integrate systems to avoid bottlenecks, duplicated work, and outdated data. KYC involves many departments.
Connecting each stage of the customer journey with an intelligently designed, end-to-end KYC compliance process will not only improve efficiency and the customer experience, but it also lays the groundwork for adapting to new regulatory requirements.
3. Artificial Intelligence Will Drive For Greater Automation
New uses of AI will focus on making large volumes of information to a small number of relevant topics, eliminating content not relevant to financial crimes. Banks can speed up the customer onboarding process by reducing false positives.
Introducing flexibility and adaptability into a notoriously complex topic, automation and technology tools are the future of KYC. Banks will gain a competitive advantage as a result of this automated procedure.
4. New Data Solutions Will Make KYC Research More Efficient
Handling with large data is not easy. As financial institutes are dealing with huge data sets the volume can result in redundant data entry, mistakes, data quality issues, and delays. Moving forward, techniques including enhanced search and robotic process automation will lead to more efficient KYC research. Manual steps and data inaccuracy are eliminated by pre-matching entity data integrating data flows between systems.
So, online KYC service providers perform the due diligence task on behalf of the company. The identity of the customer can be identified through his ID proof (ID card, passport, etc). Also, facial verification is a helpful tool to mitigate the risk of falling prey to identity thieves.
Hence the companies that aim to stay one step ahead of their competitors and gain remarkable customer value must consider investing in KYC compliance tools. An investment of a few thousands of dollars has the potential to prevent the risk of worth millions of dollars in fraud-related loss or penalties due to non-compliance.