KYC Solutions – A Pressing Need of Banks and Financial Firms

KYC Solutions – A Pressing Need of Banks and Financial Firms

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18 August 2022

False names are frequently used by hackers and money launderers to conceal their genuine identities during the onboarding process. By highly validating that the customers are who they say they are, financial firms must “get to know” them in order to comply with KYC compliance rules.

 

It seems sensible that financial organizations are looking into novel approaches for performing online identity verification of customers. Given the dependency on KYC solutions digitally and the effectiveness of Customer Identification Procedures (CIP) in banking, it is not surprising that financial companies are looking for quick ways to remotely check customers’ identities.

Why is it Essential to Do KYC Verification?

Financial firms must do due diligence to identify who their customers are and the kinds of deals they conduct in order to stop all forms of illegal economic activities, including the sponsorship of terrorism and the violation of penalties.

 

Banks paid more than 100 billion dollars in 2016 to appease regulators and KYC regulatory compliances, and it is expected that compliance costs will increase from this in the future. In spite of these enormous efforts, financial firms have received fines totaling over $26 billion over the past ten years for failing to meet the requirements of KYC and AML solutions.

Criteria for KYC Online Verification

FinCEN established four fundamental standards for efficient KYC compliance in order to define, enforce, and make clear CDD requirements and full KYC in the banking sector.

 

  • determining and authenticating clients’ identity 
  • finding and verifying companies with active owners such as persons who either own or maintain legal entities
  • creating a client risk profile by analyzing the nature and goal of customer connections
  • and to regularly keep track of and update client information based on risk concerns, customer behavior is being watched out for suspicious transactions.

What Does Onboarding Procedure Entail for Clients?

Banking institutions must gather and verify information from new customers at the moment of onboarding in order to adhere to these KYC guidelines. The limits change greatly based on if a bank account belongs to an organization or an individual.

 

All customers who visit a bank in person must show valid identification from the government. Proof of identification, such as a driver’s license or passport, as well as proof of residence and any other documents needed for the transaction, have all been necessary. To ensure that the client is who they confess they are, the banks and financial firms check their documentation. Additional information is required to confirm the legitimate owners’ identity (e.g., articles of establishment). And the business’s operations (e.g., for business accounts, profit, and loss statements).

 

Online account creation for customers involves a much more complicated process. Banking institutions must now compare customers’ digital identities to their actual, physical identities. To guarantee that the individual is who they claim to be and should keep an eye out for any suspicious activity, KYC solutions are necessary when establishing a safe link between the digital identity as well as a real person. This method may use biometric data (such as face recognition or fingerprinting), deep learning, documentation, or identity verification.

Ensuring KYC Compliance Using Verification Solutions

Companies utilize biometrics for in-person or online KYC solutions. The e-KYC solution relies on distinct fingerprints or facial maps, to verify the identity of a consumer. Businesses are using biometric verification systems in addition to traditional ID validation to strengthen their protection against internet scams and adhere to AML and KYC regulations. Digital KYC solutions not only promote customer loyalty but also make the onboarding process simple and quick.

Final Thoughts

 

Digital KYC service providers can help businesses achieve their KYC obligations. Businesses can identify their consumers due to the AML and KYC processes. Such a program’s user interface makes use of cutting-edge technologies like facial biometrics, machine learning, and artificial intelligence to let businesses rapidly authenticate their customers.

The significance of KYC solutions can not be overlooked in the corporate world. A company can fight fraud by validating the identification documents that customers submit. A business can verify that a customer is who they say they are. And isn’t a pretender using stolen information by implementing an efficient ID verification method? Operators can also evaluate the risk associated with clients utilizing biometric identification services powered by AI. Face authentication is one example where anti-spoofing or 3-D liveness detection techniques are used to check an individual’s authenticity.

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