Covid-19 has provided a landscape to practice digital business operations. Although business has revolutionized with automation technologies, it provided room to criminals as well. They use sophisticated techniques and fabricate ID documents. The Know Your Customer verification process empowers organizations to get rid of emerging crime risks and facilitates organizations with client validation and identification solutions. Businesses require a reliable solution to get rid of identity theft, financial loss, illegal transactions, and payment breaches. This blog post will explore the role of KYC compliance in fraud prevention and the smooth client onboarding process.
KYC Compliance-A Quick Overview
COVID-19 has forced firms to go remote. Although the pandemic is over, businesses are moving toward online customer registration, onboarding, and transactional processes. Although digitalization provides businesses an opportunity to grow globally with remote onboarding, imposters are more actively using technology. They generate fake documents and use them for various illegal activities. KYC AML compliance refers to a set of procedures that verify customer identities and provide security to overcome prevailing fraud. All industries, especially financial organizations are obliged to have successful KYC compliance to have secure business operations. KYC process utilizes artificial intelligence and provides robust solutions to fight identity theft, money laundering, and terrorist financing.
KYC Compliance-Process
The KYC compliance process includes various procedures, it may involve document verification, fingerprint or face identification, and database match. The KYC process ensures clients’ authenticity and legitimacy. It empowers companies with a successful ID verification process. KYC verification provides businesses with a way to onboard legitimate entities and filter out fraudsters. Major techniques used in the KYC compliance process are given;
- Document Verification
Various documents are collected and analyzed to verify clients’ identities. Optical Character Recognition (OCR) technology fetches information from the documents and converts it into digital form. Information from the documents is stored in electronic form and processed digitally.
- Biometric Verification
The KYC process includes biometric verification to provide multi-layered security. Facial scanners use robust AI mechanisms that process face deep learning and verify client identity. Facial geometry which includes various facial features such as distance between chin and forehead, length of nose, depth of retina, skin texture, etc is captured and analyzed. Automatically the client’s identity is verified.
- Database Crossmatch
KYC process may include database cross-matches. Information collected from the document is matched with data stored in various government or private databases. Automatic machine learning technology processes ID verification and overcomes prevailing fraud.
Objectives-KYC Compliance
It provides the following major objectives for enhanced security compliance;
- Customer Identification Program (CIP)
The KYC process verifies various ID documents such as identity cards, driving licenses, utility bills, social security cards, bank statements, passports, etc. Automated algorithms process all the provided documents and verify clients’ identities. This method of ID verification enables businesses to overcome identity theft cases.
- Customer Due Diligence (CDD)
Automated KYC solution offers insight into clients’ risk profiles. The Customer Due Diligence (CDD) process verifies clients’ information for risk assessment and management. It enables firms to comply with legal rules and protects them from rising criminal attacks.
- Ongoing Monitoring
A successful KYC process gives a way to monitor the whole process of transactions and clients’ behavior. It enables firms to monitor the risk potential associated with clients’ identities. It helps organizations to acknowledge and monitor changes in clients’ activities and transactions.
- Regulatory Compliance
A successful KYC process enables organizations to meet anti-money laundering (AML) and KYC rules. KYC compliance protects organizations from heavy penalties and financial losses.
What Is Digital KYC Compliance?
During the COVID pandemic, businesses moved toward an online landscape which provides a successful opportunity to grow globally. A Digital KYC verification service is required to verify clients’ identities remotely. Individuals submit scanned images of various KYC documents and get them verified. It provides a way to enhance business scalability and has more clients all over the world. A successful KYC compliance process is the only solution to protect organizations from the risk of identity theft, data violations, and terrorist financing. KYC verification is a quick and automated solution to get rid of fraudsters to have business security and development.
To Sum Up
Successful KYC compliance is crucial for organizations to protect them from fraud and other legal complexities. It protects companies from fraud invasions and ensures a smooth onboarding process. Robust AI and ML technology provides automatic digital solutions and provides global client onboarding. KYC compliance for banks is essential to get rid of financial crimes. This process offers a customer identification program, a customer due diligence process, and ongoing monitoring of clients’ changing behavior. The KYC process enables firms to evaluate the authenticity of clients they are dealing with and provides a successful fraud prevention solution.