Know Your Customer, or simply KYC is incredibly important for modern businesses where the clients and users are involved. It may be considered as the first thing you have to achieve to improve a customer relationship within the company. While this practice is not new, some businesses still struggle with it. KYC AML (Anti-Money Laundering) program is a secure way to reach your audience.
What Is KYC?
KYC or Know Your Customer is a standard practice of companies who need verification of clients’ identities in accordance with the current laws, regulations, and legal requirements. It is one of the most popular ways to secure your business from online fraud. However, companies that use KYC mixed with modern technologies still have to make sure that they act by the law.
The Process That Works
KYC is made for the verification and identification of the true identity of a client. There is a series of controls that must be applied, so you make sure that you are not doing business with frauds or terrorists. Without the KYC process, you can be dragged into money laundering or corruption. If you have more than five clients, it is complicated to track them all.
This is why KYC is a must-have process for any business. It proves that the person that you are talking to is the same they claim. After that, you can easily provide access to the products and services this person asks for. There are different methods of verification, and all of them totally comply with the law.
The user who wants to take advantage of the company’s services has to provide evidence of their true identity. Many companies prefer to use popular methods like Video Identification, video conference, or streaming video, during which a future client has to show the document that identifies them. There is quick identification of the face. If it is necessary, the client can be asked to pass the biometric test or any other security check that does not violate any rights or freedoms.
KYC processes may be performed either online or in-person, at the company’s office, or in-store. However, online identity confirmation may be more preferable in the modern world since it does not require breaking any lockdown rules. The digitized process is called eKYC.
Banking and KYC
Banking, as well as other financial industries, are extremely vulnerable when it comes to numerous frauds. It is still the most complex field for client relations. Banks are at constant risks and require a high-security level.
This is why governments of multiple countries have extended the rules for KYC processes. They have developed eIDAS and 5AMLD for an advanced framework. Basically, KYC in the banking area is almost the same as in any other industry. However, there are increased security levels that are required by law and can guarantee better safety. Video streaming is still one of the most popular options for identification. It is included in numerous financial operations. This is a beneficial way for both business owners and their clients since it saves time and prevents days of paperwork. The identification does not take more than 3 minutes on average.
World Regulations of KYC
The global financial sector usually offers a similar identification and security process. According to it, you can’t prove your identity with the images or selfies because of the low quality and poor security level. They can’t be considered valuable evidence. It is crucial to use the standard procedure of video streaming identification with the use of biometric tests if it is possible.
Improvements of KYC
During the last few years, KYC has greatly improved. AI technologies made the whole process quicker and advanced. Digitalization allowed the global community to use a similar system and provide a higher level of security to the most vulnerable business departments. The problems with face recognition or biometric test failure were removed, and the KYC process spread around almost all the branches of the market.
You may pass through the Asynchronous Video Identification in a few seconds from any device you use. Clients don’t have to go to the laptops to confirm their identity. Mobile platforms support video face recognition services as well. Such changes ease the life for both business owners and customers.
KYC Requirements
Effective KYC programs do not need any extraordinary features. However, it must satisfy not only companies but their clients as well. If you want to be successful in your business secured by the KYC process, you need to take care of the following features:
- Customer Identification Program or CIP. All individuals who deal with financial transactions must verify their identities. CIP was created to cut money laundering and terrorism. It is ruled by the US legislation system. According to it, entities must identify their clients. It requires your name, date of birth, ID, and address;
- Customer Due Diligence. Any successful business must trust the client. However, it is not easy to do in modern reality. Use CDD to check whether the client is trustworthy. You have to check the information about your potential client, including their business activities and reputation on the market, occupation, transactions in the past, current location, and methods of payments;
- Monitoring. If you have to deal with the same customer several times or on a daily basis, it may not be enough to check them once. Ongoing monitoring includes the revision of the financial transactions, revision of the accounts, monitoring cross-border activities, mentions on the media.
KYC Benefits for Everyone
The KYC process is simplified for businesses and their clients. It protects companies from fraud and secures the financial system of the US and foreign countries. This system can be used on versatile platforms, including mobile. If you don’t want to risk your money by letting unidentified customers inside the company, you have to use KYC. All your actions must still comply with the law. Only after the true identity of the client is confirmed, you may grant access to move forward.
