KYC (Know Your Customer) policies are particularly important in user and customer interactions with businesses. It is the initial stage in establishing a consumer relationship with a company.
It is very critical during customer onboarding, detecting identity theft, and financial fraud. Following the Know Your Customer and AML regulatory requirements are the main issues that businesses from any sector face.
The increased use of technological innovations entails the formation of policies to combat digital fraud. KYC compliance is a statutory and global requirement for financial institutions and businesses.
What does Know Your Customer Means?
Know Your Customer is the process, in which businesses verify the identity of their clients. While following legal guidelines and present laws and regulations. The KYC process is a regulatory and worldwide requirement. for any kind of organization that is looking to onboard a new customer.
Even though it influences all industries and requires complex procedures in any sector. It is notably important in the banking and financial businesses, as well as similar industries like insurance, real estate, and trade.
Given the global health situation because of Covid-19 since early 2020. Many organizations compel to create Know Your Customer procedures online and offsite in order to continue working despite potential constraints that would make physical onboarding impossible.
Although KYC procedures have existed for a long time now. Major companies already had KYC measures in place to boost their client onboarding process and reduce onboarding costs. It is very important to associate with a KYC partner. It tells the difference between a trusted organization and a shady one.
How does Know Your Customer Work?
KYC is a method of identifying and verifying a customer’s identity, and it implements a number of checks. It is done to prevent having economic ties with individuals involved in terrorism, fraud, money laundering, and other financial crimes.
The KYC procedure consists of validating that the user is who he claims to be and granting him access to the company’s services or goods. This verification is done by using multiple approaches, not all of which meet regulatory standards.
The procedure carries out in such a way that the person who wishes to become a customer of an organization provides legal and obligatory proof of his identity. KYC procedures use methods like video identifications for this purpose. In which a person displays his face and documents required for identity verification along with other security checks.
Know Your Customer checks perform either remotely or on-site at a commercial store or respective branch of the company.
How is KYC Relevant to Financial Industry?
Banks and the financial sector are among the most complicated industries when it comes to client interactions. The threat of money laundering and terrorist funding is relatively high in banking and financial companies. Because of this, authorities and regulatory bodies have issued guidelines in the 5th Anti-Money Laundering Directive and eDIAS regulations. By following these rules and regulations businesses can develop a robust framework for KYC procedures.
The online KYC checklist for the banking sector is just as same as it is in any other business. However, the maximum-security requirements set by regulatory bodies may differ from those mandated in other businesses.
Video identification is becoming a widely accepted method for verification in the financial sector. It is being incorporated and standardized by rules and legislation. Client acquisition has evolved from a time-consuming, costly, and cumbersome procedure to a more efficient, secure, and rapid approach. With the stringent security requirements of using a camera, the 3-week onboarding process reduces to 3 minutes.
Upsides of Employing Digital KYC Solutions
Onboarding procedures have been completely enhanced and digitized. As a result of the most sophisticated AI methods, attempting to avoid any kind of hindrance and complexity for the customer to access products and services digitally in a completely secure manner not just in banking but across all industries.
Not every Know Your Customer solution providers have up-to-date approaches and technologies on their platforms. As a result, it is critical to rely on comprehensive KYC methods that provide support to the organization. The customer for the duration of the onboarding procedure, as well as subsequent verification obligations, with strong regulatory and technological assurances.
Video verification in a couple of seconds is now feasible. It is usable from any electronic equipment with a camera and through any medium. Recruiting a client has never been easier while adhering to the most stringent worldwide regulations.
There is a lot of talk in the industry about the multiple KYC solutions that are available. It is critical to have a competent KYC partner for any Know Your Customer requirements that the company may have.