KYC is a process to know your customer, which helps financial sectors verify the identity of their clients and investors. It is challenging to decide whether or not to do business with someone using the manual approach to identify the customer. Compliance with KYC regulations takes companies time, resources, and cost. An automated KYC verification service is the best to tackle this biggest issue for financial institutes and businesses.
Organizations are now using digital KYC verification checks during customer onboarding. Therefore, complying with the latest regulatory requirements is necessary for them to safeguard themselves against financial fraud. The annual money laundering costs 2-5% of the world GDP, resulting from misusing the services provided by different businesses. So, companies must ensure that they do not become a part of any criminal activity unawarely.
This article explores the importance of KYC verification services in the financial landscape.
Why is KYC Verification Essential in Businesses?
Financial institutes and businesses are the most vulnerable to criminals. Compliance with KYC regulations will evaluate financial frauds, expose false identities to the banks, and protect society against brashly illegal activities. To comply with KYC, banks must verify the client’s authenticity by verifying documents such as proof of address, passports, IDs, and other data.
Automated KYC verification helps businesses quickly validate identity documents, capture biometric data, and remotely cross-check the papers with a third-party database. It also enhances the customer experience by assisting them with all their verification remotely from their home. Digital KYC is robust AI technology that can read, extract and validate the data like the human eye but is less error-prone. Effective KYC online verification software involves fundamental finding features that reduce customer effort.
Financial institutions always want tools that reduce their workload and assist them in swiftly onboarding new customers. The automation process is the answer for them, so they do not have to waste time on fake clients and provide full attention to virtuous clients. The one mistake in KYC regulation caused financial fraud and cost the institutes billions of dollars in regulatory fines.
How Does KYC Verification Help Firms Authenticate Customer Identities?
The KYC verification is done through independent and reliable documents to authenticate data or information about the client. However, it thoroughly analyzes the users’ submitted documents to authenticate their legitimacy. In addition, it helps companies comply with KYC regulations in many industries, including banking, finance, and other sectors where customer due diligence is necessary.
- Identity Verification
In this step, firms verify the user’s provided information with their official documents, such as ID cards, driver’s licenses, etc. However, users can easily confirm their identities from anywhere with the help of automated KYC verification solutions. They only have to capture and upload the required documents on the digital KYC platform.
- Document Verification
The papers submitted by the customers to prove their identity are thoroughly examined with the help of advanced AI technology. This initiates the verification process with validation checks, such as identifying the security features and cross-referencing the data from various databases. Thus, automated KYC verification helps businesses validate their users’ identities against sanction lists, government databases, and other relevant sources to detect suspicious activity.
- Biometric Verification
Companies must perform biometric verification after verifying the documents to comply with KYC regulations. Businesses verify biometric data such as facial and voice recognition to authenticate the individual identity. This step adds a layer of protection to the KYC process and bolsters companies’ security. The automation KYC verification makes this more simple by video call. Businesses can smoothly perform this process by video call, which makes the customer onboarding experience fluent.
- Customize Verification
Businesses can also standardize the workflow to control document format and required papers’ nature. Industries that do not have to perform the KYC process can eliminate those features which are not beneficial for them. RPA(Robotic Process Automation) makes this process simple for customers. They only have to upload the required documents, and robust AI technology will create a digital file of their papers.
KYC verification plays a vital role in businesses to prevent them from identity theft, financial fraud, and other illegal activities. The KYC regulation depends on the industry, jurisdiction, and administrative frameworks in place. Automated KYC verification ensures companies update the rules, tailor digital KYC processes according to company policies, and mitigate risk.