Tech-driven globalization is rapidly transforming businesses, and flexible workspace requirements are deemed a sign of more productivity in the corporate world. As the businesses grow, the supply and demand graph is also rising at a higher pace, risking the global financial system to its core. Co-existence is the beauty of acceptance of diversity, but the evolving challenges in the form of forge identity usage for malicious purposes are highly alarming.

Bloomberg reveals that around 77% of consumers reported a high rate of fraud incidents in Peru, Brazil, and Colombia and urged to ensure KYC online verification in all forms of businesses. It is observed that effective compliance can curb financial fraud based on the lack of a KYC verification process and better results can be extracted in this way. Consistent regulatory procedures can protect against data breach activities.

Importance of KYC Verification Process in the Financial Industry

The corporate sector is growing by leaps and bounds at the dispensation of irregular increases in digitization. Various organizations are multiplying the business strategies to pace the revenue graph, but greed is a curse. Businesses are facing various types of challenges. Startups and large MNCs are encountering large-scale data infringement. Thus, the significance of KYC Verification is more than ever before. KYC verification process includes all the personal details of the customer, complete biometrics including identity verification, and all the documents affiliated with the same identity are validated through tech-driven procedures. Rising number of frauds, from street thefts to mega financial scams, criminals never give up on unlocking the security checks for criminal activities. Bloomberg reveals that credit card financial scams ramp up by 21% on online deals in the Philippines. That’s why the significance of the KYC verification process is extraordinarily high to avoid identity thefts and financial fraud.

Major Steps of KYC Verification Process

 KYC (Know Your Customer) determines the legitimacy of the onboarding customer. There are various important steps of the KYC verification process that are required to be followed for better compliance results.

a)   Customers Simplified All Personal Details

Customers’ due diligence requires all the personal details starting from valid ID card, address, business address, personal assets details, income sources etc. All financial institutions, including the banking sector, need to ensure the credibility of customers before assigning accounts or other financial services.

b)   Standard Due Diligence Procedures

All the customers have different financial requirements, and authorities filter the customers on the basis of low or high-risk considering the details of customer requirements. The SDD procedures are internationally recognized in the financial system, but the compliance mechanism varies from place to place and person to person.

c)   AML/CFT Compliance Mechanisms

Money laundering and terror financing have become a global challenge, and fighting these challenges is not an easy nut to crack. Better compliance methods can adequately deal with this menace. For KYC services, customer authenticity is preliminary for data protection and financial security. Identity recognition, document verification, and business information, along with transaction details, are all based on authenticated KYC verification process, and negligence or delay may result in criminal fraud.

d)   Video & Facial Recognition for KYC Verification Process

 Frauds are common in the financial market; to control its rising number, effective measures are required on the war-footing level. Video identification and facial recognition with facial patterns are new automated techniques to overt the covert attempts of financial frauds. Criminals under the garb of scammers can be caught red-handed if KYC Verification Process is ensured following all these major procedures. New York Times submits that the National Institute of Standards and Technology declares the facial recognition technology for biometrics as 99.5% accurate. It further authenticates the importance of video-based or facial pattern-based identification in catching crimes on the spot.

Where is Online KYC adopted as a potential tool of verification?

Know Your Customer is now becoming mandatory in every industry. Global changes amid technology transformation and constantly rising criminal attacks, demand KYC verification process implementation in every institution to avoid criminal damages. There are different industries like the travel industry, gaming industry, hotel industry, gambling industry, banking sector, health industry and rising crypto industry where the digital KYC verification process is practically operational. It is also known as e-KYC and undoubtedly proving effective not only in financial scam detection but also to catch criminals.

FATF & IMF on KYC Verification Process

 FATF has given 40 recommendations to its member state for AML/CFT compliance. Customer details, all the related documents verification, and transactions monitoring, are declared important by FATF. Similar is the case with IMF (International Monetary Fund), as IMF doesn’t release loans to CFT/AML non-compliant states. Thus, it is unaffordable in every industry to ignore knowing your customer verification.

Final Thoughts

The flaring fraud challenges in the corporate and financial sector, add value to the need for accurate digital KYC verification. It is the need of the hour to estimate the worth of damages being caused by cyber-attacks, phisher attacks, or identity thefts for financial gains. Shufti Pro provides a one-stop solution under the umbrella of KYC services to avoid fraudsters. Small and large enterprises must comply with KYC procedures to contribute to financial security and data protection.

Leave a reply