KYC Services – Identifying Customers and Reducing Risk of Financial Crimes

KYC Services – Identifying Customers and Reducing Risk of Financial Crimes

The process of verification is one that has been used for ages, and it refers to the proof of existence or the truth of something. There are around 7.6 billion people in the world who all have their own unique identities, and differentiating between them is necessary for smooth operations in all organizations. KYC services now take this process one step ahead. Customers don’t just fill forms and provide information according to their liking, but they are required to provide sufficient data.are required to provide sufficient data.

What are KYC Services?

The services of KYC(Know Your Customer) have been on the rise to counter the increase in digital and financial frauds. Be it banks or government institutions,  every organization dealing with money has to abide by KYC regulations. The process, in simple words, involves detecting peoples’ faces using selfies and matching them with the system’s secure records. The KYC services constitute 3 main steps.

  1. Customer Identification

The customer identification process involves checking the customer’s records for inconsistencies. The potential customers’ records are checked to see any political links, and whether they have records of criminal activities.

  1. Customer Due Diligence(CDD)

CDD involves thorough checking of the background records to determine the potential risk. History of terrorist financing and money laundering are the main red flags to look for. Anti Money Laundering solutions provide the solution for financial crimes.

  1. Enhanced Due Diligence(EDD)

Following the KYC AML guidelines to verify the level of risk associated with customers, the process of Enhanced Due Diligence is deployed. Suspicious records require careful examination of the customer’s transaction history. Therefore extensive details are gathered and processed with the aim of filtering out the high-risk entities.

What is AML Screening?

When talking about the risks involved with false identities, the chances of money laundering are imminent. Nowadays, organizations are asked by law enforcement agencies to take necessary measures to prevent the efforts of money laundering by integrated AML Screening procedures in their systems.

AML solutions allow organizations to screen customers for records of money laundering, and other related crimes. If an institution does not cross-check the customers, they might accidentally become a part of terrorist activity by aiding the wrong customers. Global watch dogs always keep an eye out for such suspicious activity, and the organizations that do get involved have to pay large amounts of money.

Face Recognition

Face recognition is a method of verifying a person’s identity by matching their face using a video frame against database records. A technology called Liveness detection is also used to check whether a fake or tampered video/image is not being used. The camera detects the face and analyzes it before converting the captured image into data and then finds a match. Face recognition is used in smartphones to unlock them and to access certain data. It is also used in organizations for a secure working environment, and in payments/transactions as well. Apple Pay, Selfie Pay, and AliPay are examples of facial biometrics being used for transaction authentication.

Document Verification

As a part of KYC Services, the document verification procedure is used to verify customers’ identities by authenticating their ID documents. Software services allow us to verify documents by scanning the document. And extracting data from it, to match it with the person’s records in the database. If an institution does not cross-check the customers, they might accidentally become a part of terrorist activity by aiding the wrong customers.

Address Verification

Another part of KYC Services, Address verification also works by confirming the customer’s permanent address. Artificial intelligence is used along with template matching techniques to access the real location of the user and matching it with their address in their ID documents. Validation checks are performed and it can be determined whether the address document is forged or photoshopped.

Use Cases of KYC Services

  • Banking

Gathering customer information is the norm when it comes to opening bank accounts. KYC services now take this process one step ahead. Customers don’t just fill forms and provide information according to their liking, but they are required to provide sufficient data. So this starts from simply taking a selfie and matching the face against records. Hence goes all the way to check the transaction history for suspicious records.

  • Healthcare

According to research, inaccurate paperwork has been one of the major complaints of patients(95%). Wrongly filled out documents in healthcare don’t just cause trouble to the management, but can have severe consequences for patients. Therefore, manual systems of record-keeping are replaced by KYC services for secure record keeping.

Final Thoughts

To sum it up, KYC services are indeed efficient, and a necessary security measure in today’s world. When customers are securely onboarded, chances of identity fraud and other crimes that come with it are decreased considerably. Therefore, Artificial intelligence is used along with template matching techniques. It accesses the real location of the user and matching it with their address in their ID documents.

Radish Blue

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