The purpose of a KYC provider is to detect and prevent financial crimes on the behalf of an organization. Governments and governmental enforcement authorities require KYC compliance from organizations. KYC providers are employed by a variety of institutions to screen their end-users. This is due to the fact that there is just too much at stake for institutions to disregard the growing relevance of KYC laws and regulations.
What are KYC Standards?
KYC standards cover all requirements needed to verify that the clients are legitimate. Also, they help in assessing and managing financial risks. Money laundering, terrorism funding, smuggling, and other types of unlawful corruption involve financial institutions one way or another. So, these crimes can be detected and prevented using the services of a KYC provider. The KYC providers include document verification, face authentication, NFC verification, and other services in their package. To retard ID fraud, organizations must adhere to KYC procedures and requirements.
What do you Mean by E-KYC?
E-KYC is a technique for digitally verifying a client’s identity and address using video authentication technologies. Among others, e-KYC includes things like retrieving digital data from government-issued ID cards or using a face verification tool for remote identity authentication. This process also includes a KYC verification agent which guides the process and ensures its transparency.
The Increasing Relevance of KYC and AML
It’s worth noting that the Know Your Customer (KYC) procedure isn’t required as part of a complete AML compliance program. When done simultaneously, however, the KYC procedure takes place right at the commencement of the AML compliance program. Adherence to these requirements is required, whether it is KYC or AML. KYC providers usually offer both services.
It has been acknowledged by the business world that organizations must comply with AML/KYC regulations. It is because they know what will happen if they do not comply with the regulatory measures. The regulators are in charge of enforcement, and they do not allow anyone to slip through the cracks if they are proven guilty. These authorities enforce sanctions introduced by the concerned official bodies tasked with devising the rules. These rules include monetary fines, operational limitations, and so on.
It is a severe problem for governments all over the world since the omission of these KYC procedures leads to a rise in ID fraud and financial crimes. One instance of a financial crime – money laundering – is also used to conceal more severe crimes such as human trafficking and terror funding, among others. As a response, KYC providers ensure that the organizations are in line with KYC and AML compliance measures introduced by governmental bodies.
The Problem with Previous KYC Compliance Processes
It is understood that in order to conduct the client onboarding process, businesses need the services of KYC providers. So, let’s have a glance at the many types of KYC provider services available. First and foremost, let’s talk about the manual processes. They were either conducted by the firm’s workers or third-party KYC agents. The average salary of these KYC auditors is approximately $55000 a year which is quite much as may have to employ more than one agent.
Furthermore, these third-party KYC agents are ineffectual since they depend on antiquated research techniques and their investigations are incomplete without automated tools. Nevertheless, due to technological advancements, choosing between traditional and digital solutions should be a walk in the park. So, online KYC providers are best equipped to perform the checks and correctly identify users.
Automated KYC Solutions to Rescue Businesses
Because KYC protocols are required to be complied with by law, firms use automated KYC solutions for online identity verification of clients. The space for automated KYC solutions has opened up due to the digital shift purported by COVID-19. The relevance of customer service in KYC procedure is increasing because of this shift. These services utilize thousands of computational formulas and algorithms to bulletproof the online identity authentication process. Moreover, the utilization of face recognition and NFC verification has made the verification process provided by these services, a favorite of end-users.