As digitization continues to bring transformation within customer onboarding and identification processes of industries, fraud risks are also simultaneously increasing. Businesses failing to incorporate efficient KYC services are on the verge of falling victim to identity theft, money laundering, deep fake attacks, spoofing, and others. Industries undergoing these threats are more likely to face hefty fines from regulatory watchdogs, ultimately compounding reputational damages already incurred.
In order to filter out criminal intentions and provide secure onboarding as well as other services, industries need to implement efficient client KYC verification checks. These AI-powered solutions aim at validating Personally Identifiable Information (PII) along with supporting documents prior to building a relationship. This blog provides detailed insights into the client KYC verification process.
Online KYC (Know Your Customer) is the First Step to Mitigate Fraud Risks
KYC checks involve the collection and analysis of customers’ information such as full name, address, date of birth, social security number, and other details. AI-powered IDV services are automating the customer onboarding and verification process. Therefore, the e-KYC market value is predicted to undergo tremendous growth by crossing $2462.84 million up till 2027.
Client KYC verification process is a legal obligation as set by various regulatory watchdogs like Financial Action Task Force (FATF), and the EU’s Anti-Money Laundering Directives (AMLDs). Furthermore, to escape hefty penalties and reputational losses, industries require robust customer onboarding and identification solutions. These involve the following steps:
This step of client KYC verification refers to the accurate collection of customers’ identity details
Liveness checks are essential to ensure the customer is present at the time of onboarding and holds a legal entity. It further helps identify imposters during remote identification.
This step of the KYC process involves the cross-matching of customer-provided information within government-issued documents. It also involves accessing global databases to provide additional layers of authenticity.
This is another crucial step in the client’s KYC verification process. For the e-commerce and retail industry, address validation is of utmost importance to mitigate chargeback fraud, failed deliveries, and financial losses. It ensures that customers come from the region they are claiming to be.
Ongoing Monitoring of Activities
After completion of previous steps, industries can store the information for ongoing tracking of customers’ activities. In case of suspiciousness detection, businesses can report them directly to their respective authorities. For instance, in the UK, the regulatory body responsible for handling illicit activities is the National Crime Agency (NCA).
The client KYC verification process further involves the validation of documents for two major reasons. Firstly to cross-verify PII and secondly to add an extra layer of authenticity. For this, the system requires end-users to upload relevant documents. These include government-issued ID cards, passports, driver’s licenses, tax filings, utility bills, credit/debit card invoices, and others.
The ML-driven KYC verification process is capable of analyzing huge data sets that aids in instant data extraction and validation. Ultimately, industries can retain more customers while keeping security intact. AI-powered client KYC verification solutions further provide the following checks:
- Identifies traces of forgery
- Validates features like holograms, watermarks, and ink type
- Verifies facial features for authenticity
- Digital signature analysis
KYC Verification Process – Providing Automated Means of Customer Identification
The manual KYC process is reliant on human interpretation which can take long spans of time ultimately driving the customers away. Furthermore, it consumes high sums of resources but with expenses of accuracy. Due to the high risk of human errors, data discrepancies, and failure in detecting document forgeries, traditional KYC checks are no more reliable. Industry-leading KYC services are powered by AI.
In the growing increasingly advanced world, industries require digital client KYC verification solutions to automate their customer onboarding process. As per know your customer requirements in Germany, businesses should perform video-based identification prior to registration. AI-powered tools leverage several combinations of identification methods, such as:
- OCR for automated data extraction
- Video-based identification to ensure the presence
- Analyzing NFC chips incorporated in documents
- Liveness detection and facial feature verification
As per the legal requirements put forth by the majority of the regulatory bodies, industries need to implement the following checks within their client’s KYC verification process:
Customer Due Diligence (CDD)
Customer Due Diligence refers to the measures that industries are required to while assessing the risk associated with customers. This involves money laundering, identity theft, terrorist financing, and other threats. Businesses further validate Ultimate Beneficial Owners (UBOs), shareholders, and company affiliates. Hence, AI-powered client KYC verification solutions help stay compliant with the CDD rules.
Keeping Records Up-to-Date
Along with CDD, record keeping is another known customer requirement. As per legal obligations, industries need to keep their databases updated by verifying customers accurately.
Where fraudsters are employing strategies to exploit industries and reap financial as well as other personal benefits, regulatory bodies are putting forth certain client KYC verification requirements. As per these, businesses need to incorporate efficient digital onboarding mechanisms while upgrading their document validation checks. Therefore, in order to escape hefty non-compliance penalties and provide a secure environment for global customers, AI-powered KYC services are the industry’s reliable solutions.
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