Financial firms and commercial organizations use sophisticated technologies and human expertise for the best outcomes. As technology advances, so do scammers’ criminal activities.This is where KYC authentication comes in, protecting businesses from fraud while helping them comply with global and local regulations and avoid heavy fines. When combined with human resources, Know Your Customer (KYC) verification solutions play a crucial role in transforming organizations and financial institutions.
KYC verification is the process of verifying an individual’s identity that they are who they claim to be. Financial firms and businesses are mandated to adhere to regulations by deploying KYC solutions that help them keep scammers away while not compromising the customer experience.
Types of KYC Verification
There are different ways to check the legitimacy of an individual, such as:
- Document Verification
Scammers leave no stone unturned to exploit businesses and their customers in this digital era. The most common method used by criminals to breach customers’ data is via phishing email, and this fraud is still influential. However, a robust KYC process combats different fraud techniques effectively by verifying customers’ documents.
Their identity documents are matched with the information available in databases to check their authenticity. Document verification is done when there is a suspicion that scammers have illegally acquired important ID information of a target client to exploit them. The AI-powered document verification solutions help firms reject phony consumers quickly and ensure enhanced security within the organization.
- Face Recognition
Face recognition is a sophisticated type of KYC verification that depends on an individual’s facial features to check their identity. Businesses are deploying this biometric verification solution as it helps them boost security and offers customers a great user experience. Face verification is difficult to spoof as it is based on individuals’ biometrics rather than passwords that can be hacked using different tactics.
- Address Validation
Another way to conduct KYC verification is by checking the customers’ residences. The address verification process helps merchants verify ownership of a debit or credit card used by a client. This KYC process is also done when a user requests authorization to conduct a non-face-to-face transaction.
- Age Verification
One of the significant types of KYC verification is conducting age checks on customers prior to giving them access to or shipping products or services that are age-related. Thus, it helps minors stay away from content that is age-restricted and harmful to them. The gaming, gambling, casinos, and porn industry must perform age checks to comply with KYC regulations and avoid heavy fines.
- AML Screening
Scammers are using different tactics to launder money for their illicit practices, wreaking havoc on businesses and governments. This is where an AML Screening comes to the rescue, mitigating the risk of financial fraud and helping banks and other financial businesses stay compliant with regulations. Enhanced security and adherence to data privacy laws are what allow the business to build its reputation in teh competitive market.
- Video KYC
By using a duo of skilled identification professionals and automated assessments, video-based verification recognizes potential clients seamlessly. With the help of video verification, companies can successfully onboard new customers in a single session. Thus, it is one of the most reliable types of KYC verification used by businesses to keep scammers away.
Who Needs KYC Verification?
Any firm needs to perform KYC authentication whenever it onboards a new customer or when an existing client demands a regulated item. Conducting KYC verification is a must 0thing for businesses dealing with money, such as banks and financial institutions.
Here is the list of firms that are mandated to run KYC banking checks:
- Lending platforms and private lenders
- Broker-dealers and asset management firms
- Credit unions
- Fintech apps, based on the activities they are engaged in
Scammers are exploiting not only these businesses but every sector. Thus, all firms must run KYC checks on customers to ensure enhanced data security and privacy. In case there are high-risk customers such as Politically Exposed Persons (PEPs), a thorough investigation is done, known as Enhanced Due Diligence (EDD). This helps businesses mitigate teh risk of fraud in this age of widespread digitization
The growing number of fraudulent cases in this digital age is damaging teh reputation of businesses. This urges them to have robust KYC authentication solutions in place, verifying individuals in real time and offering the firms a greater level of security. Not only does KYC verification keep scammers at bay, but helps firms maintain global and local regulatory compliance. A secure firm attracts customers and results in building the brand’s positive image, generating greater revenue, and taking the firm to greater heights in the digital world.