As the world has moved toward digitalization, businesses and companies are working onboard. Technological advancement has made it convenient to onboard authentic clients. Moreover, businesses have to comply with KYC verification procedures to keep imposters away.
Advanced AI and ML solutions have revolutionised the digital world. As per the report, California was highest in fraud losses, where 1348.77 million U.S. dollars were paid out in 2022. There has been a quick growth in fraud cases therefore, KYC solutions are required to overcome the fraud and illegal transactions made by imposters.
What is KYC?
Whenever a business has to deal with a client or partner, it is required to verify their identity to prevent every kind of risk. It is the basic requirement at the beginning of every business relationship. KYC is a process used for the verification of the identity of clients and partners. It concerns the collection of particular data such as name, address, date of birth, and gender. Different documents such as identity cards, domiciles, educational certificates, and driving licences are collected.
KYC is a complete process involving regulations and standards to protect a business from financial crimes, identity theft, and money laundering. Digital technology such as artificial intelligence and machine language solutions eliminates the traditional methods for verification. Moreover, these solutions are very effective in the verification of identity to reach risk profiles posed by individuals.
Benefits of the KYC Process
There are several advantages of the KYC process.
1. Time-saving
KYC processes work automatically, it is quite effective in terms of both time and money. Employee load is eliminated as there is no need for maul verification anymore. It is a quick and fast service to process a number of verifications in a few seconds. Companies are not required to hire many employees for the verification process.
2. Improved Reliability
With the help of advanced AI and ML algorithms, the KYC process is reliable as compared to the traditional methods.
3. Fraud prevention
Automated KYC verification has made it convenient to detect minor variations made by fraudsters. Advanced ML algorithms are there to process verification. This process is effective and smart enough that it can identify a person with a false identity. Thus business doesn’t have to suffer with fraudsters onboard.
4. Prevent Money Laundering
KYC process accesses a person in depth. Companies can access full full-fledged profiles of their clients. Particularly banks have access to each and every transaction made by a client. Moreover, it made it accessible to know the financial sources of customers. Thus the issue of money laundering is prevented by using KYC processes.
5. Successful Business Growth
KYC gives access to any individual while onboarding, it eliminates the security risk. Only authentic clients are filtered out to be on board. OIt definitely complies to have a successful business growth.
6. Global Coverage
Digital KYC verification is used worldwide to verify clients. In this digital world, clients do not need to go onsite for verification, but they can be verified at their homes. KYC services are used globally for verification processes.
Why is KYC necessary in business?
In business, the KYC process verifies clients and access risk factors. It prevents financial fraud, identity theft, and financial terrorism. Without KYC, businesses may suffer high financial losses from criminals. By using the KYC process, businesses are able to spot clients with a history of illicit actions in onboarding. It ensures that the clients are authentic and real. Moreover, businesses are safe and secure in dealing, and KYC service providers are helpers in this regard.
Also See: Key Elements of Data Management Technology for Your Business
Why are KYC Documents Required for Identity Verification?
Different documents are required for particular verification. Such as in the case of address verification utility bills are preferred as there is an exact address detail of the individual. Other documents such as social security cards, licences, passports, identity cards, educational certificates, IBAN, and bank statements, are also used for various kinds of information.
The following documents are required as proof of identity
- Passport
- Driving Licence
- Identity card number
- Identity documents provided by educational institutions
- Proof of address documents
- Utility bills
- Water consumption bill
- Gas receipt or connection card
- Bank account statement
- Voter ID card
- Driving licence
- Passport
Conclusion
KYC verification has revolutionised this digital era with a successful onboarding experience. It has built trust between organisations and clients. Traditionally, manual verification was executed, which led to various risks. Now, automated verification tools are very smart and efficient. Documents are collected and identified to have authentic information about clients and partners.
KYC processes root out fraud, money laundering, and terrorist financing. It provides multi-layered protection to keep fraudsters and hackers away. KYC compliance can be referred to as the single best security solution as it protects interests.
