Home Business KYC Compliance- Automated Solution to Eliminate Multiple Frauds

KYC Compliance- Automated Solution to Eliminate Multiple Frauds

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The pandemic has created many problems for businesses due to increasing digitalization, and the number of online identity frauds and financial crimes has increased exponentially. However, due to the rapid transformation, business ecosystems are in need of seamless and efficient KYC compliance by which the businesses would be able to combat frauds. Know your custom solution will provide a robust and secure method of onboarding legitimate clients. But due to the covid outburst businesses are facing challenges to employ KYC AML guidelines.

What is KYC Compliance?

The term know your customer refers to the technology-driven client identity verification system that precisely determines the customers’ true identities before getting them on board and plays a vital part in preventing fraud.

With the rapid increase in cybercrime over a couple of years, the financial regulatory authority FATF has established laws and regulations for the financial sector and business as fraud prevention. KYC of customer due diligence standards are not only aiding the fintech complaints to combat frauds but also paves the way of onboarding customers flawlessly in the blink of an eye.

Effective Role of AI in KYC

The role of artificial intelligence is quite impressive in boosting up traditional KYC compliance. Due to which the finance companies and other digital businesses are enjoying the benefits like an increase in productivity, accurate client identity verification, and seamless customer due diligence process. It also enables enhanced transaction monitoring and provides risk assessment strategies.

AI is considered as the ultra-modern technology which is allowing businesses to automate their daily workflows completely. Their old school way of conducting AML and KYC methods. Before the AI emergence, the fintech companies relied on manual customer verification and client due diligence procedures before the AI emergence. Due to which the regulatory authorities developed strict compliance and set mandatory for the businesses, primarily for the businesses handling financial matters.

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Importance of KYC Solution for Digital Businesses

The financial businesses’ first and utmost responsibility is to employ automated KYC solutions to prevent hefty fines and bans from the financial regulatory authorities. Deploying the AI-based tools is improving the compliance structure, which is cutting down the businesses’ resources. In addition, it provides the feature of automation in customers onboarding as well as multiple other key benefits.

However, by integrating technological-driven products, the digital business is now capable of offering a safe and sound environment to their customers. Due to this, companies can effectively combat the increasing number of financial frauds and level up customer data confidentiality measures. Hence, this enhances business productivity as well as maximizes user satisfaction.

The key difference between Anti-money Laundering and Know Your Customer

KYC Compliance

  • Identification of customers real identity through KYC checks and verify them
  • Determines the criminals who possess any potential risk and prevents them from manipulating the system
  • Provides the customer identity as well as risk management services
  • Is intelligent and secure, intend to provide seamless results

Anti-money Laundering

  • The regulation enables the tracking and monitoring of suspicious customers’ transaction activities.
  • The only way to put off money laundering and counter-terrorist financing from the grounds
  • Provides the means of risk assessment and reporting the unusual financial activities

Both AML and KYC are best in their domains. Anti-money laundering solutions provide the ultimate way of preventing financial frauds like money laundering and terrorist financing. Whereas, on the other hand, your customer is developed to identify the true identities of the client by gathering their personal identity information. Therefore, the digital businesses that comply with both regulations are considered trustworthy and have high credibility.

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Major International AML and KYC Regulation

  • The business and companies are obliged to screen the customers’ identities before onboarding them
  • Ongoing AML and KYC screening is set mandatory for all types of customers
  • The records regarding the customers AML and KYC screening has to be appropriately organized
  • It set compulsory for every financial institution to report the regulatory authorities if the customer’s transaction exceeds the minimum transaction limits
  • Businesses that do not employ such regulation are considered lawbreakers
  • Every customer must be screened against the global sanction list, PEPs list, etc.
  • The red-flagged countries have to maintain the AML department as well as hire officers for proper functioning.

Final Thoughts

Summing it up, the technological boom has brought up good and bad opportunities. People are getting benefits from tech products, but on the other hand, criminals have become more sophisticated in their activities. Due to which the number of frauds and scams is at its peak. Innocent lives, as well as the business’s reputation, are at stake. Therefore KYC compliance is the ultimate solution that is quite effective to prevent all types of crimes from society by filtering out the bad actors.

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