Home Technology KYC and AML services– Integrating KYC services in the business management practises.

KYC and AML services– Integrating KYC services in the business management practises.

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KYC and AML services

What is Know your Customer?

In the era where money laundering has reached heights, it has become vital for the businesses to adopt procedures that inhibit fraudulent activities and financial crimes. Aiming to prevent the business from potential risks, KYC services come to the rescue. KYC, initials for, ‘Know your Customer’, define a set of legal regulations that authenticate the identity of the customers and that they do not pose a threat to the company by indulging in fraud or money laundering. This practice is usually adopted by financial institutions since they suffer the most illicit criminal activities but is not merely restricted to them. 

KYC is said to be an umbrella term since it comprises various methods and practises, as in:


  • KYB – Know your Business
  • CIP – Customer Identification Program
  • CDD – Customer Due Diligence
  • eKYC – Electronic KYC
  • PEP Checks


Methods and Practises of KYC services:

Instead of an individual, KYB focuses on the validation and legitimacy of the organisation as a whole. It allows the financial institution to gather and analyse detailed data of the company they are working with, intending to prevent any risk or fraud. Financial Institutions diligently imply effective KYB procedures in the company to verify the authenticity of the company involved with them.

Customer Identification Program (CIP) forms the base of KYC. The foremost step of getting to know the customer begins by collecting their personal details. To do so, the bio data is entered in a form. 

Customer Due Diligence (CDD) performs an in depth analysis of the details obtained by CIP. The information entered by the customer is verified to ensure that he is not an impersonator. Biometric verification is significant to prove that.For this purpose, the prior business engagements are verified and his records are analysed to determine if he is high or low risk. If the prior financial records of the customers show their high risk personality, enhanced due diligence is applied by enforcing strict rules when engaged in financial activities to prevent money laundering.

Electronic KYC(eKYC) is the integration of digital technology into kyc services to ease the work and increase the effectiveness. Considering the rapidly increasing shift towards digitization, KYC services are expected to become online based i.e. digital kyc services. The benefits of ekyc include faster, accurate and efficient performance and instant adaptability to the frequently changing technological trends. Another major benefit includes the easy accessibility to the customers that saves themselves from the pain of physically visiting the company.

Politically Exposed Person (PEP) checks are extremely important for the survival of the business in the long run. A person with a strong political background has very high chances of being involved in high risk fraudulent financial activities. Therefore, financial institutions, very diligently apply such procedures so as to report PEPs to appropriate authorities because conducting business with them is considered to be a form of corruption. 


KYC and AML Solutions: 

AML and KYC services work together to ensure the authenticity of the customers and companies involved in the business. Anti money laundering refers generally to the regulatory and monitoring activities engaged in preventing the financial institutions and other businesses from dealing with customers and companies that could impose potential risks on the business and indulge in money laundering and other financial crimes. KYC is a part of AML processes that verifies the customers during the onboarding process to determine that they are true to their identity. Hence, the KYC verification makes it difficult for the criminals to conceal their criminal activities and hide their true identity. This is particularly useful for money transferring institutions where kyc compliance restricts the criminals from depositing their huge sums of money obtained illicitly. Hence the absolute goal of KYC and AML solutions is to ensure the businesses and financial institutions have detailed knowledge of the party they are conducting business with and report any suspicious activity. 


Banking professionals and rising KYC costs and regulations: 

Despite the boom in the KYC costs and deteriorating customer experience, the banking sector has marked this practice to be their priority. According to a survey, there has been a significant change in the onboarding experience where the percentage within 60 days reduced from 93% to 76%. Moreover a compliance software’s findings proved 35% of the industry faces difficulty in adapting to the regulatory requirements. 

As per Hong Kong’s Private Wealth Management Association’s survey, Kyc utility holds leading importance as it makes it easy for the banks to pool in customer’s data and share via blockchain. 


How does Shufti Pro makes Kyc easy and effective?

With the provision of digital kyc and aml solutions, that too within a matter of seconds, ShuftiPro becomes essential for banks and other financial institutions as well as other businesses. Its API based identity verification services allows banks and other businesses to conduct the screening and monitoring of the customers to eliminate potential risks and financial crimes.

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