Perks of Digital KYC Solutions over Traditional Verification

In the Compliance Program, customer verification is mandatory. As fraudsters are always looking for opportunities to exploit weaknesses in the system and for this serious security measures must be taken into consideration. Money launderers are targeting the online retail industry, online banking portals, and such online platforms. So KYC and AML regulations are mandatory to be fulfilled by the authorities.

But this procedure is time-consuming and frustrating if done manually as it will require all the documents to be verified which is a cumbersome task and errors and omissions are expected.  Regulatory authorities have made it mandatory for businesses to have proper KYC Regulations systems. Combating the financing of terrorism and money laundering can only be saved if the right checks are being used for KYC services. Digital KYC is the solution as per regulatory authorities to combat all such crimes.

Laws related to KYC Regulations:

Fraudulent activities are taking businesses to storm by frauds like money laundering, fake identities, & account takeover. Knowing your customers decreases the risk of frauds like identity theft, credit card fraud and many other online scams. When you know who you are dealing with you are confident and safe from all kinds of frauds

The Know Your Customer(KYC) principle refers to the verification of personal and business data of new customers of a credit institution for the prevention of money laundering and terrorist financing, based on The Money Laundering and Transfer of Funds Regulation 2017. These regulations were implemented from June 2017 replacing the old  Money Laundering Regulation of 2007 that was previously in effect.

Traditional Manual Verification:

Manually it is hard to verify the identity and in this era, when businesses are working online, it is no less than an uphill task to know who you are dealing with. Following are some drawbacks of manual identity checks:

  • Time Consuming:

Manual verification is not easy and it takes a lot of time and effort at each step to identify who the other person actually is. This makes it frustrating for both businesses and customers.

  • Tedious Process:

It is a daunting task to verify IDs and documents of people. Each step takes strenuous efforts to be done.

  • Low Accuracy:

Manual document verification does not promise a high rate of accuracy adding another drawback to this good old method of verification.

  • The team is Required:

Manual identity checks are a team effort and require a lot of laborers to be hired for this purpose.

Perks of Digital KYC & AML Checks:

On the contrary to the manual verification method, digital verification brings a lot more ease to businesses. Following are the perks of using digital identity verification services:

  • Real-Time Process:

Digital KYC and AML checks are swift processes. Users’ identity is authenticating in no time, eliminating the hurdles of identity verification. Less than a minute is required to perform verification.

  • Cost-Effective Process:

Digital identity verification requires low labor costs as authentication is done through artificial intelligence, streamlining the whole procedure.  Thus it cuts the cost of the whole procedure.

For any financial institution or global business, it is necessary to perform KYC for their customers. 64% of countries have recorded high risks of money laundering and online payment scams. Any identity that is entering into the system should be identified and verified based on the needs of the institution. This would help in keeping track of the individuals who are part of the system. Also, for this, individuals must be checked against the Anti Money Laundering Checks (AML) records to prevent illegal cash flow inside the organization.