Criminal activities are increasing at a rapid pace as the internet becomes more widely available. The global economy is increasingly reliant on the internet due to globalization and digitization. Extensive data and information sharing leave the whole system vulnerable. The current increased saturation of the customer market is due to the hybrid economic structure & uneven control of data flow.
Bloomberg recently revealed China’s largest banking fraud, in which the victims were supposed to receive 100,000 yuan from the country. The fraud rate has reached this level due to noncompliance with KYC requirements. Therefore, it is essential for businesses to fully incorporate these regulations. The main goal of KYC service providers is to thoroughly check each and every customer’s details to ensure reliable financial transactions.
KYC Verification Process – Why is it Important?
Initially, it was necessary for the banking industry to use the KYC verification process. But now, these regulations are important in all financial sectors for steady funding. It concerns the customer’s financial activity and transactional data. Numerous industries, including banking, hiring, tourism, travel, insurance, and others, are experiencing various frauds.
Criminal activity puts data security and retrieval at risk, which dramatically increases the demand for KYC service providers. Organizations use many security points to validate consumer biometrics. Human capabilities and AI methods are collaborating to get the desired results.
KYC Services and Enhanced Due Diligence (EDD)
Financial institutions are in charge of managing the world economy. Without a doubt, the financial sector is to blame for the rise and fall of global economic statistics. Customers are the backbone of the service industry. It goes without saying that the real force behind the entire global system is data. No operation should ever start without thorough KYC implementation. The question of how to ensure the accuracy of the KYC process arises. Leading KYC service providers are embracing automated techniques to identify and deter fraudsters.
Almost every financial institution performs CDD. But, increased due diligence necessitates the use of robust AI systems to monitor the financial activity of customers. A number of clients in various banking channels are either politically exposed or face numerous punishments. This is so because of their inappropriate use of discretionary powers for taking illegal benefits. Machine learning is a popular technique for locating scams in banking, real estate, travel, and other sectors of the economy. As further explained below, ML-powered KYC services play an important part in identifying fraudsters.
a) Face Authentication Model
Artificial intelligence is quickly replacing human intelligence in the financial sector. In order to provide smooth financial services, KYC and AML are inextricably linked. Face recognition is a relatively new AI technique for the purpose of verifying identification cards. When scammers present a fake ID card, AI-driven face recognition software can detect fraud by comparing facial patterns to real images.
b) Recognition of Audio and Fingerprints
Digitization has progressed to a new level. AI algorithms check the customer’s voice recordings and fingerprints to ensure KYC compliance. Audio models use the frequency and pitch of voice to validate the customer. Additionally, ML algorithms are also employed to verify fingerprints.
KYC Service Providers – How to Tackle Money Laundering?
Rapid technological development has led to a significant increase in fraud. Money laundering is a worldwide problem that is growing at an alarming rate. Customers who intend to launder money create bank accounts in some nominal banks with fabricated documents and false identities in order to simply navigate the registration procedures. Poor KYC service providers frequently disregard security compliance measures.
As a result, fraudsters can engage in illicit activities and launder ill-gotten gains into offshore accounts. Potential KYC onboarding software can reduce financial crimes by implementing stringent compliance measures. High-risk customers should be put into a strict verification category using sophisticated AI models.
KYC Client Onboarding Process – Basic Guidelines
Some regulations are compelling global KYC service providers to meet the know-your-customer requirements. The following are the basic requirements.
- First confirm the authenticity of consumer ID cards, as well as pictures, video, content, and business document verification.
- Then, follow KYC compliance regulations in order to meet the expected objectives utilizing cutting-edge technologies.
Conclusion
Each industry has its own set of regulations for compliance. Some business institutions follow the regionally accepted KYC compliance guidelines. To guarantee the security of financial transactions, the FATF, IMF, and other regulatory bodies develop regulations. According to the Financial Times, 580 million euros were lost due to identity and document fraud. Furthermore, criminal fraud has increased by 40%. There are a number of new KYC service providers on the market that are providing the best onboarding solutions for secure funding.
