Kyc: What Is “Know Your Customer” Means And Why It Is Significant?

Know Your Customer (KYC) refers to the process institutions use to verify the identities of their customers and ascertain what fraud risks they may pose. The premise is that knowing your customers — performing identity verification, reviewing their financial activities, and assessing their risk factors — can keep money laundering, terrorism financing and other types of illicit financial activities in check.

Universally, the European Union's (EU) General Data Protection Regulation (GDPR) guidelines produced results in May 2018. GDPR altogether limits how establishments secure and oversee client information. These guidelines, alongside the EU's Second Payment Services Directive (PSD2), make extra obstacles for associations in gathering against illegal tax avoidance (AML) and CDD techniques inside the KYC compliance framework.

A definitive point of KYC (Know Your Customer) is to confirm, with an undeniable degree of affirmation, that clients are who they say they are and that they are not prone to be occupied with a crime. KYC is ordered for certain associations — basically monetary foundations — yet for different organizations that intentionally carry out KYC procedures, it's a significant sign that the business is reliable and thinks often about ensuring its clients.

Why are KYC Regulations Needed for Banks and Financial Services Companies?

If the last decade has shown us anything, it’s that a person’s online identity isn’t always what it appears to be. Information breaks, phishing plans, data fraud, illegal tax avoidance and other computerized scams have unleashed destruction on associations from each area of the economy — from fintech administrations to dating destinations to major parts in the sharing economy.

The intergovernmental Financial Action Task Force (FATF) assessed that in 2009, criminal continues from unlawful assets created from drug dealing and coordinated crimes added up to 3.6 percent of worldwide GDP, with 2.7 percent (or US$1.6 trillion) being washed to camouflage their illicit beginning. In addition, corporate misfortunes from deceitful online exchanges are required to reach $25.6 billion of every 2020, as per Juniper Research.

Add to this an abundance of identity information housed online and creating a goldmine for fraudsters. Digital identities act as a currency on the web, with specific data (e.g., Social Security numbers, email addresses, passwords, credit card numbers and medical records) fetching anywhere from 25 cents to $60 per record. Bad actors are exploiting all angles to obtain and utilize this data to their benefit.

To decrease the probability of these financial crimes, also to secure their brand reputations, financial administrations associations have an unmistakable financial impetus to precisely check their clients' online personalities using KYC methodology.

Compliance with KYC Requirements through Identity Verification

Organizations are endeavoring to develop their client base through quicker, simpler and cheaper digital channels, yet the current administrative scene makes numerous obstructions to accomplishing those goals. Clients need the accommodation of joining through digital channels, and they need the interaction to be fast and effortless. Establishments, then again, need to deal with the real factors of conforming to KYC guidelines, which can mean sending new clients out of their liked (digital) channel for personality check or making customers wait for days or weeks as their identities are verified.

These competing demands have created a clear need for KYC technologies that can transform an organization’s manual KYC and customer onboarding processes into a streamlined online approach.

The right arrangement needs to have these basic identity verification capabilities:

• Ability to verify the authenticity and validity of the ID document
• Ability to compare the biometric data and the ID document to validate the customer’s identity
• Ability to accurately extract data from a wide range of ID documents (e.g., passports, government-issued IDs, driver’s licenses)
• Ability to capture biometric data from the customer (e.g., selfie, fingerprint)

As well as safely meeting these specialized goals, the best KYC solution should be versatile for organizations with a worldwide presence or worldwide desires. This implies, for instance, that the solution can oblige a wide scope of public recognizable proof archives, in light of where the organization works together. Besides, the solutions should be compelling — both in terms of its cost-effectiveness and its ability to create a positive customer onboarding experience.

KYC API Integration Services

Naxtre offers KYC API integration solutions that accelerate the process of opening a client’s account through the use of an online KYC process. This eKYC Seamless Integration happens at the back office. Any web portal provides options to upload supporting documents online and perform In-Person Verification (IPV).

This entire process is smoothly executed through API integrations. The Application Programming Interfaces (API) is associated with various procedures. Hence, it is necessary to ensure that required service providers are shortlisted for each of the activities and associated APIs are made available for configuring these APIs with the eKYC applications.

Aadhaar eKYC is a paperless Know Your Customer (KYC) process, wherein the Identity and Address of the subscriber are verified electronically through Aadhaar Authentication. It can be used as an alternative to the current KYC process which is done on the basis of physical photocopies of the original documents (ID proof and Address proof).

With the explicit consent / authorization by the resident, the Aadhaar e-KYC integrations provides an instant, electronic, non-repudiable “Proof of Identity” and “Proof of Address” along with date of birth and gender. In addition, it also provides the resident’s mobile number and email address to the service provider, which helps in further streamlining the process of service delivery.

The HyperVerge Fintech Platform consists of Digital KYC+, Dedupe Fraud Check, Data Verification, Credit Scoring, and Contract Verification. The HyperVerge Geospatial Platform takes satellite and aerial images and uses AI to identify objects of interest and detect changes with the highest accuracies. It converts petabytes of data into actionable insights in tactically relevant times.

Naxtre is team of experts work on these KYC integration in your app and software. Write us at sales@naxtre.com