KYC As An Anti Money Laundering (AML) Tool

As financial crimes rise, best practices in AML and other regulatory compliance tools are fast keeping up. Financial crooks have found a way into the digital world of banking and finance, alarming regulators and financial service providers alike. The availability of sophisticated tricks and advanced technological means of trespassing customer privacy has translated into a glaring need for businesses to ‘know their customer’.

KYC as an Anti Money Laundering (AML) Tool

KYC/AML in Action

Financial institutions have been fined roughly $17billion in AML penalties with some of the biggest scandals of money laundering surfacing since 2009. Electronic money laundering is on the rise, and service providers need to come up with solutions to catch fraudulent transactions before they happen.

The popular Know-Your-Customer technique is the gold standard in understanding the entire process, and ensuring that customer verification is done in a robust manner. Money mules can be caught during a financial spoof by employing basic measures of KYC authentication.

KYC Authentication for Service Providers

A business needs to identify its customers before the beginning of any transaction. For the financial world, this means banking institutions, credit agencies, and insurance companies need to step up their regulatory compliance practices.

These include background checks of prospective clients to ensure that they are not involved in illicit activities. Corruption, bribery, terrorist financing, and money laundering are major sources of illegal transactions and threaten companies as well as countries that are competing for financial stability.

With the right KYC/AML measures, businesses can ensure that they are doing business with legitimate entities and in compliance with financial regulations. Electronic identity verification allows that process to be swift and error-free.

Knowing your customer through KYC authentication ensures the elimination of:

  • Transaction Risk
  • Online fraud
  • Financial crimes

Using Selfies, IDS, and Mobile 2 Factor Authentication methods, as well as KYC Document Verification techniques, expends a range of KYC/AML Compliance tools to companies to ensure they remain competitive. Most ID verification service providers now cover large continents and cater to document verification in hundreds of languages.

Especially for high-risk clients, businesses need to perform AML screening. This consists primarily of KYC procedures such as Customer Due Diligence, risk-based AML policies, ongoing risk assessment, and ongoing monitoring.

Cybercriminals who carry out identity fraud

Cybercriminals who carry out identity fraud and breach critical customer accounts are in continuous search of security lapses such as loopholes in account verification procedures. True Identities, as opposed to fake personas, can be verified using liveness detection, anti-spoofing techniques, geolocation logs, as well as using consent and age verification methods.

For instance, many times spoof attackers try to mislead authentication software by providing old photos of clients in order to gain access. This is instantly detected by the liveness detection feature provided by leading KYC service providers.


KYC Document Verification

KYC Document Verification is also an important service that checks for forgery and photoshopped documents. Expired documents or those that have been crumpled or tampered with will not be accepted as genuine proof of identity. Comprehensive verification using machine algorithms translates into efficient and technologically competitive solutions to identity verification threats.

All in all, financial institutions need to adopt more innovative tools and techniques to identify suspicious activity and fight money laundering and terrorist financing. KYC/AML compliance entails the use of better, more advanced verification techniques that ensure maximum security against cybercriminals.

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