Last Updated on February 12, 2023 by admin
The technology-driven world is more addicted to living life with convenience in every field. After the second world war, the world learned to grow in some other direction that was never unveiled before to anyone. The concept of globalization is now more embedded with digitization and the corporate sector is highly dependent on it to operate globally. No matter, whether it’s a banking channel, financing company, insurance organization, or any other sector, KYC verification is considered compulsory to protect the financial system. The world is too deeply integrated that it seems near impossible to get rid of this type of setup.
Customers are the backbone of business success. To improve the customer’s experience and to reduce fraudulent activities, KYC Verification Online is a requisite. Regulatory authorities are working on e-KYC verification but for an immaculate KYC verification process and standard mechanisms, there is still a long way to go.
Difference Between KYC and e-KYC
Know Your Customer (KYC) means that the financial sector should know all about its customer including customer complete identity, ID card, facial verification, audio validity, video verification, etc. All these attributes are necessary to identify the customer’s validity. Generally, it is done manually which is highly tiresome but KYC documentation is the newly practiced method to save time and effort. E-KYC is an electronic know-your-customer technique. Machine learning is involved in sophisticated e-KYC standards to avoid any sort of financial crime that may cause potential risk to the financial system. Trust-building process among businesses and customers is not an easy job but the installation of digital applications to comply with international standards gives a relative boost to KYC verification online. The onboarding stage is very sensitive regarding critical customer identity verification and this continues later on. The industrial experience is more vocal today as digitization transforms the industries to the next level. KYC Verification Online introduces a paperless and automated procedure to verify the customers more accurately.
Why Electronic KYC Rules Are More Effective?
The growing number of banks and financial institutions require more vigorous KYC verification online to counter phishing attacks, identity theft, credit card frauds, money laundering, or other financial crimes. Institutions need to know their customers in detail. Manual KYC increases the chance of mistakes or negligence that may cause severe damage to the institution. Bloomberg reveals that the cloud-based anti-money laundering market would cost worth of $5.8 billion by 2027. This shows the graph of money laundered every year from one part of the world to the other through illicit means. KYC verification online compliance procedures need to be revised to explore more diversity in its benefits. Without e-KYC regulations, it is not possible to put a tight grip on fraudsters and financial scams may continue to happen in this way. It is not only lethal to the growth of financial institutions but also to the global economy.
Types of Financial Frauds & How KYC Verification Online Mitigates Financial Frauds?
The fast-paced digital world is more prone to criminal fraud including forged identity fraud, credit card scams, phishing attacks, money laundering, illegal remittances, etc. All these crimes are prevalent in the corporate system where most businesses are operated through digital channels and online credit card payments. The electronic KYC verification online system proceeds in form of various steps and these are briefly described as follows.
a) Customer Details Screening Online
All the businesses should know complete details about customers and manual data entry is not reliable in this case. KYC Verification Online is the most accurate way to screen all the necessary inputs about customers. Forbes shares that about 78% of Americans prefer to use digital banking. In this way, manual customer details verification is not an appropriate method but electronic KYC verification online guarantees authentication and fraud limitations. KYC is the base for the rest of the verifications about customers and their activities.
b) Facial or Video Verification
Customers involved in financial scams surely need to be identified through KYC verification online but it requires proper implementation of the regulations. Money laundering is a widely practiced financial crime in the corporate sector to safeguard illegal assets from confiscation. Facial or video verification is an AI-embedded technique, having programs installed in it to capture identity theft on the spot and stop the criminal from criminal execution.
c) Documents Validation of Customers
Criminals mostly forge documents to hide their original identity in papers. Despite financial digitization to its maximum, documents are still taken as evidence of the details provided by the customers. KYC verification online is also fundamental to screening the customer’s documents for better KYC compliance.
Financial institutions and big corporate businesses are changing their KYC verification online rules to provide a new and secure financial system. Digitization links KYC mechanisms with AML regulations. Similar is the way with KYC and KYB for transparency on every level. Atlantic Council reports that Swedbank identified 135 billion euro scam plans from high-risk customers. Digital frauds are becoming a big threat to the tech-driven world, but considering these points, they not only ensure effective KYC compliance but also integrates AML procedures with the financial institutions to secure the financial world from scams.