Identity verification is crucial for businesses all across the globe to fight against different frauds like cybercrimes, money laundering, account takeover and identity theft. KYC regulations are mandatory in this regard and any business failing to do so can result in paying a hefty amount of fine to the authorities. With every passing day, financial crimes are becoming more sophisticated. The game of cybercriminals is getting stronger as they are coming up with more hacks to crack the security system of a business. Customer due diligence has become the need of the hour to put a hult on cybercriminal activities. KYC for business can save businesses from a number of scams such as identity theft which is used to commit many other crimes. KYC ensures the customers are who he says he is by checking out his previous activities that if he was ever involved in any criminal act. By doing this business gets secure at the time of onboarding customers. Businesses are using identity verification checks to filter out fraudsters and high-risk customers because digital scams have turned many businesses to ashes in recent years.
KYC an ID verification backbone to businesses:
KYC regulations for identity verification help businesses many ways to fight back frauds. Following are the ways KYC is assisting businesses:
- To comply with AML (Anti Money Laundering) compliances:
Money laundering is a big issue and from hindering your business to be a platform for fraudsters to launder money, digital KYC solutions help to identify scammers right at the base. KYC solutions identify the scammers and help to highlight high-risk customers who can indulge in any such criminal activity using your business.
- To detect identity thieves:
Identity theft is the most common type of fraud. It has many types like synthetic identity theft, children identity theft, medical identity theft, and financial identity theft. KYC ensures a stringent measure to provide a shield for all such ID thieves in order to secure their customer’s data.
- To mitigate the risk of credit card fraud:
Credit card frauds are clamping up with every passing year. Identity verification solutions can help to mitigate these frauds drastically.
- To mitigate the risk of financial loss due to identity thieves:
Identity theft results in businesses to lose millions due to resulting fraud. Businesses save money instead of losing it due to fraudulent activities by deploying such solutions.
- To identify cybercriminals:
As already mentioned, money laundering is used for terrorist funding and KYC solutions are used in Combating Financing of Terrorists (CFT). It identifies fraudsters and criminals.
- To verify the identities of the businesses they trade within the B2B model:
After KYC, KYB regulations are also important to follow. It is mandatory to know the businesses you are about to deal with. Document verification ensures it is not a shell company.
In a nutshell, the challenges are increasing due to the rapid pace of regulatory change. The regulatory authorities have introduced stringent requirements on beneficial ownership checks and customer due diligence. So KYC is really very important and can be done by using different other technologies like biometric verification and AML checks. KYC is the top priority agenda of many businesses, especially the financial sector where the ratio of scams is higher. We all know that it is important to know about the customers and the KYC process has facilitated enough. Moreover, businesses need to have a proper KYC channel in order to comply with regulatory authorities.