Identity Verification Procedure: Understanding KYC
In the digital age, where online services have become an integral part of our daily lives, the importance of security and compliance cannot be overstated. One such process that plays a crucial role in maintaining this balance is the KYC (Know Your Customer) process.
User Registration marks the beginning of the KYC journey. During account signup or onboarding, customers provide basic personal details such as full name, address, date of birth, and agree to the verification process.
The next step is Document Submission, where customers upload identity documents like passports, driver's licenses, national IDs, or utility bills. These serve as proof of identity and address.
Document Verification is then carried out by automated systems. They check the authenticity of submitted documents by detecting security features like holograms and watermarks, and matching the ID photo with a selfie taken by the customer.
Biometric Verification is another essential step, which may involve facial recognition or fingerprint scans. Some services may also require liveness actions like blinking or smiling to ensure the authenticity of the user.
Watchlist Screening and Risk Assessment follows, where customer data is screened against global sanction lists, politically exposed persons (PEPs) databases, and other watchlists to identify potential risks or fraud. Higher-risk customers may undergo Enhanced Due Diligence (EDD).
Based on the verification and screening results, the service either approves the customer for access or flags them for further review. Ongoing Monitoring is a mandatory step for customers of all risk groups, where companies monitor all accounts for unusual behaviours or transactions.
The first component of the KYC process is Customer Identification, where first-time users must provide official ID proof, such as bank statements and government-issued documents. The next step is Customer Due Diligence (CDD), where companies evaluate customers' risk profiles.
The KYC process online includes four main steps: Personal Data Submission, ID Document Scan and Selfie, Identity Verification, and Delivery of Results. A solid KYC policy not only protects clients' personal data but also supports global efforts against money laundering and terrorist financing, helping prevent financial and reputation losses.
In recent times, the term eKYC (electronic KYC) has become increasingly common. It refers to the digital version of the KYC process, which uses IDV (Identity Verification) software for automation, offering simplified KYC Compliance in seconds.
KYC started in the banking sector but is now applied in other sectors, including telecommunications, fintech, and most online services, and has been adopted worldwide. It is a standard used to ensure businesses interact with real and legitimate users, not fraudsters or individuals linked to illegal activities.
In cases of manual verification, the user may be invited to a live video call with a human agent for additional checks. However, manual verification can take anywhere from one to several business days, while IDV software typically completes the verification in a matter of seconds.
In conclusion, the KYC process is a key part of anti-money laundering (AML) and counter-terrorism financing (CTF) programs. It is designed to ensure compliance with regulatory frameworks, prevent fraud and money laundering, and securely verify customer identities online, while balancing thoroughness with user experience.
- In the realm of fintech, forensics plays a significant role in the KYC process by analyzing suspicious behavior or transactions to identify potential fraud or money laundering activities.
- To enhance the efficiency and accuracy of the KYC process, technology, particularly business software like IDV (Identity Verification), is embraced to automate document verification and biometric checks, significantly reducing verifications to seconds.
