3 Steps To Effective Know Your Customer Compliance (KYC)

Banks and financial institutions use Biometric eKYC or Physical KYC to provide their customers with a seamless experience. Biometric KYC incorporates having a customer identification program set up and rehearsing customer due diligence. It is the strategy used for confirming client identity and shields the bank and financial institutions from being tied up in unlawful plans and monetary wrongdoings like Anti – Money Laundering (AML), the system alerts banks about clients who are using illegal means of transactions and participating in ill-doings such as money laundering.

What is KYC – Know Your Customer (KYC) procedures are a critical function to Verify Customers, assess customer risk, and a legal requirement to comply with Anti-Money Laundering (AML) laws. Effective KYC involves knowing a customer’s identity, their financial activities, and the risk they pose.

Let’s discuss three steps to effective Know your customer compliance (KYC)

  1. Information Collection

The absolute initial phase in the KYC system is to gather the information of the customer. While at this stage, the institution must verify the identity of the Customer through the procedures of identity verification documents and other due diligence methods like Government databases or a combination of both.

Prerequisites for customer verification are:

  • Name
  • Date of Birth
  • Address
  • Identification proof
  1. Document Upload

This step helps the bank and other financial institutions to cross-check the information and other necessary and required documents of the customer. Three due diligence steps are involved in this process of KYC Compliance:

  • Upgraded due diligence is done from the data gathered to comprehend customer’s previous actions/activities/transactions through the maker-checker process.
  • Fundamental customer due diligence is data acquired to get confidence that there is no danger to the bank or financial institution from the Customer.
  • Disentangled due diligence are circumstances where the danger for tax evasion or fear-based oppressor subsidizing is low.
  1. Information Verification

After the information is uploaded or given by the customer, the next step involves verification. Information verification is done to get confidence that the provided information is correct in all possible ways, and no customer record has been missed. The most productive approach to become KYC agreeable is to incorporate the investigation of data from the customer.

In conclusion, with the advancement of technology, doing and getting KYC done has become a simple and easy step. From the biometric approach to Artificial Intelligence, innovation is offering better approaches to recognize customers, run due diligence to industriousness checks, and perform progressing observations. The mix of portable information with conventional information sources has added a layer of Validation to help convey an advantageous, prompt client experience, alongside the vital consistency and extortion relief measures.

By Carolyne Rabut
Content Marketing – CompuLynx

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