Everything You Need to Know About KYC Verification from A World-Class KYC Provider

Know Your Customer (KYC) verification is the foundation needed to comply with anti-money laundering (AML) regulations. Implementation of a successful customer onboarding strategy needs an effective KYC verification process. And to meet all these demands, you need a world-class KYC provider.

Initially, collective global regulators like the Department of the Treasury in the United States’ original objective for KYC was the protection of financial institutions from being used as a front for money laundering. This mandate remains the same, but due to recent amendments, the scope now includes all industries in their drive to protect the global economy.

For individuals and small business owners caught in this economic battlefield, it means more of their personally identifiable information (PII) is being required everywhere. Yet, not all citizens and business owners fully understand the KYC verification process or ramifications. In situations where the average small businessman already ‘knows’ his customer, what should their KYC checks entail? And how can a world-class KYC provider make AML/KYC verification easier?


How Does KYC Verification Work?


Knowing your customer is one thing, but can you identify that same customer’s information from a sea of similar names, birthdays, or addresses? Probably not, if your business is online. Then you may be thinking to yourself; “I don’t need KYC as my business is not online, small and safe.” Wrong! Money laundering is older than the internet. Therefore, you still need KYC verification services even if you are not online. Maybe once you understand how KYC verification works you’ll better comprehend how much trouble you and your business are in.

Developing a stringent Customer Identification Program (CIP) with document verification and real-time ID verification is the first step in the creation of your KYC verification strategy. As a part of Basic or Simplified Customer Due Diligence (SCDD), the requirements include: –

Demographics: Name, Age, Date of Birth, Address, Occupation, Nationality, Telephone, Email, Gender, and Relationship Status

Verification Documents: Driver’s License, ID card, Social Security, Passport, and address verification documents such as utility bills or mail-in bank statements.

Identification of Politically Exposed Persons (PEP’s), Specially Designated Nationals (SDN’s), and Adverse Media Watchlist members.

Employer or business verification with supporting documents like proof of employment letter, paycheck, or other proof of earnings.

  • Tax information
  • Beneficiary Information

The goal of the CIP program is to provide financial institutions with a reasonable belief in a customer’s true identity. In completion of these basic requirements which can be done through a form online or off, a few more questions or red flags may arise in your KYC verification process. It may be due to why the customer needs to interact with your business, the type of account, the identification documents, how they opened the account (loads of cash), or in the case of business accounts, the institution’s size, location, and customer base.

Everything You Need to Know About KYC Verification from A World-Class KYC Provider

Whatever gives you the willies, be it who they know or their very demeanor, you should move on to Enhanced Due Diligence (EDD) to better assess the possible risk. When dealing with Business to Business (B2B), EDD should be a standard part of your CIP to account for Ultimate Beneficial Owners (UBO’s). And it is at this stage that manual KYC checks die.

Actually, it was dead for some time, but you may have stubbornly tried to make it limp along and call it a KYC process. What you were doing was either attempting ID validation and document verification manually or collecting them in a drawer with no real benefit to your business or anyone else’s protection. Either way, you cannot receive AML compliance certification and risk being a front for money laundering and receiving hefty fines that can cross a million dollars.


Expanding into Online KYC Verification and KYB


Going digital is no longer a catchphrase, it’s a way of life. It’s only a matter of time before having an online presence will be the requirement to do business. Requiring your customer to be physically present isn’t acceptable even in third-world countries. Though 59% of customers love the store experience, usually it’s after 79% shopped online then picked up in-store. On top of that, at the end of 2021, mobile e-commerce was expected to account for 72.9% of all eCommerce sales, which means your offline store is losing money as well as credibility.

Once you make the digital transition, implementing these steps into your CIP becomes easier, and online KYC verification is possible. Adding Electronic KYC (e-KYC) to utilize the digital tech, online services, and data improves automated KYC and access to KYC providers. This massively improves the customer onboarding experience, data handling, tracking, and storage. Online KYC is faster, more accurate, and easily adaptable to industry changes, regulations, and processes.

At the onset, KYC was designed to include business clients, however, financial institutions had the final say in what would be the requirements. Thereby, requirements varied from country to country, institution to institution, and person-to-person. To address a loophole that did not account for the correct handling of B2B customer onboarding, Know Your Business (KYB) was born.

Under the European Unions’ Fifth Anti-Money Laundering Directive (5AMLD) and Electronic Identification Authentication and trust Services (EIDAS), UBO registries, prepaid cards, cryptocurrency, high-class goods, and high-risk countries were now under regulations scrutiny. And with the Bank Secrecy Act (BSA) update, even more, the focus went to UBO’s, new industries, the use of technology, transparency, and asset management. It is plain to see that KYC alone in its previous form would not suffice.

However, the capability of KYB can only be fully successful with consideration to Know Your Customer’s Client (KYCC). Financial institutions and businesses that don’t consider KYCC in their KYB verification process can risk becoming embroiled in scandals, money laundering, and terror financing acts. Think of it this way, the same way you don’t want your children involved in questionable characters, the same way you should act when it comes to the friends of their friends.

Another key area of focus is the UBOs because sometimes who you think is the owner, really isn’t. By proxy, you can be putting your business at risk by not fully investigating both the UBOs and your customer’s potentially imaginary clients. And since to do this properly you need the right ID validation systems, global ID verification solution, and access to global watchlists, you are going to need a world-class KYC provider.

Or maybe you are the Do-It-Yourself type and therefore performing KYC checks on your own can be something you can do for your business. Or maybe you just want to know what exactly you are getting in your KYC checks. Then again it could be a budget issue. No matter the case, KYC checks should not be taken lightly. They are the first steps to AML compliance, fraud protection, and data breaches. Performing them on your own can lead to errors and end up costing you more in fines in the end.

You can still perform UBO and KYCC checks manually if you have a lot of time on your hands and money to hire a private investigator. It’s easier to automate and save you and your customer’s time by having all the information easily accessible from the start. In performing KYCC and UBO checks, the right technology and data access would be the key to its success. Therefore, a substandard KYC provider may not have the necessary KYC API that can give you quick access or even relevant up-to-date data.

For Global Data Protection Regulation (GDPR) compliance, it’s best if you seek out a KYC provider who is better equipped to handle digital identity management. Knowing your customer is not a simple matter of knowing who is buying from you but understanding the intent behind the transaction and protecting everyone from the backlash of money laundering and terrorist financing.


Recognizing A World-Class KYC Provider


The simple fact is that you cannot perform AML compliant KYC checks on your own. Manual KYC checks leave too much room for error and simply inputting an automated KYC system isn’t going to save your business without access to the fresh data or updated watchlists. Nor can you hire just any KYC provider to perform KYC verification. Automation and biometric technology are very important to executing comprehensive global automated KYC checks. A world-class KYC provider knows well how to utilize technology in ID validation, mobile ID verification, document verification, global compliance, and data protection. Going it alone or with a shady KYC provider is a recipe for AML fines and data theft.


High Global Accuracy Rates

To achieve high global accuracy rates for both individual and corporate KYC checks, your world-class KYC provider needs ready access to the latest worldwide data from government agencies to large industries. Any KYC provider can give accurate rates for North America, but how many can give you global ID verification in lower-tier countries? Maybe 3 or 4? And at what level of accuracy? Probably 1 or 2 of them. And would those rates take into consideration all the relevant global watchlists and relatives of Special Interest Persons (SIP’s) in these countries? One.


ID Validation on Any Device

Usually, to get mobile ID verification or video verification, you’ll need to seek out a specialist provider that will do that and that alone. There are no KYC verification services or customer onboarding strategies included. Apart from identity verification, behavior and intent are not assessed by other substandard KYC providers for better risk mitigation. However, a world-class KYC provider would be able to perform ID validation on any device and use both mobile ID verification and live video verification through IDMlive to assess possible bad actors.


The Latest Technological Methods

Using customers’ biometrics already available on smart devices, we can input a KYC API that allows us to verify identity by facial recognition, optical character recognition (OCR), and device fingerprinting to track hand movements. IDM scan assists in document verification, age verification, and customer identification. Not many KYC providers have such tools and those that do lack the data to support its proficient use or can include it as part of your customer onboarding strategy.


Complete and Unique Service

Ask your KYC verification services provider if they can verify identity on social media. In fact, do a Google search now and see who can. What you will find is people discussing methods for identity verification on social media, not with social media. Being the exclusive creator of IDMsocial gives us a unique competitive advantage and a wider range of protection.


Industry Trust and Recognition

With over 13 million data sources spanning over 175 countries, we are the definition of world-class. Global partnerships with industry giants in finance, technology, border security, and event management as well as upcoming small business owners mean IDMERIT has the versatility to deal with anyone at any stage of business.


Verify Anyone Anytime and Anywhere.


At IDMERIT we take our tagline very seriously. The ability to verify anyone anytime and anywhere is exactly what we aim to do and with all our global partners, it has been possible to do so for the last decade. In continuing the fight against money laundering, identity theft, and fraud, we continue to focus on developing the best identity verification solution that can make complete online KYC verification possible while providing a seamless customer onboarding experience.

With our experience in the finance industry and B2B customer onboarding, we understand the need for unique real-time ID verification and online KYC verification processes that can be adaptable to your growing business needs and new industry threats. E-KYC verification services are a small step towards AML compliance certification, but a huge step for your customer. Just as you want to be sure of who you are onboarding, your customer needs to be sure that their data is being handled by a trusted world-class KYC provider.

A smooth KYC verification process can improve productivity, customer relations, and sales. Be sure of who you choose. Talk with us, today.

Posted in KYC
Tony Raval
Tony Raval

Tony Raval brings more than 15 years of leadership in data technology as the Founder and CEO of IDMERIT, headquartered in Carlsbad, California. He leads an executive team including top data tech veterans to execute on his passion of creating a global data universe generating true and trusted intelligence. IDMERIT’s competitive success has come from the company’s ability to perform cross-border transactions, for which Tony and his team have developed a meticulous process and progressive technology. The company was launched as the result of a highly effective engagement with a leading global financial institution, whereby the company was uniquely able to triangulate multiple elements to create a comprehensive, and yet, frictionless experience. Tony has provided data intelligence to companies such as Google, SalesForce, and HP as well as clients across financial, government and other sectors seeking a superior partner in compliance and mitigating risk. He holds a Master’s Degree in computer engineering and data sciences, is an active member of the Entrepreneurs Organization San Diego and dedicated mentor to new entrepreneurs in EO’s Accelerator Program, enjoys meditation and running, and he and his wife Sonal recently celebrated their three-year-old son's birthday.

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