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Industries that Require Know Your Customer

by GM
Customer

Know Your Customer or KYC is the requirement to know the identity of the customer. This is important in most financial aspects of business and actually plays a key role in fraud prevention, identity theft, money laundering, and accurate tax filing. Businesses are required to do that as a fraud prevention measure. Fraud is getting out of control and every industry is becoming its target some way or another. The digital means of operation has given rise to sophisticated cyberattacks and many companies have faced millions of dollars through that. Know Your Customer is there to curb fraud by identifying the business dealings. There are now AI-powered solutions that can digitally perform Know Your Customer and ensure safer business practice. In this blog, we will highlight the industries that can benefit from Know Your customer.

The History of Know Your Customer

KYC or Know Your customer was initially introduced in the 1970s through the Bank Secrecy Act. The requirement for this became rigid after the 9/11 attack. The law requires the business entities to verify the identity of all their clients to capture the fraudsters.

They are also to monitor their transactions and ensure that illicit activity is occurring. If they see any unusual activity they must report to the concerned authority of the regulatory body. This act was passed to also monitor the financial flow so that any criminal indulging in money laundering activity is instantly caught. Initially, this was mandatory for the banks and financial services but now other sectors are being regulated as well.

The business that fails to identify and record their customer’s identity and do not report to the authorities of any unusual activity are heavily fined and even sometimes face permanent closure of their business.

The Digital KYC Solution

The digital solution of KYC can perform identity verification within seconds. It offers face verification, document verification and video KYC services. Face verification is a solution that verified the identity by verifying the face of the person against the picture of their ID document. The document verification ensures the legitimacy of the identity document. The AI of the digital solution is trained on the different type of ID documents to detect any tampered or fake ID documents and ensure their authenticity. The video KYC solution allows businesses to perform KYC remotely through a video interview call with a KYC expert. The process uses both AI and HI to make sure the identity of the individual is legit.

KYC for Industries

Business entities can benefit from the KYC solution if they opt for a good KYC provider.

● Banking and Financial Institutions

Banks have always been targetted with fraud or money laundering. This is why it is necessary for the banks to verify the customers and ensure that all the monetary dealings are being conducted securely. If the banks are not regulated, they can face huge penalties. Fraudsters can steal the identity of someone and get access to someone else to account to steal their money. They can even open up various accounts for their illicit financial funds. This is why banks need a secure and robust solution that performs KYC in seconds and streamline business operations.

● Medical Industry

The medical ID is always a major target for identity theft as the medical identity costs a lot in the black market. Medical treatments can be costly and this is why people steal other people’s identity to get treatment for free. This can be risky for the victim of the ID theft as it can alter their medical history. The fraudsters can also steal prescription drugs through it as well.

● Digital Currency

Digital currency is the booming industry ever since bitcoin hit record-breaking prices. fraudsters are now trying to take benefit of it and the anonymity factor does not help. The regulators are becoming increasingly concerned over the misuse of the currency. Money launderers also use the anonymity factor to hide their illegal money. KYC will ensure transparency in the industry and secure the industry from criminals as well as fraudsters.

● E-commerce

E-commerce or online business platforms must apply KYC measures to identify all their customers. It is harder to verify the identity of the customers online and fraudsters can take advantage of that. This is why they must ensure a proper identity verification system.

 

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