The digital revolution has benefited the business sector in a number of ways but fraudsters have also got their hands on sophisticated technology that can support their malicious plans. They can use identity fraud to deceive the online community and gain financial advantages. If companies were using traditional customer identity verifications approaches, it was very easy for cybercriminals to fool the system. In this context, Blue Chip NFTs the global regulatory bodies introduced new and stringent regulations to deal with the rising cases of financial crimes e.g. money laundering. The new KYC compliance made it mandatory for every business to perform the customer identity authentication process.
KYC Compliance: What are the Procedures Involved in it?
There are multiple procedures in KYC compliance screening, some of them are document verification, face authentication, and address verification. Additionally, there are:
- AML Background Checks
- Consent Verification
- Video KYC Solution
This authentication service provides convenience to the banking industry, various financial institutions, and online stores. Moreover, it facilitates businesses that deal in cryptocurrency. According to KYC compliance, businesses must conduct client identity verification procedures in order to reduce fraud prevention. In the document verification service, clients must submit ID cards, their passports, driving licenses, and debit cards. These documents facilitate cross-checking the data in clients’ profiles.
The good news is that the document verification procedure is customizable according to the needs of the consumers. For instance, a shipping business can implement a document verification service to counter the rising cases of fraud in the shipping business. The ID document verification system captures information like the full name of the consumer, their DoB, MRZ code, and nationality. The clients can choose between onsite verification and offsite authentication.
How Does the System Work?
The whole procedure is the following.
- The consumer registers for the document verification procedure. They select the documents that they want to be verified
- The system asks for the required documents according to the authentication procedure. It means that credit cards, passports, and the driving license
- The system only takes a few seconds to complete the process. In case the documents have fabrication, the system rejects the application. When the documents are genuine, the end-users see the final verification message
The face verification system uses facial signature, liveness detection, and 3D depth perception to complete the authentication procedure. It means that there is no need to submit paper documents and cards to get verification results. The face authentication procedure has the backing of artificial intelligence and machine learning algorithms that enhance its efficiency and keep it updated according to KYC compliance requirements. Another name for face verification is biometric authentication and it is popular for effectively reducing money laundering, identity theft, and terrorism financing.
The use of online facial verification is much simpler than document verification. Face verification only requires the facial signature of the clients for authentication. The procedure of face verification is the following:
- The consumer registers for the procedure
- In case, the customer presents a fake image, the system rejects the application immediately. Only in the cases where end-users are present in real-time, the software proceeds with the procedure and shows the final verification result
This service is critically important in order to deal with chargeback fraud. Usually, the banking industry, online business stores, and delivery services perform address verification because they want to validate the identity of their consumers. It is important for them that they only extend their services to genuine clients to safeguard their businesses from corruption, according to KYC compliance.
Address verification eliminates the cases where cybercriminals provide fake addresses to the companies and later on claim that they did not receive any products. Previously, in such cases, the company had to reimburse the consumers because they did not have any address verification system. Learn more about apk
How Does the Address Verification System Work?
The address verification system is the following.
- The end-user registers and provides the necessary documents for address verification
- The system uses the OCR technology to capture information from the records
- The software cross-checks the data from multiple documents to ensure the originality/authenticity of the data
- The address verification gives final results to the user in cases where the given documents are original. If the client tries any tricks, the AI system rejects the documents immediately and informs the company about the manipulation. Later on, it is up to the company whether they want to perform any other verification system or not
To sum up, the traditional KYC procedures are not in alignment with recent KYC compliance. They take longer yet give dissatisfying results to the clients (i.e. too many errors). For financial institutions, the manual KYC procedures can be hectic and resource-ineffective in the digital age. This is where they must opt for artificial-backed KYC verification systems for effective fraud prevention. The automation features enhance the client identity verification process and support adherence to KYC compliance.