Money laundering cases need to be controlled, and KYC helps financial institutions block the gate of fraud. Know Your Customer is the best way to know the identity of your customers and decide if they meet the security standards.
We know that money laundering cases are increasing daily and need to be controlled. With the advancement of technologies and the extraction of unlimited information, it gets easier for anyone and everyone to barge in. The financial breach has become a common thing that must be taken care of today.
Money laundering cases are on a spike, and some approaches need to be taken seriously to maintain security.
Many financial institutions and companies have started using methods like KYC and sanction lists to prune out fraudulent cases. Know Your Customer (KYC) is important in protecting these institutions from financial fraud. Today, KYC has become a significant element in the fight against financial fraud and money laundering cases. Customer identification is one of the most critical aspects of preventing money laundering cases.
Let’s gather crucial information about KYC.
KYC, or Know Your Customer, is an important process of recognizing the identity of the clients at the time of their account opening. Simply put, banks and other financial institutions should make sure what type of clientele they have. Today, opening accounts of illicit activities is quite common, and this should be controlled by checking the background of their clients.
KYC requirements are to be fulfilled while opening an account. The institutions halt the account if the customer fails to get through the KYC requirements.
KYCC- know your customer's customer, KYB -know your business.
KYCC is an extension of the standard KYC process, which was required from the growing risk of fraud originating from fraudulent individuals or companies, hiding in second-tier business relationships. In simple words, the necessity to identify a customer's customer has come up.
Know Your Business or simply KYB is an extension of KYC to verify a business. It includes verification of registration credentials, location, and the UBOs (Ultimate Beneficial Owners) of that business. It has been necessitated to collect documents from shareholders holding 25% or more of the company’s shares.
The entries in financial institutions are unlimited and hard to keep track of the KYC procedures are adopted by banks and other institutions. These procedures involve important actions that ensure the reputation of the clients. This can protect the institutions from getting involved in complicated transactions and dealings.
Know Your Customer is an important approach to monitoring risks. This client-onboarding filter process helps avoid and identify money laundering, illegal corruption schemes, and terrorism financing. The KYC process includes ID card verification, document verification, biometric verification, and face verification. All these filters help the institutions to identify and assess risk management.
Identifying and verifying your customers is a huge task. Any company or institution that needs to undergo a customer verification process for security purposes cannot get into it manually. Checking identities and identifying risks is a long procedure, especially when the list of customers is long. No company would invest days on pruning the risky entries.
With time being limited and responsibilities overflowing, many companies started adopting easy ways to manage risks. The importance of KYC is increasing by the second. Many AML software uses the KYC approach and helps companies to avoid financial risks. The software or individual KYC systems take no time to produce the best results. The method is faster, safer, and more accurate.
If you are worried about your finances and wish to give them a protective layer, get in touch with Smart Infotech. The company introduced an AML software called AML-TRACE. This helps the companies to assess financial risks and keep risky transactions away.