The KYC verification system protects businesses and their
customers all over the world. It also refers to the legal requirement,
introduced by the lawmakers. The system helps to avoid money laundering,
payment scams, terrorism financing case, ID theft, etc.
The implementation of modern KYC solutions can streamline the onboarding process of customers, ensuring risk-free procedures and crime prevention. The use of perpetual KYC due diligence services allows banks to verify customers' identities and sources of funds. In this way, financial institutions will achieve their targets.
What is Perpetual KYC?
Perpetual KYC (pKYC) has introduced ongoing customer due
diligence which verifies customers continuously and highlights worrisome
interactions. By consistent monitoring, companies can monitor the transactions
coming from the same verified customer.
The perpetual KYC concept began in the industry when banks
recognized the need to move to advanced verification solutions in order to
protect their customers. Today, many companies have started using it to
increase security and improve customer relationships and credibility.
Important Factors of Perpetual KYC
- Identity is not a one-off transaction, it is a
relationship
- Increases security and lessens the chance of fraud
- Enhances customers' overall experience
- Compliance and regulations
What makes pKYC Different from Ongoing KYC?
Perpetual KYC regularly updates the information of a customer through ongoing KYC monitoring. It comprises the end-to-end process from the onboarding of customers through lifecycle management.
Ongoing KYC monitoring is a key step in the journey of pKYC
using data attribution lineage in order to highlight the key attributes
relevant to risky profiles. The next phase includes the use of updated data in
order to refresh the customers' profiles to maintain up-to-date profiles.
Combating Fraud with Perpetual KYC Due Diligence
The banking firms can track their clients' exchanges and
monitor their activities in order to provide a better experience. Verifying
customers' IDs, preventing fraud, and authenticating the source of money are
the main benefits of this intelligent solution. Due to this, banks can ensure
AML/KYC compliance and can avoid hefty fines.
Perpetual KYC due diligence system utilization, allows
financial institutions to avoid data breaches and other external attacks
effectively.
Significance of Perpetual KYC Due Diligence Solutions
In present times, firms must use modern solutions like perpetual KYC due diligence and perform know your customer process to discourage fake identities from entering their systems. It will also fight fraud and will allow customers to have an overall better experience.
The traditional systems are prone to exploitation and can
have errors as they don't facilitate compliance with anti-money laundering and
know your customer guidelines. This is why smart perpetual KYC due diligence
systems provide a risk-free environment and are extremely profitable as they
validate customers' identities in real-time and highlight suspicious
activities. Document verification is also used for this purpose.
Types of Review Procedures
There are three types of review procedures that are
conditional on consumers' identities.
Customer Due Diligence (CDD)
It involves the general evaluation process that is used by
the banks at the time of customer onboarding. Background checks and basic risk
evaluation are also a part of it.
Simplified Due Diligence (SDD)
It is the basic level of due diligence and is applied to the
profiles having less chance of money laundering.
Enhanced Due Diligence (EDD)
The high risk of money laundering or crimes goes through enhanced due diligence. It helps to enhance security as it cross-examines the data against global sanction lists. It is an in-depth review process as compared to the CDD process.
Customer Identification Program
During the onboarding process, banks should obtain
personally verifiable data from customers and calculate their risk factors. It
is an important task before extending their services. In this way, banks must
ask for a customers' full name, their address, date of birth, and Social
Security Number (SSN).
Financial firms must obtain other identifiable information
and secure it in the data servers. Due to this, customers can only provide
government-issued documentation. This is really important in the context of
perpetual KYC due diligence and is also important to provide a positive experience
to users.
The advanced digital systems also cross-check the data of a user to identify high-risk entities (e.g., PEPs). In this way, it is a fool proof system for fraud prevention, having no human errors.
Conclusion
With the support of artificial intelligence and machine learning models, the perpetual KYC due diligence solutions can help to streamline the onboarding process of a customer. In this way, financial institutions can authenticate customers' identities without any human error and can provide a better experience. Banking service providers are able to easily comply with anti-money laundering and know your customer requirements in order to avoid hefty fines. Hence, they can ensure the best customer support and can prevent fraud.
