aml checking

KYC (Know Your Customer) is the procedure of confirming the identity of every new customer. This is checked against fake, false, or synthetic identities. The customers are verified so that the financial crimes can be mitigated. Financial institutions are vulnerable to money laundering and must conduct comprehensive KYC.

In the era of digitization, there is no space for lengthy and extensive KYC procedures. Businesses need robust and quick KYC methods to deliver real-time verification results. This can only be achieved by online automated KYC verifies customers remotely. This type of KYC compliance program can ensure a seamless customer experience.

KYC Compliance

Let’s have an example from the banking sector where a new customer initiates an account opening request. Now, the bank will conduct KYC through the below steps:

Customer Identification Program

This is the first step of KYC, where a customer is identified by name. He provides his data to the banking website by filling out a bio-form. All the data collected from customers is stored for future verification. 

Personal Data includes

• Nationality
• Full Name
• Date of Birth
• Address information

The customer also uploads a live selfie for facial verification

Documents Uploading

Documents supporting the information given in CIP are uploaded to the website as an image. The government must issue the identity documents required for verification and have full information of the customer. The documents that are accepted are listed below:

• ID Card

It is the authority certificate that the person is a legal resident of that state.

• Driving Licence

This is the permission letter to a citizen that he can drive within the borders of the issuance country.

• Passport

It is an international travel document that records a person’s travel history. It is issued when a person wants to travel outside the boundaries of a country.

Data Extraction through OCR

The data on the paper document is extracted through character recognition technology. For instance, name, dob, or address. There might be a possibility that the identity document is in the native language of the customer’s country. OCR, which provides global language support, can understand and translate all languages. Sometimes, the document image can be distorted or of low quality. This could be a problem for traditional KYC methods, but not for this. OCR can align images for accurate data extraction. Modern OCR is combined with Artificial Intelligence that can read complex fonts and scripts.

OCR can help a business run KYC on multiple customers at once and set up employee accounts.

Information Verification 

This step matches the data given by the customer and extracted by OCR. A user’s selfie and image on a document are verified facially for complete identity verification.

AML Screening 

After complete verification and confirming that the person is the same as he declares to be, the customer’s name is screened through anti-money laundering watchlists. This is done to verify the customer’s involvement in financial crimes. AML watchlists have data on people involved in financial crimes. These lists collect data from all countries and keep updating them.

Consent Verification

Although this is not common, some businesses use it for extra security measures. This is the digital form of traditional connect verification. Initially, the customer must tick the checkbox “I want to open a Bank Account.” But in modern consent verification, the customer has to upload a picture of himself holding a consent note in his hands. The consent note can be written or printed as a business demands.

Concluding the Above

The discussion of KYC procedures is widespread. There are also modern methods, like video KYC or biometric KYC. The implementation cost of these KYC compliance methods varies. However, it is clear that all businesses should have a KYC compliance program. It will eradicate fraudulent attempts and give rise to legitimate business activities.