Verification of identity is an important process to confirm the identity of an individual. In the world where it is hard to identify if the person is right or wrong, trust is a luxury we can not afford. Doing a business involves taking a lot of risk including protecting yourself from becoming a victim of fraudulent activity.
The ability of the business and financial sectors to recruit and manage legal funds and transactions from legitimate clients is critical to their integrity. The claim of the customer is verified to know if they are providing true information. Fraudsters and scammers tend to enter a business platform using fake identity to steal from companies or destroy their reputation. Tax evasion, identity fraud, sponsorship of terrorist exercises, and other exchanges designed to assist violent criminals. Criminals illegal activities pose a serious threat to the credibility of companies and financial institutions.
Importance of Identity Verification
Proactive safety, like identity proofing, measures ensure that any form of extortion is completely eliminated in a timely manner. Data leaks, fraud, account takeover Fraud, unlawful tax dodging, and terrorism are just a few examples. Unauthorized access to internet platforms has resulted in one of many fake exercises. To combat this, banks and internet businesses must undertake KYC verification for each client throughout the onboarding process.
When illegitimate assets or fake identities are discovered in transactions, the reputation of the businesses and financial institutions involved is always harmed. Family of the identity fraud victim always blame the company whenever there is an attack. The victim blame the company because the perpetrator is hard to find.
Effect of Money Laundering
Money laundering is defined as any activity that aims to disguise or hide the genuine origins of unlawfully determined returns so that they appear to have come from legitimate sources or contain legitimate resources. If a criminal successfully launders the money then he will be able to be processed to fund criminal activities. Activities like drug dealing, terrorism, illegal weapon trading etc.
Businesses want to prevent any kind of fraud because it can harm the reputation of their business. Financial institutes and businesses can land into hot water and even get legal notice if they fail to prevent a crime through their platform. This is why many firms develop policy to tackle any criminal activity. Many of the firms verify their customer before they enter into there platform because they want to eliminate the risk of fraud.
Importance of Artificial Intelligence
Expansion and development of technology has converted the world into digitalization. The digital world has shifted many tasks online including selling, buying and making transactions. For the sake of convenience and effectiveness, customers and businesses moved online. The technological advantage comes with technological threats.
Fraudsters and cybercriminals are on the internet making the online world unsafe for customer and business transactions. Cyber criminals take the help of highly developed technology system and use fake identities so that their identities stay hidden. User verification entering into a business online platform is important to prevent the site from any fraudulent involvement.
Expansion of technology has outdated the traditional method of KYC so the company must adopt to the new technological methods. Fraudsters and scammers are smarter than before and take help of AI to commit their illegal activities. Fraudsters and criminal networks have developed a variety of innovative methods to achieve their sinister goals in the modern era. Organizations are developing systems by using AI to prevent them entering the platform. AI-based KYC verification is an effective method for identifying customer identity.
Know Your Customer Verification
Know Your Customer or KYC verification is a process of identifying customer authenticity. When a customer enters into a business platform he provides document information to verify his identity. This information allows businesses to understand if the customer is true or dangerous for business.
The use of KYC regulations or approaches has shown to be incredibly effective in detecting suspicious activity by “customers” without wasting time. A comprehensive understanding of the transactions done by the monetary institution’s clients is a critical component of a successful “know your client strategy”. It is critical that the KYC procedures in place take into account the collection of sufficient data to construct a “client profile”. The main purpose of such systems is to allow financial institutions to predict with reasonable certainty the types of transactions in which a client will most likely be trapped in.
Advance KYC Procedure
Prior to conducting business with a client, the current KYC process should include the technical side and confirmed facts that monetary institutions and other directed organizations want. KYC is the process through which a company verifies the identity of its consumers. KYC structures overseen by controllers around the world are becoming increasingly important in the fight against identity theft fraud, money laundering, and psychological militant financing.
The use of biometric identifying confirmation administration technology for precise client character confirmation has shown to provide effectiveness and comfort for businesses and consents to unofficial laws to prevent identity theft fraud, unlawful tax avoidance, and terrorism funding. Organizations are moving toward digital marketing to better expand their territories and reach more customers. The new opportunity has its risk and preventing them is important. To meet the challenges and requirements of online client acquisition, client affirmation strategies must be redesigned with appropriate improvements, such as biometric Identification.
Anti-Money Laundering
The KYC process does not end here. A single customer verification does not imply that the identification is unquestionably trustworthy. AML compliance program is essentially a concept that describes how a business analyses accounts, identifies, and reports monetary misconducts to the appropriate authorities. The continuous monitoring of financial activities is critical for detecting suspicious transactions and unusual money flows in the financial system.
AML compliance can effectively extract risk-related facts from a large number of data. AML make identity verification much easier and less risky. It has the ability to track regulatory changes all across the world. KYC verification assists in the fight of money laundering and identity theft. With the help of AI, businesses are now able to prevent and protect themselves from any kind of fraudulent activities.
