AML/KYC Compliance: Keeping Financial Institutions in Line

An AML/KYC compliance program’s objective is to discover and counter the crimes like terrorist funding, money laundering, and others having similar financial nature. KYC and AML regulations and practices are mandated by governments and official enforcement bodies. Various financial firms use AML/KYC software to screen their clients. This is because there is much too much on the line for financial firms to ignore the rising importance of AML/KYC compliance.

What is AML Compliance?

AML is a framework that incorporates a number of cybersecurity and enforcement procedures aimed at detecting online financial fraud before it happens. Clients’ identities are checked before they are onboarded as authorized users in this procedure. Furthermore, the system looks for any reported or dubious transactions involving a certain client.

What is Meant by KYC Compliance?

KYC protocols include all steps necessary to verify that their clients are real, as well as analyze and manage risks. These client onboarding procedures aid in the detection and prevention of money laundering, terrorism funding, and other forms of illicit corruption.

Identity card verification, face authentication, document verification, and biometrics are all part of the KYC procedure. To prevent fraud, businesses must adhere to KYC and anti-money laundering requirements. 

What is E-KYC?

E-KYC is a procedure that uses authentication tools to verify a customer’s identity and address digitally. The retrieval of digital data from government-issued chip-based ID cards (which are ICAO 9303 compliant) or the use of a face verification tool for online identity authentication is an example of eKYC.

The Problem with Former KYC/AML Processes

It is now self-evident that organizations require a KYC/AML compliance solution in order to complete the customer onboarding process. So, let’s take a glance at the various sorts of KYC/AML compliance services. AML/KYC compliance service providers are not a new concept. In retrospect, the manual processes were either carried out by the organization’s employees or by third-party compliance auditors appointed by them.

Additionally, even third-party compliance agents were ineffective since they relied on primitive investigation methods and did not offer online services. Due to technology improvements, however, there should be no difficulty in deciding between manual and digital solutions. Because technology breakthroughs have advanced to the point where AI-powered ID verification services are the talk of the town. So, automated video KYC providers are here to stay and take their rightful place in the market.

Comparing the Manual and Digital KYC/AML Providers

When we compare the two processes, we see that traditional procedures have no advantage over digital services. It would be reasonable to state that the comparison isn’t fair because the automated solutions are far superior in every manner.

• Automated AML/KYC compliance solutions are superior at detecting various document patterns such as guilloche, OVI, and so on.
• The online KYC and AML solutions have a remarkable accuracy rate of above 98%.
• Digital solutions completely eradicate human-caused mistakes while saving a lot of time and money.
• The tedious custom of standing in line for hours at the bank has been eliminated.
• It’s well suited to the social distancing rules amid Covid-19.

How to Employ the Most Efficient Service?

If a company wishes to use AML/KYC tools, it should prioritize its needs first. When faced with a vast list of digital AML/KYC compliance services, it might be difficult to decide which is the best. Nevertheless, if you’ve created a checklist based on your most critical requirements, making a decision won’t be difficult. Regardless of the solution employed, they must assure your compliance with regulatory measures. Additionally, if you are still unsure, don’t worry since we have compiled a list of characteristics to look for in a service. The following services are described below:

• Biometric technology such as facial recognition must be included in the AML/KYC provider’s solution.
• They must have the ability to identify advanced document forgery techniques.
• For extracting data from e-documents, they must utilize OCR.
• Their user policy and pricing structure should be transparent and public.