Posted by The growth of modern-day businesses is inevitable, but so is the risk of fraud attacks from cybercriminals. According to United Nations estimates, money laundering in global GDP is around 2% to 5%. This is an alarming statistic which puzzles businesses and lawmakers. For this reason, legislators have introduced the KYC compliance system to discourage fraud worldwide.
KYC & AML regulatory obligations are becoming stringent with time to discourage fraud worldwide. KYC compliance not only streamlines the onboarding procedure but also ensures a positive experience for new consumers. The article goes in-depth regarding the know your customer compliance program.
KYC Compliance Regime: A Quick Overview
KYC is a subset of the Customer Due Diligence (CDD) program that facilitates businesses to verify customer identities in real time. This way, experts can examine the risk associated with new consumers and deal with it proactively.
All businesses worldwide must identify consumers’ credentials according to KYC & AML regulations. KYC has multiple phases which help companies calculate the risk linked with client credentials. The basic KYC verification services demand Personally Identifiable Information (PII) from new customers. The KYC validation solution has a broad scope to authenticate the credentials of merchants, employees, and business partners. Nonetheless, KYC is used widely around the world because companies can modify the process according to their needs.
According to ReportLinker research, the E-KYC market will exceed 15.79 hundred million dollars by 2030, hitting a CAGR of 24.5% for the forecast period of 202-2030.
Important factors that will play an important role in growth are below:
- Reducing paperwork
- Decreasing turnaround time
- Simplifying the KYC verification procedure
Government authorities are also focusing on regulating digital currencies to remove anonymity in monetary transactions. The cross-boundary financial exchanges will also increase demand for E-KYC solutions.
Top 5 Benefits of KYC Compliance Regimes
The following section discusses five benefits of the KYC system for the modern world:
Ensuring Fraud Prevention
Combating scams is an interesting perk of using KYC screening programs. Cybercriminals use fake or stolen identities to commit suspicious activities Criminals do this to gain instant financial rewards. Fraudsters implement account takeover fraud, money laundering and phishing scams to achieve malicious goals.
The KYC compliance system supports corporations regarding efficient risk management. After calculating the risk score, KYC authentication solutions help companies to implement scam prevention strategies.
Complying With Regulatory Obligations
All businesses are responsible for following the latest international standards. This not only applies to well-developed countries but also to other jurisdictions with high-crime rates. Lawmakers keep strengthening the KYC & AML guidelines to discourage money laundering & terrorist financing worldwide. FATF is a supervisory body which has recently updated its list of member states. Other areas have their KYC compliance programs. Legislators can charge hefty fines and incur serious repercussions for non-compliant bodies. The implementation of KYC compliance can help corporations avoid the consequences mentioned above.
Streamlining Customer Onboarding & Facilitating Client Retention
Following the KYC compliance regime helps corporations to develop a secure clientele base. Performing ID verification solutions during the onboarding process communicates responsibility & care to all the stakeholders.
Companies that follow KYC compliance regimes diligently attract genuine customers from worldwide. New customers know that data will be safe from external attacks. This also wins loyalty and trust, which ensures customer retention for the long term.
Enhancing Credibility & Increasing Business Growth
KYC compliance programs support organisations to boost their market worth and gain global acknowledgement. On the other hand, non-compliance with KYC regulatory obligations exposes loopholes for fraudsters to take advantage of. If modern-day corporations do not follow the latest KYC compliance system, companies have to face heavy fines or credibility loss.
When businesses stick to KYC compliance, experts can easily grow the enterprise. This also ensures customer retention, which adds to the revenue growth of the corporation. Hence, the KYC regime increases market credibility and boosts growth.
Modernising KYC Authentication Solutions
Real-time KYC is about validating new customers’ credentials online instantly to discourage fraud. This way, there is no need to visit organisations on-site which offer a better experience to clients.
ID verification also happens through face authentication services and record validation. Experts also conduct AML screening along with KYC checks to ensure that high-risk entities cannot exploit the mainstream corporate system. Hence, businesses cannot deny the importance of KYC regimes.
Concluding Remarks
The application of KYC compliance systems can facilitate businesses to discourage identity theft and money laundering cases. Business experts can also collaborate with third-party vendors to implement the plan and avoid hefty fines from global regulatory bodies.
The latest KYC compliance system can attract genuine customers worldwide and help corporations fight fraud effectively. This way, business experts can strengthen client relationships and have a competitive advantage in a tough market atmosphere.