Fraudsters nowadays are coming up with various tactics to fulfill their malicious plans. These scammers target financial institutions, cryptocurrency, and other industries for cybercrimes. The majority of black money is invested in real estate, alcohol, the gambling industry, etc. to conceal its origin. Hence, every organization in all industries needs to verify customers before onboarding. 

Customer verification through traditional methods is time-consuming and repels clients from reaching out to your business; therefore, digital client verification can help. What is KYC and how can it help? KYC means Know Your Customer that allows businesses to verify whether the client they are onboarding is legitimate or not. Through the digital procedure, it only takes a few seconds to verify the clients and secure your business from fraudsters. Organizations need KYC and here is what you must know about its process.

Elements of Effective KYC

Every procedure has some special elements that enhance its efficiency. KYC has three elements that boost its efficacy. 

Customer Identification Program (CIP)

How can you ensure that someone is actually who he or she claims to be? It is impossible without an extensive verification process and cross-checking original documents. Identity theft cases are increasing significantly worldwide and approximately 16.8 billion dollars were stolen in the US in 2017 through identity theft. The US government has mandated that everyone must have a verified identity for financial transactions in the CIP. The fundamental requirements of CIP are:

• Name 
• Date of birth 
• Address
• Identification number

Customer Due Diligence (CDD)

For every institution, the first step is to identify whether the client is trustworthy or not. Customer Due Diligence (CDD) is vital to check if the client you are planning to onboard is credible. It is a critical element that cross-checks the client details with sanction lists, PEP lists, criminals, and terrorists. Customer Due Diligence has three levels:

• Simplified Due Diligence (SDD) – money laundering risks are low and extensive CDD is not necessary 
• Basic Due Diligence (BDD) – assesses the risks associated with the client
• Enhanced Due Diligence (EDD) – for high-risk clients with higher risks associated with them 

Ongoing Monitoring 

Verifying once in a lifetime is not enough when everyone is finding better ways for scams. Ongoing monitoring helps you to keep a check on all your clients at periodic intervals. The right criteria for ongoing monitoring include:

• Does the transaction amount match the client’s stated purpose for account creation? 
• Is the information up-to-date on the account?

The vitality of eKYC in 2020

Businesses are taking the digital road to achieving their goals. Fraudsters are not stepping back either, and they are developing faster ways to achieve their goals. Using electronic or eKYC can assist all businesses in verifying their clients faster and more accurately. In the digital process, organizations can also choose video KYC to be more vigilant in customer onboarding. It is a cost-effective, fast, accurate, and adaptable method for verifying clients in the industry. Moreover, securing customer information is also convenient. Firms are improving customer experience through a better verification system.  

Conclusion

The rising cybercrimes are threatening all business operations, especially in the finance, alcohol, online dating, gambling, and the cannabis industry. Hence, there is a dire need for robust verification procedures to ensure the security of the platforms. Know your customer verification is crucial for firms to filter suspicious individuals and onboard honest individuals. Cross-checking high-risk customers are also convenient through KYC. There has been the latest introduction to the process and now, video KYC is making the process more straightforward.