KYC, or Know Your Customer (sometimes also referred to as Know Your Client) refers to the practice where a business requests identity verification from or for its customers to estimate the risks associated with a certain transaction. It is part of the compliance effort centered on preventing money laundering. Apart from its significance in the AML context, KYC automation is vital to ensuring general customer due diligence.
Efficient as it is in terms of fraud and loss prevention, a seamless know your customer process is not easy to set up and maintain, which has been causing an increasing number of business owners to automate KYC using artificial intelligence and other advanced technology.
Where is KYC Automation Necessary?
Knowing your customer becomes especially vital in the so-called regulated sector, which includes the spheres where compliance with anti-money laundering directives is required. If there is a risk that your business acts as a fraud harbor, you need a robust onboarding verification procedure. Some of the cases include finance, represented by loan institutions and banks, law and real estate, most activities involving e-payments, accounting, tax consulting, gambling and bookmaking, and adult websites.
Professionals and businesses in the above spheres must employ a KYC procedure in compliance with applicable regulations. This includes collecting customer information necessary for verification, identifying the ultimate beneficial owner, and using secure channels for sharing customer documents on a daily basis.
To Automate or Not to Automate?
Automation means immediate additional costs. This is only natural given the long-term benefits of entrusting KYC to AI rather than human staff, but apart from this, there are certain risks associated with automating your KYC automation workflow. These are mainly related to regulatory issues, such as excluding specific populations that would otherwise be available. Another challenging task is to strike a balance between data privacy and effective anti-fraud customer verification.
Generally, though, the above risks can be reduced to a minimum with a robust automated KYC system. Instead, the transition will eliminate weak links in the current know-your-customer chain that occur due to manual labor in the data entering, verification and maintenance phases.
It’s All About Integration
A well-automated KYC procedure will minimize disruption of the established workflow that’s normally associated with manual customer vetting and the need to stay up to date in regulatory terms. Today’s solutions integrate smoothly with existing systems. They offer automation throughout the KYC automation process, from image quality checks to customer verification and fraud detection to digitalizing client documents through optical character recognition for reduced processing time. Combined with an intuitive, easy-to-navigate user interface, this leaves your staff more time for inherently manual tasks, potentially saving you human resources and thus money.
Stay in Control at Any Time
Automated KYC also translates to more granular and flexible monitoring. Without the need to manually submit entries, you can update essential customer status information in an effortless manner, seamlessly weaving the continuous verification into your deal-making practice. The same applies to compliance. With the potential for accidental inaccuracies reduced, you have every chance of meeting applicable standards.
Save Your Time and Eliminate Human Errors
Automating your workflow to make sure that you know your customer does bear certain risks. Yet, this move is likely to save you a lot of human effort and spare more than one potential mistake to make up for the cost of automation. In areas and jurisdictions where KYC is indispensable, integrating a KYC solution in your general workflow and streamlining customer identity verification has every chance of bringing your compliance and anti-fraud protection to a whole new level.