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KYC steps businesses need to take to counter cybercrime

Richard Huss
Richard Huss
5 Min Read

The reshaping of the world due to the influence of technology makes businessmen rethink strategies in order to make the most out for their financial growth. With the aid technology, companies can extend their reach to customers to any corner of the world. However, this also gains the attention of criminals who have taken advantage of digitization to commit smarter crimes. The rise of such cybercrimes puts businesses in a tough fix where the need for effective security becomes mandatory.

Law regulation agencies and authorities put forward stringent compliances to tackle these crimes. Of these regulations, Know Your Customer or KYC regulations came to be introduced in 2001 by the United States as a part of Customer Due Diligence or CDD in the Patriot Act, and in 2004, the Bank of India to make it mandatory as a security check.

KYC Authentication – A necessary means to prevent fraud

The KYC Process is a procedure where a customer’s identity is thoroughly verified to prevent risks that could hurt both them and the business they interact with. Primarily it is meant to thwart away criminals from committing identity theft, other kinds of fraud, and to put a halt on money laundering and terrorist financing through AML screening and background checks that go hand in hand with the KYC process. In today’s digital age, such a check is a crucial requirement that companies and financial institutions need to meet or face immense fines as punishment on top of facing threats from incriminating parties online. But due to the influence of technology, the KYC process can be performed online using intelligent AI-powered software that brings about many benefits and reduces many risks.

What are the KYC Steps to verify identity?

Through the use of technology, the ID verification process is far less hectic and is much more seamless to perform whether done online using an automated process or remotely communicating with a KYC expert. Either way, the steps required are identical which are:

1. The customer needs to present their document containing their proof of identity. They could use any valid document such as their ID cards, passport, driving license, or bank statements, etc. This document should be shown clearly in front of the device’s camera.
2. The information on the document is captured using AI-powered OCR and extracted. According to the categorical context of their user information.
3. The AI determines the validity of the information by cross-checking it with the manually entered user information. The customer provided at the time of registering their account. Further checks are done such as examining the genuineness of the document. Looking for holograms and identification marks in order to counter the use of fake photoshopped documents thieves likely use.
4. The collected data once verified is uploaded to the back-end database to be further evaluated and approved.

Other methods of conducting KYC authentication

Besides needing documents to prove one’s identity. Other ways exist in case one way doesn’t work or meet requirements based on a business’s needs. The following ways are other possible methods of KYC authentication:

● Facial Recognition

A customer’s face gets scanned for ID verification. Where the AI uses liveness detection and depth sensing to prove a valid face. And not a photograph is shown to the camera in case an identity thieve tries to cheat the system. The scanned face is then matched with their picture in a document. Such as an ID card to prove their identity.

● Address Verification

Especially when a customer is at an online shopping site’s checkout. Needing to prove their address is a sure method of proving their identity by matching. The scanned information from their documents such as a utility bill or bank statement to ensure their entered address is truly their address.

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