Every year banks have to pay hefty fines in the wake of non-compliance with KYC and AML regulations. As money launderers find new tricks to launder money, that’s why financial regulatory authorities also update the KYC and AML regulations with time. The sudden increase in money laundering compelled financial regulators to make regulations for KYC compliance stringent. It also affects financial institutions to comply with security standards. It has been noticed that financial organizations fined the most for AML fines with banks on top.
According to a source, the Swiss bank was fined $5.1 billion in 2019. And if we come on to 2020, we come to know that the amount of AML fines breaks all previous records and banks paid EUR 12.09 billion as non-compliance fines. On the other hand, money launderers are also a threat for banks to harm them. There is a dire need for all financial institutions, especially banks to know their customers well enough to meet KYC compliance and to stop money laundering. It can be done by following anti-money laundering regulations. Let’s have a look at what anti-money laundering is.
A bit About Anti-money Laundering
It aims to make laws, rules, and policies to prevent money laundering and stop money launderers to make their black money legitimate. Anti-money laundering helps businesses to make their KYC process stringent to avoid any loss. The Financial Action Task Force and other regulatory authorities of different countries make new rules and update policies that are required to make their system more secure. AML and KYC measures help all businesses to avoid money launderers. That’s why all financial institutions should meet AML security regulations to avoid loss.
To survive in the market, robust KYC in banks is a must to screen their customers. Now, many businesses are more focused on performing robust KYC screening to avoid massive penalties. Let’s understand KYC in the banking sector.
KYC in Banking
know your customer is the prime responsibility of all businesses to avoid any loss. KYC is the process of confirming the identity of the customer to check his financial status. It also helps to determine whether the customer is really who he claims to be. KYC in banking establishes a good B2C relationship. All banks must perform client KYC verification before opening a bank account or giving access to other services to know potential customers Although, with the changing AML and KYC requirements, it is a bit difficult for financial organizations to meet security standards. But the online identity verification services make it easy for businesses to confirm the identity of their customers before onboarding in real-time.
How KYC is Performed?
AI-based identity verification confirms the bio-data of the customer within seconds that helps financial organizations. Video KYC facilitates banks and online businesses to onboard their customers in real-time that annihilate ID scams. To verify customers through video KYC, the end-user needs to register on the business platform first. Secondly, a live video call starts with a KYC expert in which the end-user has to show a photo-based ID document to a KYC expert. In the end, the AI-enabled system cross-matched the end-user data and sends the result to the business.
Along with the video KYC process, there are other processes that facilitate the businesses to confirm the identity of their customers in real-time which enhances the security of the verification process.
AML Screening
AML screening can be done by matching the customer’s data against global watchlists, sanctions, and PEPs lists using AML datasets. AML screening helps to identify high-risk institutions and performs ongoing monitoring of customers to keep a check on their regular activities to avoid fraud. AML dataset includes the data of hundreds of global and native watchlists, sanctions, and PEPs lists that fulfill all instructions of FATF, GDPR, and OFAC. The integrity of businesses also increased as the AML dataset updates regularly that covers the record of almost all countries of the world.
Conclusion
In account of rapidly increasing AML bank fines in the last few years, banks should perform KYC compliance to avoid potential customers. They have to meet all security standards led by FATF and other regulatory authorities of their respective countries to prevent hefty fines and money laundering. Online ID verification solution facilitates businesses to provide their customers a secure platform for identity verification before onboarding. It also assists to perform KYC in banks to avoid online fraud.
