In the modern world, innovative digital solutions have helped companies to streamline their business operations and achieve their revenue goals. Unfortunately, this growth and development have also attracted fraudsters to exploit the corporate sector for instant rewards. Businesses must follow KYC compliance to implement know your customer solutions for effective fraud prevention. This will not only provide a better onboarding experience for new customers but also secure a competitive advantage in the market. The following sections highlight the benefits of applying KYC compliance protocols for modern-day corporations:
1- Preventing Fraud
A big reason behind following KYC compliance is fraud prevention, especially during customer onboarding. Fraudsters can exploit the corporate sector by using fake or stolen credentials to achieve their malicious goals anonymously. Criminals perform fraudulent activities to gain instant financial rewards.
With the use of modern technology, criminals can execute account takeover fraud, money laundering, and terrorist financing. Hackers can also implement phishing attacks to their advantage.
AML & KYC compliance facilitates businesses with accurate risk management. After risk calculation, KYC verification supports active fraud prevention measures to help businesses. Coming up with risk prevention strategies is the initial stage where KYC & AML screening protocols support organisations in various ways.
2- Avoiding Hefty Fines
As described above, all businesses worldwide must comply with AML & KYC compliance. If experts think that KYC and AML protocols are only for well-developed countries, they are mistaken. Global regulatory bodies are trying to introduce stringent KYC & AML regulations to discourage money laundering worldwide. For example, FATF is a supervisory body that has updated the list of its member states recently. The newly added jurisdictions are not well-developed countries but locations with a high prevalence of crimes. Besides, several countries have their personal KYC and AML regulatory obligations along with supervisory bodies such as FinCEN and FINMA.
Regulatory authorities can issue serious penalties to the reporting organisations if they are non-compliant. AML & KYC compliance protocols help corporations prevent fraud as well as avoid repercussions.
3- Streamlining the Customer Onboarding Process
Following KYC compliance protocols help corporations to develop a safe customer base. The application of KYC verification solutions during the onboarding process displays an organisation’s commitment towards protecting the interest of all stakeholders.
The research found that more than 60% of customers prefer an online platform that uses robust security protocols. Implementing KYC & AML screenings on clients communicates a positive message to the users that the company wants to deter criminals. Dealing with safety concerns through the application of obvious security protocols also facilitates client retention. Moreover, a lack of defence mechanisms is a key factor behind the abandonment of digital transactions worldwide.
4- Facilitating Growth
Applying AML & KYC compliance facilitates organisations to increase market credibility and ensure business growth. Sticking with regulatory obligations facilitates global acknowledgement and attracts potential investors. Besides, non-compliance with KYC standards leaves loopholes in the security systems that fraudsters can easily exploit for their advantage.
In the context of non-compliance, all businesses not only have to face financial damages but also a loss in market credibility. For instance, a Swedish bank was found to be an accomplice in a money laundering case in 2019 which decreased its market integrity.
Following KYC compliance protocols help businesses attract genuine clients by streamlining the onboarding process. In this way, customers show their trust and loyalty to the business that implements robust security protocols. Hence, the execution of KYC verification solutions facilitates the company’s growth.
5- Offering a Comprehensive Solution
Real-time KYC happens when the customers’ identity is validated quickly. In real-time KYC & AML screening protocols, the software verifies user credentials within a few seconds without using paper-based records. For ID authentication, the customer must input the data and display their ID card along with their face. The solution displays results in real-time which clients can see on their screens.
Identity authentication can only happen through government-issued records such as ID cards, passports and driving licences. Experts can also perform AML screening along with KYC protocols to validate user information by cross-checking against global watchlists. Hence, business owners can mitigate risk from clients in an effective manner.
Final Thoughts
Implementing KYC compliance measures can help businesses streamline their onboarding procedure. This ensures that only genuine customers enter the organisation and receive services from staff members.
Teaming up with a third-party vendor can offer a digital solution that is within the budget of the company. Businesses can also collaborate with the service provider to use innovative digital solutions to ensure a better experience for customers. Hence, this ensures that companies avoid hefty fines from international regulatory bodies and strengthen relationships with consumers.