Perpetual KYC Due Diligence: Know Your Customer (KYC) solutions refer to the legal requirements that lawmakers have introduced for protecting businesses all over the world and their customers. In the context of payment scams, money laundering, ID theft, and terrorism financing cases, financial service providers are perplexed about how to deal with the problem timely and powerful.
Only the implementation of the latest KYC methods can streamline customer onboarding by ensuring foolproof crime prevention. In this way, financial institutions must adopt the latest digital solutions to achieve their objectives. Utilizing perpetual kyc due diligence services enables banks to verify consumers’ IDs, do instant risk assessments, and verify sources of funds. The following blog highlights how an intelligent know-your-customer process streamlines daily banking operations.
Understanding the Significance of Perpetual KYC Due Diligence Systems for Banks
Financial firms must perform know your customer process in order to discourage high identities from entering their system. Cybercriminals use sophisticated techniques to bypass the security protocols of businesses and achieve their goals. In the case of money laundering, they want to hide the source of money by flowing it through the mainstream financial systems.
In present times, firms need the latest digital solutions like perpetual kyc due diligence solutions to actively fight fraud and provide a positive experience to their customers. The traditional approaches are susceptible to errors and prone to exploitation by hackers. Moreover, they do not facilitate compliance with AML/KYC guidelines. In this way, traditional system users can encounter non-compliance repercussions and credibility loss. E-KYC solutions protect financial institutions from external attacks in real time. This way, clients can enjoy unbeatable security with the help of AI-driven solutions.
West African Interpol investigated the theft of around $1 million from multiple bank accounts. This money laundering attempt was from an organized group named Black Axe. In this way, the perpetrator from New Jersey will be incarcerated for about 78 months. Such types of cases highlight the loopholes in banking service providers’ systems. This is where the application of the latest digital solutions becomes mandatory for protecting the systems. Moreover, AI-powered systems need effective, cost-effective, and time-saving for modern-day corporations. Intelligent perpetual kyc due diligence systems are highly reliable and profitable. Thereupon, they validate consumer IDs in real-time and highlight fraudulent activities early on.
Fighting Fraud with Perpetual KYC Due Diligence
Validating customers’ IDs, verifying sources of money, and preventing fraud are the main benefits of the above smart solution. Moreover, banking firms can monitor clients’ activities and track their exchanges for ensuring a positive experience. This way, banks can stay put with AML/KYC requirements and evade hefty fines. Utilizing perpetual KYC due diligence solutions enables financial firms to discourage external attacks powerfully. According to the international guidelines, know your customer process should be followed in the following way:
Customer Identification Program (CIP)
Banks should obtain personally identifiable information from users during the onboarding process and calculate their risk factors. This is really important before extending their services. In this way, banking service providers must ask for full names, Dates of Birth (DoB), addresses, and Social Security Numbers (SSNs).
As per the local standards, financial firms must obtain other Personally Identifiable Information (PII) and secure it in well-encrypted data servers. For this purpose, customers must provide government-issued documentation only. This is really important in the context of perpetual KYC due diligence and providing a positive experience to users.
The latest digital systems also cross-check the user data against global sanction lists to identify high-risk entities (e.g., PEPs). In this way, it is a foolproof system for fraud prevention. For guaranteeing high customer satisfaction, the KYC authentication system guides consumers throughout the process.
3 Types of Review Procedures
The next critical step in the perpetual KYC due diligence procedure is CDD which is about risk examination linked with clients’ profiles. There are three types of review procedures conditional on the customer IDs.
Simplified Due Diligence (SDD)
It is the level of due diligence applied to customers’ profiles that have a low risk of money laundering or other crimes.
Enhanced Due Diligence (EDD)
Customers showing a high risk of money laundering or other crimes go through EDD. This phase helps enhance security by cross-examining data against global sanction lists. The review process asks for in-depth information as compared with the CDD process.
Customer Due Diligence (CDD)
It is the general evaluation procedure that banks can use during customer onboarding. It also involves basic risk evaluation and background checks.
Concluding Remarks
Perpetual KYC due diligence solutions help streamline the onboarding process with the support of AI & ML models. In this way, financial institutions can validate customers’ IDs without errors and ensure a positive experience. Banking service providers can easily ensure compliance with AML/KYC requirements and avoid hefty fines. Hence, they can ensure fraud prevention and ensure the best customer support.
