Identity Verification: Necessary Documents and Steps
In today's digital age, businesses are required to adhere to strict regulations to prevent money laundering, terrorism financing, and other illicit activities. One such process is Know Your Customer (KYC) verification.
KYC Checks: The First Step in Business Relationships
Before commencing a business relationship, it's crucial to verify the identity of the client. This process involves acquiring the client's personal data, such as name, date of birth, and address, and confirming its authenticity. In some cases, businesses may also need to perform a liveness check to ensure the client is a real person.
Document Verification: The Backbone of KYC
Businesses must verify the digital authenticity of documents, checking for optical security features, absence of tampering, and photo on ID that belongs to the client. Automated document verification approaches, which use a combination of verification procedures and comparison against various open data sources, can significantly reduce costs by 43% and speed up the onboarding process.
Address Verification: Ensuring the Client's Region
Address verification is another essential step in the KYC process. It involves determining whether the client comes from their claimed region, ensuring that the provided address is valid and accurate.
CDD: Assessing the Risk
Customer Due Diligence (CDD) is a crucial part of the KYC process. It involves identifying the customer, identifying the beneficial owner (where relevant), and assessing and obtaining information on the purpose and intended nature of the business relationship or transaction.
Risk Screening: Compliance with Regulations
Businesses are required to screen customers against sanction lists, watchlists, PEPs lists, and other relevant sources to ensure they are not involved in any illegal activities. This step helps businesses comply with anti-money laundering (AML) and counter-terrorism financing regulations.
Ongoing Monitoring: Continuous Vigilance
Ongoing monitoring is necessary to identify changes in a customer's profile throughout the business relationship. This step helps businesses stay compliant and detect any suspicious activity.
The Benefits of Automated KYC Verification
Sumsub's platform, as per a Forrester Consulting report, can potentially provide a 240% ROI for companies that invest in it. Automated KYC verification not only helps businesses comply with regulations but also reduces costs and speeds up the onboarding process.
In Conclusion
KYC checks are a critical part of doing business in today's world. By following the steps outlined above, businesses can ensure they are complying with regulations, reducing fraud risk, and building trust with their customers. If suspicious activity is noticed, it must be reported to a specially designated institution, such as the UK National Crime Agency (NCA) in the UK.
In the business sector, automating KYC verification offers substantial financial benefits, potentially yielding a 240% return on investment for companies that implement it, thereby reducing costs and expediting the onboarding process.
Businesses, when engaging in financial transactions, must adhere to stringent regulations and screen clients against sanction lists, watchlists, PEPs lists, and other relevant sources to prevent money laundering, terrorism financing, and other illicit activities.
