Back in time, Know Your Customer (KYC) checks were not that important, except for financial organizations. Therefore, KYC is an institution to watch out for in its client stores and transactions.
It ensures they are not prone to a money-laundering setup. Since KYC anti-money laundering checks are necessary, we need automated tools for it. Therefore, we will check the ideal automated tools available in this guide.
What is KYC Analysis?
Know Your Customer (KYC) is a necessity and standard for banks and the financial industry. This addresses a customer onboarding process that organizations must satisfy as per KYC and anti-money laundering guidelines.
Gathering customer data has two objectives. The first is to save their finances. The other is to save the client by giving them critical knowledge. This data also includes client knowledge and risk management.
Along with that, all organizations need to follow KYC checks and money laundering checks. On the contrary, banks and organizations may face hefty fines and punishments. In addition, other than these fines, the effect of such occasions can bring down the trust of your clients.
What is KYC process analysis?
How might banks and other financial institutions implement a KYC process while onboarding customers? The following five steps are vital to staying safe from scams:
To prevent financial crimes, you should gather individual data about the customer. The purpose of doing it is to have the option to recognize the person completely. It contains a manual section of personal data, identity verification, facial verification, address, debit card, and other files.
After collecting the data, please take a look at its validity. To think about it, Artificial Intelligence ought to extricate the information from the archives. This will confirm identity verification, visa, debit card, and address against the data physically entered. This check is a necessary and yet a needed step.
Validate AML Compliance
The third step is when the KYC cycle sees the client’s connections to anti-money laundering. This is a check against money laundering and other mandatory lists. Regulators worldwide are focusing on this step while evaluating banks and organizations. For instance, starting around 2001, not checking the terrorist list can be very risky for a bank in the US.
The remediation phase is a significant step in this process. It looks at your customer information and refreshes any obsolete data. The remediation includes address updates, ethnicity changes, etc.
In this step, you will send a similar form to your client to get the new information about them. All CRM and KYC apps can lessen the effort.
To wrap things up, when all data is placed and recorded, you are in a position to approve customers. Organizations should have the option to accept or dismiss customers based on their data and list checks. Banks, as a rule, accept account openings and client onboarding.
Top Features for KYC Tools You Should Look Into
Picking the right KYC software is essential, and therefore, you ought to think about these elements:
Frictionless data enrichment: This will tell you more about clients without requesting official documents. In addition, the software creates a digital impression to give you a thought of who you are managing.
Document verification: The software will determine the authenticity of the ID. It will tell if it is actual, fake, or stolen. Different software has various information sources and techniques for looking into that data.
Pay as you go pricing: In the best-case scenario, the price of your KYC software should scale alongside your use. So, there is no good reason to burn a massive amount of dollars a month if you have a minimal volume of usage.
AML features: These Softwares come with elements to check for anti-money laundering or lists for money laundering. Also, it includes looking at the list of PEPs (Politically Exposed Persons). Furthermore, it also observes transactions over a specific time.
Top 8 Automated Tools Used in KYC
Refinitiv is a top-rated analytics company that keeps an enormous list of financial data, which it can use for KYC compliance and AML compliance. When you coordinate their solution, you will get to pick the KYC model you want. You will have admittance to ideas from 100s analysts.
Therefore, these features make Refinitiv an ideal choice for KYC and anti-money laundering.
- Refinitiv has both anti-money laundering and KYC tools in one package. Therefore, it is one of the best AML software.
- One of the best things about this AML software is its information collected from analysts.
- Attention to top-level financial establishments implies that it will cost you a lot.
SEON is one of the KYC software that gives you the most informative guides. All that information is taken care of through an engine that yields risk score precise details. So, this permits you to promptly sift through scam clients or request extra data from clients with little risk.
- SEON searches 35+ web pages, including social media, before onboarding clients. This is more than some other KYC software.
- Gets results in seconds through API
- It is an actual SaaS model with a free 30-day trial.
- SEON is best utilized as a pre-KYC tool or as an instrument for additional information during a manual audit.
- You cannot use SEON to check sanction data with it.
Onfido uses its Artificial Intelligence model to confirm 2,500 sorts of IDs in 195 nations. With Onfido, you will get a liveness check, biometrics test, and, obviously, an Artificial Intelligence framework that accepts or dismisses applications. There is a special reward for manual audits for gray cases.
To wrap things up, Onfido is reasonable for both KYC and anti-money laundering checks because of its PEP screening and great features.
- Onfido can confirm about 2500 types of documents and IDs on a local and global scale.
- You can do all the checks in one go.
- You may get odd errors, which can be baffling for customers.
- While the liveness check is doable, false positives and low quality can disturb clients.
Trulioo offers ID confirmation by checking its list of 5 billion IDs in 195 nations. It gives admittance to 4,200 kinds of libraries, from driving licenses to residency NOC. It would help if you met KYC prerequisites and checked for anti-money laundering lists.
Their items, including business verification, are accessible through API.
- It probably has the most significant data set of IDs for KYC.
- KYC software prices are unclear, so it would be great to know precisely how Trulioo segments its items.
- Trulioo will not be the best fit for manual audits or overseeing risk in different regions separate from KYC.
KYC-Chain allows you to confirm IDs, run KYC compliance and anti-money laundering checks, and, maybe more creatively, influence blockchain KYC. Moreover, it highly esteems its bank-grade compliance, which can filter more than 10,000 information sources in 240 countries.
It will do so in less than 30 seconds. KYC-Chain vows to have helped over 1,000,000 customers.
- If you are looking at how a shared ledger can function to verify IDs, KYC-Chain is a decent option, to begin with.
- Crypto trades need to go through KYC and anti-money laundering checks as well. KYC-Chain has distinct features for that area.
Such tools require many users to work, and blockchain KYC is in its early stages.
Token of Trust
What will be your first step if you encounter a scam on the web? Report it to the police? Make your web security better? Your response should be to employ a better KYC tool for your benefit. That is how the Token of Trust came into existence in 2019.
The company currently offers electronic ID checks and examines the documents and ages of the clients.
- This includes identity checks, biometric proof, and even confirming age.
- The Token of Trust has excellent outcomes in various business sectors.
- Token of Trust is a costly tool.
ComplyAdvantage is another tool used to make compliance less hurtful. It offers customer screening and observation for KYC data and transaction monitoring, making it ideal for all your anti-money laundering needs. All that is done with the help of APIs, and one of its key benefits is that you can get a free version of it.
- Use APIs to connect your system to the tool.
- Offers a free and complete solution for KYC compliance reporting
- This is the ideal option for KYC and AML solutions.
- It doesn’t provide complete client profiles.
If you want video ID verification and facial recognition, Ondato should be on your list. Moreover, it claims that its KYC software is frictionless to such an extent that it will be friendly for your customers. General Financing, Swedbank, and NFT Venture use its KYC and anti-money laundering technology.
- You do not simply get video recognition with Ondato but, further, get biometrics and other checks.
- You can cover the Ondato logo to reassure clients.
- Ondato is not dependable in the case of risk assessments.
- Even though they provide a free version, you can only do transaction screening after contacting their outreach group.
Examples of Technologies Used for KYC Software
Real-time video and liveness verification
An outside company generally gives real-time ID checks. You incorporate the product into your system, and it permits clients to transfer official reports to the site. These ID records may include personal data, driver’s licenses, or residency NOC.
Pros and Cons:
Video streaming is rapidly becoming the worldwide norm for ID confirmation. On the other hand, it is thought to be high friction. That is to say, it’s an addressed issue for your clients.
Furthermore, fraudsters are great at bypassing video and ID validation with doctored information and recordings.
Another area of identity check for KYC is the utilization of biometrics. This includes face ID, voice recognition, or identity marks unique to each person. In KYC, biometrics are frequently utilized at the verification stage to guarantee that the individual is the right person for the activity.
Pros and Cons:
Biometrics is an excellent way for fast validation, yet, it’s not enough for complete verification. Along with that, there are occasions when the scanning doesn’t work appropriately.
While blockchain technology is connected chiefly with crypto, there has been a new push to use it to store and offer KYC services secretly. The idea is to capture the client ID, confirm it, and transform it into permanent open data without uncovering individual data.
Pros and Cons:
Blockchain KYC devices have a massive load of potential. They can scale and be better than conventional KYC tools. Nonetheless, these arrangements will show their actual worth once more, and more people will use them.
Digital Footprint Analysis
With digital footprint analysis, the idea is to depend on the client’s behavioral analytics, virtual presence, and online history to function correctly. Moreover, you can find out about your clients by checking what tools they are using. Therefore, an email address or telephone number, for example, can uncover a ton of data about somebody.
Pros and Cons:
Digital impression analysis is quick and frictionless, as it occurs in the background. Also, it is a distinctive method for filtering through clients and fraudsters. Nonetheless, you cannot solely depend upon it to affirm client identity before client onboarding.
AI and Machine Learning
Artificial Intelligence and Machine Learning use automated systems to speed up verification and work at a higher rate. So, whether it is for picture quality checks, record digitization, or proposing risk rules, AI can help you.
However, the issue is that you can’t re-appropriate KYC to machines. The algorithms only help you with the currently available processes.
Pros and Cons:
AI and machine learning are phenomenal in automating existing cycles, yet you should have the option to trust the nature of your tech. However, it is likewise worth considering whether you need to work with a BlackBox or white-box system
With an increase in the number of available options for KYC verification, it’s worthwhile to learn how KYC functions. In addition, you should know which structure appears to be legit for your business. Ideally, this article will be an excellent introduction to the subject, whether you need to perform KYC compliance or AML screening.