(Newswire.net — February 6, 2023) — KYC stands for “Know Your Client” and it represents a standard in financial and investment services. Companies use it to check and verify their customers’ digital identity. KYC is implemented at the beginning of the customer onboarding process to ensure that the business is in compliance with the anti-money laundering legislation, privacy laws, and other regulations.
These are the three key components of KYC:
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Customer Identification Program (CIP) requires a company to obtain the client’s name, date of birth, address, and identification number.
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Consumer Due Diligence (CDD) is a process in which a company collects and verifies the customer’s credentials to make sure that there are no suspicious account activities and to evaluate the potential risk for the company.
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Enhanced Due Diligence (EDD) is used when additional information is necessary to prevent risks of money laundering or terrorism financing.
What industries benefit from KYC?
Some researches show that every year up to $2 trillion is laundered in the world. Banks and other financial institutions are the most affected. Yet, they are not the only ones who can benefit from KYC.
KYC solutions for business can be used in different industries. With the fast technology development, KYC is going to become the practice that many companies will have to implement in order to protect themselves.
While KYC is essential for banks, insurance, and financial institutions, it is becoming important for almost all other online transactions.
These are some of the industries that benefit from KYC:
Online sports betting – is one of the most popular forms of entertainment nowadays. On some of the most visited platforms players can make in-game purchases using real money. To do this, they have to leave their personal information and financial data.
By making digital identity verification procedures mandatory, online sports betting companies can now protect themselves from fake accounts and provide the most for the real players.
The Cryptocurrency market – is growing fast and is becoming an alternative to traditional banking services. As such, they have to follow KYC processes in order to check their customers’ identity and financial transactions.
KYC solutions efficiently evaluate potential risk factors enabling the safe use of Cryptocurrencies.
Healthcare service providers have to deal with medical identity thefts. These thefts often include misuse of medical insurance data of a person to get healthcare benefits.
KYC solutions for the healthcare industry help medical organizations to learn everything about their patients and easily determine if someone is using stolen medical and financial information.
Top 3 benefits of KYC solutions
KYC offers huge security benefits for different businesses. It protects your business and customers and prevents fraud and theft. Here are the top 3 benefits of KYC to business.
No fraud
KYC procedures confirm and validate the identity of each customer. This way it protects your security and prevents fraud, but at the same time, it protects customers’ data as well.
No money laundering
The number of money launderers is increasing each year. They use the weaknesses of the security system for their illegal activities. However, with KYC verification, anyone with suspicious intent is easily prevented from accessing the company’s data.
No data stealing
Most businesses that reach for KYC solutions deal with sensitive data. This is why KYC practice is essential, as it protects customers’ data through a detailed identity verification process.
Conclusion
The digital era and technological development bring plenty of benefits for businesses in different industries. However, it opens a lot of space for cybercrime and fraud. With KYC solutions you can ensure the safety of your business and your customers’ identity.