Know Your Customer Activity to Mitigate the Data Breaches and Cybercrimes
Financial crime is a significant hurdle to the success of organizations, and the companies must drive the ways to safeguard the interests of the business. Legal authorities are also finding new techniques to help discourage cyber scams. Know Your Customer is the best solution to these issues, as when the company holds the detailed information of their clients, then the chances of scams are reduced. In 2023, the revenue of the cyber security market in Kazakhstan was about $202.64 million, almost a 15% increase compared to the previous year.
Why Do Companies Perform Know Your Customer?
The companies perform Know Your Customers to ensure that the client's identity is accurate and that the user is not involved in any mysterious activity. The clients must undergo multiple verification steps; the scanner does not allow illegal people to bypass the account. The client's face, voice, finer and iris authentication is done; after this, the client's documents are verified. The know-your-customer process is done online; no actual user presence is required. The government has made it essential for companies, especially financial institutes, to comply with these regulations. Organizations that do not abide by the Anti Money Laundering (AML) regulations must face heavy fines.
What are the Steps to Know Your Customer Compliance?
The following are the basic steps of the know your customer:
Customer Onboarding
The first step is that the organizations have to onboard their clients after proper verification. For this purpose, the customers have to submit their basic information. This way, the business can ensure they are onboarding only real clients; any fraudulent activity is detected immediately.
Client Identification Programme
In this step, the business asks for documents from the client, such as name, address, identity card number, driver's license and utility bills. This step identifies the client as accurate; the back-end system ensures that the user is not involved in any mysterious activity.
Customer Due Diligence
The clients are asked to submit further documents; this is done to measure the due diligence of the user. The company checks the source of income of the user; this is done to mitigate money laundering. Through CDD, the company can know about the risk rate of their customer and then segregate them as high-risk and low-risk clients. And then they have to treat them accordingly.
Ongoing Monitoring
The best KYC in UAE feature is the continuous monitoring. There are chances that the client has sub-cited legal documents while verification, but later on, they get involved in any illegal activity. So they can cause loss to the company shortly. So, organizations have to monitor their clients continuously. In this way, they can even get the updated information of their user and then connect with them in a better way.
Reporting
After monitoring, the companies must record all the data and make a proper file. They have to segregate their customers according to their risk rate and then take measures to mitigate the risks. If, during verification, the client is involved in any suspicious activity, they immediately inform the respective authorities.
Benefits of the Know Your Customer Banking
The following are the main advantages of the know your customer:
Detect Financial Crimes
The organizations can measure the risk rate of their employees and detect fraudulent activities, money laundering and data breaches. When the company has the entire information and data of the users, then they can reduce the chances of financial scams. The financial sector needs to comply with the KYC to mitigate the issues of data breaches.
Regulatory Compliance
The business must comply with the latest regulations and these rules for the betterment of the companies, as they will preserve the credentials of the organizations. For businesses that abide by these rules correctly, a significant rise in their revenue is observed, and their brand image is improved through it.
Risk Management
When the users' risk rate is known, the companies can take measures to mitigate such issues accordingly. Organizations have built relationships with their clients according to their risk rate.
Conclusion
The rise of globalized financial transactions has enhanced the importance of the know your customer. It is essential to make sure the identity of the clients is real; they are not involved in money laundering and are not politically exposed. Compliance with Know Your Customer enhances the organization's security, preserves the client's credentials and provides seamless services. The organizations can build the users' trust by adequately understanding their demands and ensuring their client is satisfied. The happy clients promote positive word of mouth and aid the business in attracting new clients.
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