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Strengthening Security Measures for Businesses With KYC Verification Process

Businesses and various other organizations from the financial sector stand on their customer’s unwavering trust. Due to reliable services, companies can attract business from legitimate customers.

Moreover, it also helps with extending the brand and its reputation. With widespread fraudulent activities, criminals pose threat to the reputation of businesses.

Some illicit activities like money laundering, synthetic fraud, and terror financing are assisting criminals with illegal activities.

When authorities find the trail involving illicit funds or stolen identities, these illegal transactions tend to hurt the reputation of businesses and other financial institutions.

Businesses lose their customer base when victims start blaming the organization for frauds that happened with them during an online transaction. During such cases, finding the perpetrator is usually untraceable. 

To trace fraudulent activities, organizations have integrated identity verification systems. Usually, among the identity verification systems, biometric solutions are mostly adopted by organizations.

Due to the strict verification process of biometric solutions, fraudsters can’t easily gain access to the system. So the question is, “how far ahead of the organizations are with identity verification solutions?” 

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Impact of IDV To Comply With Money Laundering Regulations

Usually, money laundering entails engaging with acts that are designed to conceal the criminal’s real identity. However, it appears to have been derived from a legitimate source but it’s contrary to what is usually perceived. It tends to provide criminals with control over their proceeds of crime. 

Therefore, it often fuels various illegal activities such as drug trafficking, arms dealing, and funneling corrupt politicians dirty through the system. Other criminals tend to expand their enterprises and operate through various networks. With the rapid advancement in technology and due to globalization needs of the financial industry – the financial sector of crime is becoming more challenging with time.

Complying With Federal Regulations With Identity Authentication Solutions 

The United States Bank Secrecy Act of 1970 enacted a framework under which all financial institutions are obligated to comply with various anti-money laundering (AML) regulations. Like this, various other regulations make it mandatory for organizations to keep in compliance. 

For this reason, organizations have integrated identity authentication methods to fight against money laundering attempts. This helps companies to verify the identity of true culprits and net them out of the system. 

ID verification is Not Only Important For Banks 

In the United States, before enacting the PATRIOT ACT, anti-money laundering laws applied only to a few financial institutions – mostly the banks that take deposits. With PATRIOT ACT, the implications of anti-money laundering spread to other business types and aspects that are designated as financial institutions. However, the application of financial institutions include:

  • Banks or other financial institutes that take a deposit
  • Deal Brokers 
  • Currency exchange, cash check, and money transfer businesses 
  • Car payment networks
  • Insurance Companies
  • Finance and loan companies 
  • Car and airplane dealers
  • Dealers of precious metal
  • Real Estate Broker
  • Casinos 
  • Any other businesses dealing with the cash that the treasury would designate

Complying With KYC Procedures By Integrating Identity Authentication 

Nowadays, where news travels faster than the speed of light – organizations dealing with issues regarding identity theft or stolen identity aren’t new to the world. Businesses need to strengthen their KYC policies and for this reason, they require identity theft protection solutions.

The primary objective of installing an online id verification solution is to verify your identity and grant user access. However, to verify identity online there are various options that customers can take to engage with a wider audience.

Adopting a stringent KYC process is proving to be quite effective for detecting any illicit activity. Therefore, it’s required for businesses to have complete knowledge about the transactions that are carried out by consumers within a financial institution.

Financial institutes could easily monitor any suspicious activity with verification of identity that is consistent with customer profiling. It could potentially pose a significant risk to enterprises that involve heavy fines or penalties. 

To verify id on the go, enterprises should upgrade their id verification services from a portfolio of different verification methods.

Therefore, to verify the identity of anyone – it’s gaining importance for the companies to properly use government-issued identity cards. It would help with streamlining the customer experience while reducing errors and operating time.

Junaid Tariq

Junaid Tariq is a contributor content writer. I usually write about CyberSecurity, Artificial Intelligence, Machine Learning, Fintech, Blockchain, and Finance topics.

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