A KYC check is a mandatory identity verification process for financial institutions and other companies to confirm a customer's identity; thereby preventing identity theft, money laundering, fraud, and other forms of financial crime.
KYC, or "Know Your Customer", is a set of regulatory guidelines for customer identity verification procedures. The implementation of relevant KYC procedures is mandatory among financial institutions and other companies or organizations that carry out monetary transactions, such as cryptocurrency platforms, gambling platforms, insurance providers, or nonprofit organizations.
The KYC framework can be broken down into three categories: Identity Verification, Customer Due Diligence (CDD), and Enhanced Due Diligence (EDD). These three steps ensure that a customer's identity is real, there are no financial risks associated with them, and that any potential misconduct in their financial transaction history is immediately detected and reported.
The complexity of a KYC check varies from customer to customer. For those who present an elevated risk factor, more research and in-depth verification will be required to assess whether a business relationship is plausible or even safe.
Identity verification means exactly what the name implies; it is the process of verifying a customer's identity by means of government-issued identification documents and confirming the customer's presence through facial recognition.
Customer Due Diligence
CDD is the process of researching the customer's legal history for the purpose of establishing a customer risk profile. Following the verification of the customer's identity, proving the legitimacy of their documentation, and assessing their risk profile, an account for that customer may be established at the financial institution's or company's discretion.
Enhanced Due Diligence
EDD is the continuation of KYC policies once an account has been created. EDD ensures that any suspicious activity is immediately flagged and reported to the appropriate regulatory authority.
Complying with KYC regulations is mandatory for financial institutions and other businesses that perform monetary transactions, such as online gambling or e-health service providers.
To best prevent the various forms of financial crime, those entering into work relationships that involve financial transactions are responsible for properly investigating potential clients in advance. Furthermore, if suspicious activity is detected but not reported, those responsible for reporting will be held accountable as well.
Failure to comply with KYC regulations may result in considerable fines and reputational damage to the company, in addition to potentially jeopardizing other stakeholders. Because financial crime is a serious matter that government bodies do not take lightly, the consequences for non-compliance can range from fines to the complete dissolution of a business.
However, fortunately, there are innumerous KYC solutions available for companies and institutions to choose from. KYC service providers can help companies navigate the KYC process and develop a fully compatible and compliant solution for their clients.
PXL Ident - The SaaS Solution from PXL Vision
Finding a compliant and efficacious KYC platform that can be tailored to your operational preferences as well as customized for maximum efficiency may evolve into a difficult undertaking. That is why we developed a dependable IDV solution that is customizable, decreases customer drop-out rates, and can reliably handle the identity verification part of any KYC check.
We offer indispensable expertise to guide you through the basis of every KYC check: the identity verification. With our IDV solution, you can establish compliant KYC check policies that meet the needs of your business while providing the customer with an efficient and satisfactory experience.
Our SaaS solution PXL Ident balances the best qualities to offer a user-friendly platform that is swift, accurate, and secure. Furthermore, it is designed to accommodate the needs and/or preferences of both your business and your customers.
PXL Ident harmonizes cost-effectiveness with convenience. We guarantee high security standards and KYC compliance for every use case. From banks and investment firms, to crypto and online gambling platforms, our IDV solution is compatible and compliant in every application.
The duration of a KYC check is dependent upon the method used to carry out the process. A traditional manual KYC check can take anywhere from a few hours to several days to be processed, whereas an AI solution, such as PXL Ident from PXL Vision, takes only 30 seconds to verify your customer's identity.
The documents that are generally required for a KYC check include: a government-issued ID (e.g. license, birth certificate, passport, etc.), proof of address (POA) (e.g. utility bill, lease agreement, etc.), and a clear photo of the customer's face. In some cases, proof of income (POI) may also be requested.