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How KYC Solutions Will Benefit the World of Finance

KYC is the procedure to determine the authenticity of customers to protect the business from fraudulent activities & terrorist financing.

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How KYC Solutions Will Benefit the World of Finance

Know your customer (KYC) is the procedure to determine the authenticity of customers to protect the business from fraudulent activities and terrorist financing

It is almost impossible to miss the terms KYC and AML in the world of banking or finance. KYC laws were introduced in 2001 after 9/11 as part of tightening financial laws to detect any kind of terrorist behavior. Today, every legal and financial operation require KYC Compliance in some form.

What’s the need for KYC Authentication

One may assume all the paperwork involving KYC is tedious and tiresome, but it is highly important as well. The main purpose of KYC is to prevent any kind of identity theft, financial fraud, money laundering, and terrorist financing. Through the use of efficient KYC solutions, the company can better know their customers and avoid any potential risks accordingly.

KYC and AML

AML stands for Anti-money Laundering and it includes law, policies, and regulations to combat money laundering and generating income fraudulently. At the core, KYC/AML is connected although they are different. As established above, KYC includes the verification of the customer and their financial dealings. Similarly, AML consists of KYC solutions, risk assessment and risk-based AML policies, internal audits, AML compliance.

Virtual Identity

KYC and Cryptocurrency

The main idea of cryptocurrency is anonymity and KYC is the exact opposite of it. So why is KYC so important in the crypto world? The reason is simple. Due to the anonymity presented by the digital currency, it is highly lucrative for terrorists and fraudulent people. To ensure that the digital currency is not being used illegally, it is highly important to provide KYC solutions to digital exchanges. The process of KYC for banks and digital exchanges is the same as it requires Proof of Identity (POI), Proof of Address (POA) and other relevant documents.

KYC Solutions – A List of Known Measures

To run an effective KYC procedure, some important elements are necessary. Let us examine them.

Customer Identification Program (CIP)

To know about the validity of your client and to ensure they are who they say they are, it is important to properly identify your customer. Identity theft is far too common and widespread and according to statistics, over 16.7 million US consumers were affected by identity fraud resulting in the theft of $16.8 billion in 2017.

The main requirements to open a financial account are:

  • Name
  • Date of Birth
  • Address
  • Identification Number

While gathering this information is enough, the company must ask the client for relevant documents and check the authenticity of these documents at a suitable time.

Customer Due Diligence (CDD)

You have to trust your client and for that purpose, you have to perform CDD on them. Customer Due Diligence is the process that involves verifying the authenticity of your client protecting your organization from any potential terrorists or fraudulent people. There are three levels of CDD:

  • Simplified Due Diligence (SDD) which involves low money accounts and the risk for money laundering or terrorist financing is low.
  • Basic Customer Due Diligence (CDD) is information taken from all the customers to perform checks.
  • Enhanced Due Diligence (EDD) involves collecting more advanced information from high-risk customers.

Ongoing Monitoring

It is not enough to check your client only once and for that purpose, you would need a software that can monitor your clients regularly. Any spike in the client’s activity or unusual cross-border account activity etc. has to be monitored closely.

Helpful Resources:

1. Why is Cybersecurity Important For Enterprises?

2. 5 Website Security Tips Every Employee Should Know

3. Get VPS Hosting For Your Websites For Better Results

4. Top Ten Blockchain Applications That Are Transforming Industries

5. 6 of the Best Wireless Security Cameras You Can Get in [2019]

6. How to Protect WebSites Against Attackers or Hackers by using “X-Security Headers”

We are an Instructor, Modern Full Stack Web Application Developers, Freelancers, Tech Bloggers, and Technical SEO Experts. We deliver a rich set of software applications for your business needs.

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Cryptocurrency

Should Your Business Accept Cryptocurrency Payments?

Cryptocurrency users have grown in number in recent years, and so has the variety of cryptocurrencies they are adopting.

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Ethereum Cryptocurrency

The payment options you accept in your physical or online store can be important in convincing your would-be customers to complete their transactions with you. If a customer cannot find their preferred payment option in your store’s list of accepted payments, they might not push through with their purchase and look for a business that aligns with their preferences.

Losing business in this way can be devastating for an establishment trying to set itself up for success in the digital age. As such, businesses should carefully consider whether or not to accept payments in the form of cryptocurrency. Cryptocurrency users have grown in number in recent years, and so has the variety of cryptocurrencies they are adopting.

Would it be a good idea to add this mode of exchange to your establishment’s list of accepted payment methods? In most cases, the answer is yes—especially if you’re eager to enjoy the following benefits and prepared to deal with the complications that come with it.

1. The Pros and Cons of Transacting in Cryptocurrencies

Having a Bitcoin, Ethereum, or Monero wallet for receiving cryptocurrency payments from your customers can provide you with the following advantages:

2. Access a Wider Range of Customers

Once you start accepting cryptocurrencies in your digital or physical store, you make it easier for techie customers to purchase your products or services. Your market will not be limited to people who pay in cash or credit, as it will also include a portion of the people who have invested in cryptocurrencies in the past few years.

You’ll also be able to accept payment from anyone from anywhere, given that you can live up to your side of the bargain by delivering your goods or providing your services to the place where the customer indicated.

3. Ability to Provide Better Customer Experiences

Privacy is becoming rarer these days, and many customers would like to use their assets without compromising their data or being subject to scrutiny. Using cryptocurrency, your business is catering to their needs without risking their personal details. The same can be said for your business, as the protection offered by transacting in cryptocurrencies goes both ways.

4. Conduct Business with Lower Transaction Fees

One of the main draws of accepting cryptocurrency is a lack of a central system to regulate the flow of coins and tokens. This allows individuals and organizations that transact in cryptocurrency to choose an intermediary that can offer them the most favorable transaction fees.

Cryptocurrencies Bitcoin

Instead of paying 2 to 4% of each transaction to a credit card company or an intermediary, a business can cut down that cost or even eliminate it entirely. Also, there’s no need to wait for payments to clear foreign banks when transacting with crypto, even if the person paying you is based in another country.

At the same time, accepting cryptocurrencies also opens up your establishment to the following risks:

5. High Level of Price Volatility

It’s a well-known fact that cryptocurrencies are quite volatile. The price of the coin you use, BTC, ETH, or XMR, can change dramatically in a day. This, in turn, will affect how you will translate the value of your cryptocurrency assets and include them in your financial records.

You need to be able to quickly and regularly exchange the crypto coins in your wallet for digital or physical cash to protect your business from the drastic changes that the cryptocurrency market often goes through.

6. Technical Barriers and Upkeep

Cryptocurrencies are still developing and will continue to change to reflect the communities that support them. It’s a must to familiarize yourself with the current technologies behind this asset.

Still, you also have to keep an eye out for up-and-coming developments that can impact the coin you support and the community behind it. You need to be prepared for the changes this asset will continue to go through if you want to use it effectively for your business.

7. Regulatory Uncertainties

Cryptocurrencies offer a fairly new way of trading, as the first cryptocurrency was only released in 2009. Laws can be pretty slow in keeping up with technology, and digital coins and tokens can sometimes exist in regulatory limbo.

This can mean that, in many places, the people and organizations that use cryptocurrencies cannot expect the same level of protection afforded to consumers who use more traditional means of trade and exchange, such as fiat money and credit cards. It can also be difficult to determine how cryptocurrency assets should be declared in forms and regulatory reports.

There are many benefits when catering to customers who wish to conduct their business using digital coins. Accepting payments in the form of cryptocurrency as early as now can boost your establishment’s reputation among progressive-minded customers who see the role that crypto coins and tokens will play in the future.

Also, being a part of the cryptocurrency community early on will enable your business to easily adapt to future technologies that may develop from such a dynamic environment.

However, it’s important to consider whether your business is prepared to face the possible complications of going this route. Only by being fully aware of these risks and possibilities can you maximize the opportunities that cryptocurrencies present to your establishment.

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