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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.

Published

3 years ago

October 17, 2019

TwinzTech

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.

Table of Contents

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.

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Blockchain

Non-Fungible Tokens (NFTs) – The Future of Digital Ownership

Non-Fungible Tokens (NFTs) are a revolutionary concept in the world of digital assets. They can transform how we own and value digital assets and create new opportunities for creators and collectors.

Published

1 week ago

March 24, 2023

TwinzTech

Non-Fungible Tokens NFTs The Future of Digital Ownership

The emergence of blockchain technology has brought about a revolutionary concept in the world of digital assets – Non-Fungible Tokens (NFTs). NFTs are digital tokens that represent unique assets, such as digital art, music, videos, and other creative works. Unlike cryptocurrencies, NFTs cannot be exchanged for one another as each NFT has its unique value and characteristics. In this article, we will discuss the rise of NFTs, benefits, and their challenges. If you want to start bitcoin, you must first invest in a reliable trading platform like bitprofit trading App.

Table of Contents

1. Rise of NFTs

NFTs have been around since 2017 but only recently gained popularity in early 2021, with the sale of Beeple’s digital artwork, “Everyday: The First 5000 Days,” for $69 million. Since then, NFTs have become a new way for artists, musicians, and other creatives to monetize their work and earn royalties. It has also created a new market for collectors willing to pay millions of dollars for a digital asset.

2. Benefits of NFTs

One of the major benefits of NFTs is the ability to prove ownership of a digital asset. NFTs are stored on a blockchain, a distributed ledger that records all transactions and ownership changes. This means that once an NFT is created, it cannot be duplicated or altered, and the ownership of the asset is immutable. This gives creators and collectors the confidence that their digital assets are authentic and valuable.

Another benefit of NFTs is the potential for creators to earn royalties every time their digital asset is sold. This is possible through a smart contract, a self-executing contract that is built into the NFT. The smart contract can be programmed to automatically distribute a percentage of the sale to the creator, which means that they can earn passive income from their digital assets long after the initial sale.

3. Challenges of NFTs

Despite the benefits of NFTs, there are also several challenges that need to be addressed. One of the biggest challenges is the environmental impact of NFTs. NFTs are created through a process called “mining,” which requires a significant amount of energy and computing power. This has raised concerns about the carbon footprint of NFTs and their impact on the environment.

Non-Fungible Tokens NFTs The Future of Digital Ownership

Another challenge is the lack of regulation in the NFT market. Unlike traditional financial markets, the NFT market is largely unregulated, which means that there is a higher risk of fraud and scams. It is essential for governments and regulatory bodies to establish guidelines and regulations to protect investors and prevent fraudulent activities in the NFT market.

4. Future of NFTs

Despite the challenges, the future of NFTs looks promising. NFTs have the potential to transform the way we own and value digital assets. With the rise of the Metaverse, a virtual world where people can interact with each other in a digital space, NFTs could become the primary currency for virtual transactions. NFTs can also be used to represent physical assets, such as real estate, cars, and luxury goods, providing a secure and transparent way to verify ownership.

5. Conclusion

Non-Fungible Tokens (NFTs) are a revolutionary concept in the world of digital assets. They can transform how we own and value digital assets and create new opportunities for creators and collectors. However, there are also challenges that need to be addressed, such as the environmental impact of NFTs and the lack of regulation in the NFT market. It is essential for governments, regulatory bodies, and industry leaders to work together to establish guidelines and regulations that will protect investors and promote the growth of the NFT market.

In conclusion, NFTs are an exciting new development in the world of digital assets, and they have the potential to revolutionize the way we interact with and value creative works. As the market for NFTs continues to grow, it will be interesting to see how this new technology shapes the future of digital ownership and the broader economy as a whole.

As NFTs become more widely adopted, we may see new use cases and applications emerge, such as NFT-based gaming and virtual experiences. Ultimately, the success of NFTs will depend on the ability of creators, collectors, and investors to navigate the challenges and opportunities presented by this new technology.