In the current context of the digital-only world, not only financial institutions need to comply with regulatory standards but also entities operating in the corporate sector. A wide array of vendors offering services in e-commerce, crypto, online gaming, insurance, healthcare, and banking need to carry out due diligence procedures before they associate ties with potential clients. In order to avoid non-compliance penalties and heft fines imposed by financial regulators, businesses need to implement Know Your Customer (KYC) and Anti Money Laundering (AML) procedures in their daily tasks.
While keeping intact these standards are essential, addressing the concerns of the end-user are also significant. KYCC or Know Your Customer is the process of understanding the direct end of your first-hand client. While having a look at how businesses meet KYCC needs and bank on customer verification protocols.
What is Know Your Customer?
The famous banking term KYC stands for Know Your Customer and entails all policies, procedures, and methods that corporate and financial entities take in order to identify and verify their customer’s identity. Staying compliant with KYC standards is a mandatory regulatory requirement for financial entities like banks, insurances companies and cryptocurrency exchanges, KYC is usually performed during the early stage of custom onboarding where personally identifiable information is collected from the user using their authentic ID documents issued by the government.
The KYC process is intended to make sure that safe and secure customer onboarding takes place and that only legitimate customers are allowed to open accounts with the business. Below are listed some aspects of the KYC verification process:
- Identify and authenticate the end users identity
- Make sure that the financial history of the client is legitimate and authentic
- Perform a risk assessment of the customer using background checks
How is KYCC Different from KYC?
KYCC is a relatively newer term than KYC, and corresponds to Know Your Customer’s Customer. Staying compliant with KYCC regulations entails a lot more than just making sure your business partner is a verified entity or organization. It requires detailed verification of a business’ end-users that are direct clients of either your partner entities or are a third-party affiliate organization.
For instance, you are a service provider that runs an e-commerce store, and you recently acquired a service that verifies your direct customers. The verification of your clients is the responsibility of the service provider which you started using services of. This means that the verification provider needs to take into account KYCC compliance so that eventually you can deliver a purposeful experience to your customers/clients.
Corporate Advantages of KYCC
To survive the intense market competition these days, businesses need to keep globally-set rules and regulations. This is important to keep bad actors from associating ties with legitimate businesses. In this regard, businesses can reap the following benefits by implementing KYCC compliance in their daily operations.
1. Preventing Digital Fraud
KYCC is usually carried out during the early stage of the customer onboarding procedure, which is part of the Customer identification Program (CIP). Service providers now offer AI-backed solutions in the market that are competitive, accurate and offer on-the-go authentication for end-users. These KYCC services allow businesses to mitigate ID fraud, identity theft, account takeovers, and other forms of cybercrime.
2. Upsizing the Security Protocols
Today, KYCC or end-user verification are performed using state-of-the-art identity verification solutions powered by artificial intelligence models. With a considerable accuracy rate and with the utility of automated authentication, fraudsters can be caught off guard and prevented from succeeding in their dubious purposes.
3. Banking on Better Customer Engagement
Using KYCC protocols, activities on the users end can be closely monitored by the service provider or business. That being said, this develops transparency and mutual trust between both the customers and the business since they are aware of what information is exchanged. This creates better opportunities for a risk-free environment so that businesses can bank on improved customer engagement.
4. Conforming with Regulatory Requirements
Global financial watchdogs such as the FinCEN (Financial Crimes Enforcement Network) European Union, FATF (Financial Action Task Force) FINTRAC, and AUSTRAC have certain KYCC compliance requirements for businesses operating in the financial industry. Those entities who fail to comply with these practices have to bear heavy financial losses and penalties depending upon the nature of violation. This can ultimately damage their brand reputation and customer base in the long run.
5. Offering Minor Protection
Merchants of age-restricted products and services such as online casinos, e-gaming platforms, tobacco and alcohol online stores have the moral and social obligation as well as regulatory requirements to protect minors from indulging on their platforms. This is important to protect the wellbeing of children who are not able to decide what’s better for them on their own. KYCC methods can allow companies to stay one step ahead of age verification laws keeping intact minor protection standards in the first place.