Identity Verification Procedure: Understanding KYC
In today's digital age, ensuring the authenticity and legitimacy of users has become paramount for various sectors, including telecommunications, financial technology, and online services. This is where Know Your Customer (KYC) comes into play, a standard that has been adopted worldwide to interact with real and legitimate users.
The KYC process is a key part of anti-money laundering (AML) and counter-terrorism financing (CTF) programs, and it helps prevent fraud, identity theft, money laundering, terrorist financing, and other illegal activities. The core components of the KYC process include Customer Identification, Customer Due Diligence (CDD), Enhanced Due Diligence (EDD), Ongoing Monitoring, and Simplified KYC Compliance.
When it comes to electronic KYC (eKYC), the process is designed to be efficient, secure, and paperless. The key steps involved generally include Document Submission and Data Entry, Authentication via OTP or biometric methods, AI-powered document and identity verification, Biometric or video verification, Cross-checking against compliance lists, Approval and onboarding, Notification and status updates.
The applicant submits identity documents such as Aadhaar, PAN, passport, or driver’s license through a secure digital platform and fills in required personal details. Verification is typically done by sending an OTP to the mobile number registered with the identity document or by conducting biometric verification such as facial recognition or fingerprint scanning. eKYC platforms use Optical Character Recognition (OCR) and AI to extract and validate data from submitted documents against government or regulatory databases.
Many eKYC processes include biometric authentication or live video verification of the customer to confirm they match the identity document submitted. Customer information is screened against global watchlists, sanction lists, and anti-money laundering (AML) databases to detect fraud or suspicious activity. Once the identity verification succeeds, the customer is approved and onboarded digitally without the need for physical paperwork. The customer receives confirmation of successful verification or instructions if manual intervention is needed for rejection or discrepancies.
Simplified KYC Compliance offers identity verification in seconds with secure and simple processes, from documents to biometrics, on any device. This method is designed to make the KYC process more user-friendly, addressing one of the challenges associated with the KYC process, which is the user experience.
In summary, eKYC streamlines identity verification through digital document upload, OTP or biometric verification, AI-based authentication, and compliance screening to enable fast, secure, and paperless customer onboarding.
The eKYC process, a modern adaptation of the KYC standard, is instrumental in the control and security of digital business transactions, given its role in finance-related sectors. It aids in the identification and prevention of illicit activities such as identity theft, fraud, money laundering, and terrorist financing.
The streamlined eKYC process, with its efficient and user-friendly features, addresses the challenge of user experience in traditional KYC procedures, thereby enhancing the overall finance business.
