The world is getting smaller. And with the growth of online lending, it's becoming more of a global economy than ever before. As such, you are operating in an increasingly interconnected environment and as such need to be just as mindful about KYC (Know Your Customer) compliance issues - not only for your borrowers but also for your partners, suppliers, and other 3rd parties that you deal with on a day-to-day basis. KYC policies can vary from country to country so this post will focus on KYC requirements in the US and UK markets.
Account fraud in the
financial industry is on the rise. In order to meet compliance requirements and reduce account fraud, KYC (Know Your Customer) policies should be implemented for borrowers, partners, and suppliers. KYC regulations vary by country so this post will focus on KYC requirements in the US and UK markets.
Understanding KYC Compliance
KYC compliance refers to a process of
identifying and verifying the
identity of
customers in order to obtain information about them that is needed for
AML (
Anti Money Laundering) purposes. KYC policies should be implemented at an early stage in order to prevent fraudsters from taking over your account.
KYC Requirements in the US:
In order to be compliant with
AML directives,
financial institutions must comply with
customer identification programs (CPIC) that are aimed at
identifying customers who may pose a risk of money laundering, terrorist financing, and other criminal activity. KYC programs require
financial institutions to develop an in-depth understanding of their
customer's business activities that could potentially expose them to a risk for money laundering or terrorist financing.
KYC Requirements in the UK:
KYC policies are mandatory under the new Proceeds of Crime Act 2015 (PCA 2015) and must be followed by all UK
financial institutions. KYC requirements aim to protect against the criminal exploitation of
customers, with a specific focus on vulnerable groups such as children or those who are socially excluded from society.
Account Fraud Prevention & Reduction Strategies:
KYC should be implemented at an early stage in order to identify potential risks associated with KYC compliance. KYC policies should be implemented for borrowers, partners, and suppliers in order to comply with KYC regulations.
KYC and IDV are two components that should be integrated into account fraud prevention/reduction
strategies as KYC policies help
financial institutions meet compliance requirements while IDV
software helps to collect data from potential KYC fraudsters through social media platforms such as Facebook, Twitter, LinkedIn, etc.
The Difference Between KYC and IDV
KYC and IDV are the two most important components for account fraud prevention/reduction
strategies. KYC compliance refers to a process of
identifying and verifying the
identity of
customers in order to obtain information about them that is needed for
AML purposes, while IDV
software helps
financial institutions by collecting data from public sources such as social media networks or public records.
In order to prevent and reduce account fraud, KYC should be implemented at an early stage in order to identify potential risks associated with KYC compliance. KYC policies should be implemented for borrowers, partners, and suppliers as these
individuals are all susceptible to account fraud or IDV networks such as social media which can lead them into becoming a victim of KYC fraud. KYC and
IDV are the two most important components for account fraud prevention/reduction
strategies.
KYC compliance refers to a process of
identifying and verifying the
identity of
customers in order to obtain information about them that is needed for
AML purposes, while IDV
software helps
financial institutions by collecting data from public sources such as social media networks or public records.
