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January 28, 2024 5 min read

KYC Automation: Streamline your Onboarding Process and Comply with AML Laws

Home » AU10TIX Blog » KYC Automation: Streamline your Onboarding Process and Comply with AML Laws

Amy LurieSenior Editor

Are you looking to streamline customer onboarding while complying with anti-money laundering (AML) laws? KYC automation can help! This blog post will cover the differences between KYC and AML, the laws concerning KYC and AML, and how KYC automation can help you save money and optimize your customer’s experience while ensuring compliance with all applicable regulations.

What is KYC Automation?

Know Your Customer (KYC) is a pivotal standard across numerous industries, ensuring that businesses can thoroughly verify a customer’s identity and assess any risks associated with the customer relationship. It involves customers providing a detailed personal identification profile and is structured around three foundational components: the Customer Identification Program (CIP), Customer Due Diligence (CDD), and Enhanced Due Diligence (EDD) for scrutinizing a customer’s account post-opening. This framework is essential for preventing fraud and complying with regulatory obligations, safeguarding both the business and its clientele.

Building on the foundation of traditional KYC processes, KYC Automation introduces the use of sophisticated technology to streamline these essential checks. By employing remote identity verification software, KYC Automation allows for the swift and secure collection and validation of identity documents, including passports and government-issued IDs. This innovation not only accelerates the verification process but also significantly cuts down on the costs and labor associated with manual verifications. Moreover, it enhances compliance with laws and regulations by ensuring that verifications are conducted thoroughly and systematically. As we advance, an increasing number of banks and financial institutions are moving towards implementing KYC Automation, aiming to provide a more efficient, secure, and user-friendly onboarding experience. This shift marks a significant step forward in the evolution of customer verification, highlighting the industry’s commitment to leveraging technology for improved security and operational efficiency.

What is the relationship between KYC and AML?

KYC verifies a customer’s identity, while Anti-Money Laundering (AML) involves detecting and reporting suspicious activity to prevent money laundering. Banks are subject to strict laws concerning KYC and AML, including a requirement to implement policies to monitor customer activity and report suspicious transactions. Banks must also ensure compliance programs meet regulatory requirements and establish reporting policies for suspicious activities.

KYC is a broader set of guidelines for verifying the identity of customers, which usually includes questions such as whether the person opening a bank account is a real person, if they live at the given address, and if they are of legal age. KYC also involves ongoing monitoring to ensure the customer is still eligible for services. Automated KYC solutions can help streamline this process by utilizing remote identity verification.

AML falls under the KYC regulations but focuses more on financial activities and money laundering. AML consists of use cases such as automated KYC solutions, enhanced due diligence, reporting policies, AML screening, and compliance program requirements. Examples of money laundering activities include fraud and tax evasion. Businesses must comply with AML regulations and have a clear plan to reduce the risk of money laundering.

Why is it essential to comply with KYC and AML Regulations?

Businesses have an ethical responsibility to adhere to KYC and AML laws to help prevent money laundering and other financial crimes. Failure to comply can result in fines, sanctions, or criminal prosecution. By implementing automated KYC processes, companies can ensure they comply with relevant laws and regulations while streamlining customer onboarding. Additionally, AML screening tools can help businesses identify suspicious customers before they can engage in any illegal activities.

How can KYC Automation help my business?

KYC verification is essential to many businesses’ onboarding processes. Unfortunately, manual KYC is expensive, inefficient, error-prone, and time-consuming.

An automated KYC process can offer numerous benefits, such as saving time and money while optimizing user experience. It can also help businesses meet their KYC and AML compliance requirements while providing an efficient way to manage customer onboarding and identity verification. An automated process also increases accuracy, delivers faster digital onboarding times, improves customer experience, and reduces manual effort.

Benefits of KYC automation over manual KYC

KYC automation marks a significant shift in the way businesses conduct identity verification, moving away from labor-intensive manual processes towards a more streamlined, technology-driven approach. Here are the key advantages of adopting KYC automation over manual processes:

Increased Efficiency: Automation speeds up the verification process by removing the need for manual data entry and document checks, enabling quicker customer onboarding.
Enhanced Accuracy: Utilizing AI and machine learning reduces the risk of human error, ensuring that customer information is verified with high precision.
Cost Reduction: By automating verification tasks, businesses can lower the expenses associated with manual processes, allowing for better resource allocation.
Improved Customer Experience: A faster and more straightforward verification process leads to a better onboarding experience, increasing customer satisfaction and loyalty.
Stronger Compliance: Automated systems can be quickly updated to meet changing regulatory requirements, helping businesses stay compliant with less effort.
Fraud Prevention: KYC automation employs advanced techniques to better detect and prevent fraud, protecting businesses from potential financial and reputational damage.

Transitioning to KYC automation offers practical and impactful benefits for businesses looking to enhance their verification processes, compliance posture, and customer relationships.

The case for automated KYC – real-life applications

Digital customer onboarding

With the emergence of digital banking, more and more customers are signing up online. This increases the risk of money laundering, as online financial institutions and other e-commerce platforms don’t have physical contact with the customer to check their identity. Automated KYC processes combine technologies such as identity verification software, enhanced due diligence, AML screening, and reporting policies to confirm the identity of customers quickly and securely without needing physical contact.

Age verification

Age verification is a critical part of automated KYC and remote identity verification processes. It helps businesses comply with AML regulations. Online gaming platforms, online casinos, alcohol retailers, and tobacco vendors use remote age verification as part of their KYC processes to ensure they are not serving minors.

Driver registration

Driver verification is an important process for ride-sharing services or delivery companies that rely on drivers to complete customer orders. Identity verification ensures that the driver is who they say they are by verifying their identity documents such as a passport or driver’s license. AML screening helps to protect companies from financial crime and money laundering by detecting suspicious patterns of behavior in the driver’s banking activities.

Is KYC convenient for automation?

Absolutely. KYC is ideally suited for automation, enhancing both efficiency and accuracy. AU10TIX's automation solutions transform KYC into a quick, seamless process, significantly improving customer experience and operational cost-effectiveness. Automation ensures that businesses can meet their compliance needs without compromising on speed or customer satisfaction.

What are KYC materials?

KYC materials include essential documents like government-issued IDs, passports, and utility bills, necessary for verifying customer identities. With AU10TIX, the verification of these materials is automated, ensuring fast, accurate, and secure identity checks, streamlining the customer onboarding process with minimal manual effort.

What technology is used in KYC?

AU10TIX employs cutting-edge technologies such as AI, machine learning, and biometric verification for KYC. These technologies automate the verification process, enhance fraud detection, and ensure a secure and efficient identity verification process, keeping businesses compliant and their customers safe.

Wrapping up

The identity verification industry is expected to grow tremendously in the coming years. According to a recent study, the global market size of identity verification solutions is expected to grow from $9.7 billion in 2020 to $18.3 billion in 2023. This increase is due to pressure from governments and regulators to implement strict AML compliance programs and heightened demand for automated KYC processes. Compliance with KYC and AML regulations is essential for banks and other institutions to protect themselves from money laundering and other criminal activities. Automated KYC processes can simplify and speed up the customer onboarding process while providing organizations with an efficient way to adhere to applicable laws and regulations.

Take your remote customer onboarding to the next level – say “yes” to increased conversion and regulatory compliance and “no” to money laundering and fraudsters. Connect to the most powerful, global, accurate, scalable, and user-optimized KYC platform with a single API. AU10TIX has the only global identity management solution built to outsmart fraud with 100% automated technology.

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