Feb 1, 2021

Know Your Client (KYC): Process and requirements

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Know Your Client (KYC): Process and requirements

Know Your Client, better known as KYC, is a crucial procedure for the incorporation and registration of clients and users in organizations, companies and institutions of all types and areas.

Although this procedure is applied in the onsite environment, it is of decisive importance in the online environment, where it is an essential requirement at a technical and regulatory level. It is the way that organizations establish a first relationship with their users.

Contact eID through this form to find out all the details about the Know Your Client policy and needs of your company or organization.

Defining Know Your Client

Know Your Client (KYC), is the procedure of identity verification of clients when companies wish to establish a formal relationship with them. 

This policy is presented in the form of a process, which must be carried out in the first instance so that an individual can become part of a company as a client. This is motivated by the anti-fraud measures that companies must apply, thus avoiding risks and complying with current regulations.

Know Your Client controls and processes allow clients to be onboard within a framework of absolute security and guarantees. Not only is it a process that companies are required to perform by law, but it is also a safe, agile, and simple customer acquisition process that will improve sales.

Know Your Client concept is equivalent to the term “Know Your Customer”. Find out all the details here.

Phases and requirements of the KYC process

The Know Your Client process is completely standardized and regulated; and it is made up of a series of controls, checks, phases and specific requirements that become necessary when a company wants to incorporate a user as a customer to make use of its products and services.

The process must work in such a way that a series of strict controls are applied that corroborate that the people are really who they claim to be. This completely prevents fraud and helps companies comply with regulations regarding AML (Anti-Money Laundering), privacy and formal contractual relationships.

This identity verification and the digitization of the onboarding process originated from Know Your Client policies is driving boost in customer acquisition, reducing red tape to a minimum, improving productivity and reducing costs.

Know Your Client Checklist

The way to comply with the Know Your Client standards is through a process of digital identification and registration that is adequate, secure and that complies with the most demanding standard regulations.

The streaming video identification process is adequate to carry out a secure, efficient, agile client onboarding that is supported by regulations, unlike other low-level identity verification processes such as those ones based on images and / or selfies..

Request here for free a demo of VideoID, eID’s effective and secure Know Your Client solution.

The streaming video identification process proceeds as follows:

  1. The user accesses the system and records the requested data.
  2. The user shows the front side of the identity document.
  3. The user shows the back side of the ID.
  4. The user shows the face to the camera and smiles.
  5. A series of technical and security checks are carried out on a background process by artificial intelligence and machine learning techniques. 
  6. The client is registered and can contract the company’s products and services with guarantees, security and trust.
  7. A human agent can subsequently verify the integrity of the video for added security.

Know Your Client regulatory standards

While Know Your Client standards and regulations apply across all industries, they are especially sensitive in the financial and banking industry, as well as in the insurance or investment industry.

The most prominent European regulations (benchmarks for the rest of the regulations in the rest of the world and the most complete ones) within the scope are:

  • AML5: The fifth directive against money laundering and terrorist financing entered into effective application on January 10 2020. It is the base standard that all European countries must comply with and the reference for the rest of AML regulations around the world. By eliminating borders and creating opportunities, this standard allows customers to be incorporated fully online with guarantees and security. Its successor, AML6, will continue on its way.
  • eIDAS: Acronym for electronic IDentification, Authentication and trust Services, establishes the standards for digital identification, electronic transactions, trust services and digital signature, creating a reliable environment for companies and users to operate online.

Download here for free our complete guide on AML5 and eIDAS, the main regulatory standards for Know Your Client.

Know Your Client together with Electronic Signature and Authentication

Know Your Client policy does not affect only the onboarding process and registration of users and clients but is transversal to any formal relationship that a company or organization may have with a client or user.

For this reason, electronic signature and reinforced authentication complement video identification to ensure that companies can operate and interact with their clients in a totally online and remote way while complying with current regulations and digitizing and optimizing your processes. Remarkably, electronic signature have different uses and forms that can be applied to different use cases.

Find out here how to authenticate clients with security, efficiency and agility once they have been registered.

eID, Know Your Client partner

It is important that companies and organizations, especially those framed within sensitive sectors of activity and that require greater security around their relationships with their clients, have the back of a RegTech partner that supports its Know Your Client needs.

Electronic IDentification works to develop comprehensive Know Your Client solutions that allow companies to grow while giving their users a unique and quality experience when it comes to becoming clients.

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