KYC (Know Your Customer) is an especially relevant practice in the financial sector. Here you will be able to find out why, and its relationship with banking frauds, its problems, and how is improving it.

What does KYC (Know Your Customer) means?

KYC or Know Your Customer is the practice carried by the financial institutions with the objective of verifying the identity of their clients, in accordance with the legal requirements.

Why complying with KYC’s regulation is so important?

In todays world, the vast use of the new technologies and the internet have made necessary the use of rules that will help us fight against online fraud.

Thus, KYC answers with a legal and a global position for the rest of the financial entities.

But, what exactly is Know Your Customer?

KYC is a process of verifying and identifying a client’s identity. In other words, the process is a series of controls made to prevent having commercial relations with people related with terrorism, corruption, or money laundering.

KYC Regulation in the world

The financial sector must comply with KYC Regulation worldwide which implies that the identification process with selfies or images isn’t valid at the highest level because of its low technical security, the weakness of the electronic proof provided by the process, and the weakness from its lack of integrity.

 This means that the security level provided is low, far from the security required for formal customer identification according to the strictest regulations in this area, which have fixed in a higher standard the level of the technical requirements to use streaming video for these KYC and AML processes.

To be clear, video in streaming is becoming the global standard for identification processes in the financial sector. In case of onboarding new clients, the results are staggering: the time-to-market shrinks from approximately three weeks to just three minutes. And used to long, expensive and bureaucratic procedures, now the process is available in any electronic device with a camera, as simple as that.

In this guide, you can obtain more information about the video in streaming for KYC and AML processes.

Digital onboarding process that complies with KYC norms 

KYC Regulation in Europe

AML5 together with eIDAS put in place drastic changes in the financial sector by introducing for the first time in history digital identification methods. The goal is to enable an online way for clients to be autonomous in the relationship with their banks, insurance company, etc. 

This means that your financial entity can enjoy the access to 508 million of citizens to offer financial services in the secondary international market, with 20 billion of Euros in GDP. With just a click thanks to videoidentification.

KYC (Know Your Customer) in Mexico

KYC must be complied globally, thus it also affects Mexico. The CNBV has taken a further step with the “Ley de Instituciones de Tecnologia Financiera” released last March. Both this law and the “Ley de Insitutciones de Credito” facilitates videoidentification in the country.

As we have already mentioned, identification based in simple images or selfies are not eligible by Mexican standards.

Do you know the facts about online fraud?

Even today, 1 of 5 adults connected to the internet claims to be victim of a type of cybercrime. To make things worse, every day more than a million of people become victims of cybercrime. The financial costs of these crimes are bigger than the black market for cocaine, heroin, and marihuana together.

What are the challenges facing Know Your Customer to this day?

Today, requiring the client’s identification each time that a company wants to operate with them is very inefficient. Especially due to the poor user experience that the client has go over, this can make them unhappy and may lead to them ending their relationhip with the company.

How has Know Your Customer improved?

KYC has improved thanks to the new AI technologies, leading to a digitalization of onboarding without friction for the user.

Asynchronous video identification, from any device through any channel, is now available. And complies with the most demanding global regulations (KYC, AML5, Eidas). Acquiring new clients have never been this easy. Also, after the pass of the regulation AML5, your company now has access to a market of 508 million potential new clients. Do you want to know how to reach this new market? You can check out this link about AML5 where we explain how.

There is much talk on the market and a lot of confusion about what compliance is and what makes all the identification solutions different from one another.

This is why we have decided to create a simple guide with all the details.

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