What is KYC Verification? Everything You Need to Know
KYC is the practice of verifying an individual’s identity in compliance with laws and regulations, primarily for Anti-Money Laundering purposes.
In response to the pronounced inability to detect and prevent online fraud, the KYC process has been introduced to reduce instances of illegal transactions. The increasing adoption of technologies led to the rise in cases of identity theft, which necessitated due diligence procedures in conducting international business.
Due to its sensitivity for businesses, KYC is regulated by government agencies in any country. KYC procedures are necessary when opening an account with a bank or when conducting financial transactions of any sort. Due to the global pandemic in 2020, many companies have had to establish Know Your Customer processes remotely in order to comply with government regulations and continue operations.
How Does KYC Work?
In financial services, KYC is a crucial part of the customer identification system. In this process, the verification of the identity of clients is performed, with the aim of avoiding commercial relations with people related to frauds, terrorism, corruption, or money laundering among others.
The KYC process allows companies to verify who their clients are for them to have access to the services or products they need. Conducted online, the eKYC process allows rapid onboarding of new users onto a financial services platform.
Identity Verification Online For KYC
Identity verification ensures that a person’s identity and the processes they’re carrying out are both reliably authentic. This way, banks prevent a person from creating false identities or committing fraud.
There are numerous methods for identity verification. The methods of verifying an identity range from manual to automated and the processes can be carried out in different ways, depending on the channel and the way the service is achieved.
In a traditional process, a person delivers his or her identity document to the agent at the same time so that the agent can verify the person’s identity by comparing his or her appearance to the photograph on the identification card.
The process of identification on the internet is different than the one in person since there is no place with schedules where an agent can check the validity of an identity document.
How Does Identity Verification Online Work?
There are several identification methods used online, but only a handful of them are appropriate and meet the criteria for a safe and reliable process, at Sensity we provide such kinds of solutions.
Sensity is a remote identity verification solution that meets high security/reliability standards and legal requirements. We help companies to secure and speed up their customer onboarding process. With cutting-edge AI KYC solutions, fraudsters are automatically rejected and legit customers can onboard in seconds.
eKYC is a convenient and secure digital process that checks a person’s identity through a device with an internet connection.
The Online Identity Verification Process With Sensity AI
- Typically, the user will register by providing information through the website, app, or platform of the organization.
- The user authorizes the use of the device’s camera and microphone to verify identity.
- ID authentication: the user is then asked to show the ID card, passport, or driver’s license on both sides to be recognized and verified. We check the IDs’ authenticity by detecting the main features in real-time like MRZ code, signature, stamps, rounded corners, etc. Once the format is validated we extract the user information through OCR algorithms, matching them with the information collected through the contact form previously filled.
- Face recognition: user needs to take a selfie and the system matches automatically that selfie with the picture on the ID. Sensity return a conclusive decision if the accuracy rate is high, user can continue to the next step
- Liveness detection: is the most important step. Here we want to be sure that the person in front of the camera is a real human being and is not using tricks or artifacts to spoof the check like papers, masks, faces, or digital injected face swap algorithms. Liveness can be active or passive. Active liveness is the most common and consists in asking users to perform certain actions like close the eyes, turn the head or open the mouth. Passive liveness doesn’t require users to do any action, it analyzes several features in the selfie previously taken like brightness, background elements, and of course the user’s face in order to find evidence of manipulation. At Sensity we mix passive and active techniques to provide our clients with an effective and reliable solution against spoofing attempts.
Why Biometric Identity Verification is the Right Solution for Banks and FinTech?
Banks and financial institutions struggle to prevent several financial crimes, including money laundering and terrorist financing. The KYC banking process handles the same checks needed in other industries, but regulatory demands are higher. Banks must undergo rigorous KYC (Know Your Customer) checks in order to comply with current regulations.
Biometrics KYC for customer onboarding is becoming more of a trend in the last few years. Using solutions like that makes client identification an easy and more secure process for both parties. In addition, eKYC technologies can help banks to automate the onboarding process.
7 Reasons to Adopt a Biometric Identity Verification Solution
- Help fraud teams by reducing their workload
- Prevent fake account creation
- Cheap and highly scalable on high volumes compared to manual verification performed by operators
- Better conversion rates with a quick and intutive process
- Reduce operational costs by cutting human involvement
- Automated onboarding procedures
- Speed-up customers acquisition operations reducing churn rate
Download the brochure to learn more about the Sensity ID Verification solution