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KYC (or know your customer) is an acronym that refers to the process of identifying your customer or client, and then verifying that identity. In short – KYC checks allow you to confirm that a person is who they say they are, by inspecting their ID documentation.
This initial step is a crucial part of any company’s risk-based approach to AML compliance, as it hugely reduces the chance of entering into business with someone committing fraud, or involved in financial crime.
eKYC is therefore the electronic version of the know your customer process. It’s worth noting that this method relies solely on digital resources and electronically submitted data, in order to successfully verifiy the ID of a person or company.
Over the last decade, businesses across the globe have undergone a process of end-to-end digitisation. From onboarding clients to setting up payment portals, booking systems or moving business records online, almost every aspect of business has been subject to a digital transformation.
For a large portion of 2020, the Coronavirus pandemic made manual ID via the assessment of physical documents impossible. Cut to 2021, and your modern, smartphone-wielding clients and customers are likely to expect every stage of business to be possible remotely – including registration and verification.
But the eKYC process is a sophisticated one, and many firms are struggling to provide an online verification service that meets the standards of global regulatory bodies. This is where third-party RegTech companies – like SmartSearch – come in handy.
The most common way of performing eKYC is using electronic documents to verify identity. This process is usually referred to as EIDV, and generally involves a combination of private information, and some details that are available on public databases.
When a customer provides personal details like full name, address and date of birth, an EIDV tool will check that the information given corresponds with their digital footprint. Advanced platforms like SmartSearch can quickly filter through thousands of images and forms online, to achieve a reliable, accurate ID match in seconds.
Along with electronic document verification, there’s also video KYC – a system where customers record a short video of themselves on request, which is then used to verify their identity. The subject of the video can be cross-referenced with other existing photos and forms of ID available, and this is how their identity is confirmed. More and more businesses are turning to video KYC at the registration stage – including online banks like Monzo, and even dating apps.
Another interesting component of video KYC is the introduction of a ‘liveliness factor’, which is often requested to authenticate the recording. The liveliness factor could be an action – like a wave or a specific gesture – which the customer is required to perform in the video, but it could also be a phrase or sentence.
For example, the customer might be asked to record a clip during which they raise their hand, or say their name out loud. This ensures that the video they submit hasn’t been prerecorded, so it reduces the chance of falsification or ID fraud.
SmartSearch is proud to offer an industry-leading AML compliance solution called TripleCheck. This product is one of the most sophisticated eKYC methods on the market, and comprises three different levels of verification:
Stage one: ID verification with sanctions and PEP screening.
In this first step, the initial ID verification is carried out using a combination of public and private information, and the customer or client is then screened against sanctionsand PEP lists to determine their risk level.
Stage two: facial recognition, document capture and liveness appraisal.
Next, photographic ID is examined and a Selfie Liveness Video is submitted by the customer. We use the latest biometric facial recognition technology to confirm that their physicality matches the documents provided.
Stage three: digital fraud checks with data referencing and triangulation.
Lastly, TripleCheck will give you a holistic risk score for your potential client or customer, which is calculated using fraud-risk indicators. You’ll also be given advice and support on any recommended enhanced due diligence.
