With identity fraud on the rise it is now more important than ever to consider using Anti-Money Laundering (AML) and Know Your Customer (KYC) tools for detecting and preventing all types of fraud and financial crime.
But what is the size of the issue at hand and how can it be fight this?
How much money is lost to fraud in the UK and ROI?
According to a 2021 survey from AIB, financial scams targeted 80% of people in the previous 12 months:
“AIB’s survey found 33 per cent of people received a fraudulent communication from a bank or financial institution they were not a customer of, while 30% received a fraudulent communication claiming to be a technology company.”
The government supports during the pandemic also reported record-levels of fraudulent claims and activity as we reported in our blog post on fraud in the Pandemic Unemployment Payment scheme.
And this is not in Ireland alone. There was a reported £4.9 billion of taxpayers money lost by the UK government to Covid loan fraud.
This fraudulent activity can be prevented using anti-money laundering (AML) regulations, which are mandated by national and international authorities around the world and place a wide variety of monitoring obligations on financial institutions.
What is the difference between AML and KYC?
AML obligations include the Know Your Customer (KYC) process, and because they are often used interchangeably it can be difficult to understand how they differ. Essentially, AML is the framework to combat money laundering and KYC is one of the tools to achieve this.
So, what exactly is AML?
AML or Anti-Money Laundering is the overall umbrella term for the larger set of mechanisms to combat money laundering or ML.
AML refers to the steps that financial institutions and businesses should take to prevent criminals from using their business to transfer funds that came from illicit activity. AML regulations are designed to stop terrorist financing and proceeds from crimes like human trafficking and no industry is safe from the risk of fraud as we have seen over the past two years.
What is KYC?
KYC is the identity verification procedures used to verify that the individual using your service (a customer, client or member for example) is who they say they are.
Why should a business perform KYC checks?
Businesses verify the identity of their customers to make sure build a relationship of trust with them. Identity verification solutions like ID-Pal enables the trusted exchange of identities between a business and their customer.
CDD versus KYC
KYC verifies the customer which is the process of Customer due Diligence (CDD).
A robust CDD process will find out the identity of customers and verify their details such as address and name. After verifying the documents and the document holders, which ID-Pal does in real-time, the risks are clear before making this customer a part of the business ecosystem. The results of the CDD can be compiled into a report.
For institutions to stop fraud and meet their regulatory obligations, it is essential that they firstly fully understand the importance of AML and KYC and how to perform these checks to be compliant with regulations and their obligations. Without this knowledge they cannot protect their business, employees or their customers and, even worse, face large penalties for non-compliance with the regulation around AML.
How ID-Pal simplifies AML and KYC compliance
ID-Pal gives SMBs, enterprises and financial institutions advanced streamlined technology to comply with AML and KYC seamlessly. Not only that but the solution is GDPR compliant by design, ensuring the safety and security of the data processed at all times. We offer:
- Identity & Address Verification: Industry-leading Biometric, Facial and Document checks.
- Global Coverage: 6000+ Identity Documents and 200+ Verified Address Data Sources.
- Onboarding Efficiencies: Automated decisioning, dynamic workflows for streamlined exceptions process.
- Built-in Compliance: Best Practice AML & KYC compliance built into every step of the journey.
- Transparent Audit Trail: Comprehensive Client Due Diligence Report automatically generated within business portal.
ID-Pal has the applications to create a comprehensive KYC and AML solution for preventing fraud. In fact, the ID-Pal platform can be extended to any channel (online/remote, in-branch, trusted partner/broker) for managing and deterring fraudulent onboarding activity.
Leveraging the ID-Pal platform means consumers must provide identity document detail, and produce a liveness test that would be analysed using extensive AML and KYC verification checks prior to completing the online loan application.
If your company is encountering similar fraud challenges, ID-Pal can help develop a fraud prevention process in just hours.
Best of all, our solution is available off-the-shelf: go live in a day with a fully branded customer facing app that can be customises in minutes to verify real customers in seconds.
Get in touch with our team to see how we can help you simplify AML and KYC compliance.
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