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Blockchain Technology for KYC Verification

blockchain for kyc

Blockchain is a good solution for KYC verification, not a lot of people would agree with it but using blockchain for KYC is a crucial step in ensuring secure and fast compliance. With the pandemic changing industry standards, KYC automation stands to revolutionize payments, customer onboarding, and so on. It only makes sense to use the most secure technology, “blockchain,” for KYC compliance. 

Blockchain is a decentralized ledger that can help financial institutions, banks, merchants, and so on to streamline the KYC verification process. Here’s why you should use blockchain technology for KYC verification. 

Current Landscape of KYC Industry

It is easy for banks and financial institutions to authenticate customer identities using government-issued ID documents including driver’s licenses, social security numbers, passports, etc. However, the biggest challenge lies in establishing the authentication of other ID sources. Having inefficient KYC verification solutions also leads to an increased rate of financial fraud such as money laundering. 

Regardless of the use case, verifying customer identities using Know Your Customer or KYC verification, is a long and monotonous process. Apart from a huge amount of paperwork, a lack of transparency in the procedure of the use of personal data collected from customers has led to a lack of trust in the process. 

Regulatory bodies all over the world are trying their best to combat financial terrorism and money laundering, which is a highly expensive process. According to reports, firms all over the globe spend over $10 billion on AML compliance annually. 

This volatile environment, with complexity and uncertainty, is the current landscape of KYC compliance. Blockchain KYC verification is a way to fix the problem of less trust and inefficient policies. 

Changes in KYC Environment- Integration of Blockchain

For decades, financial institutions and regulatory bodies have been trying to find viable solutions for KYC and identity verification. Fortunately, blockchain technology came out as a solution.

Blockchain’s role in KYC verification is simple and elegant. As a decentralized ledger technology, blockchain technology will allow for the collection and storage of data from multiple governments and private data portals into a single immutable, secure database. Complying with KYC regulations and authenticating customer identities using blockchain technologies can be faster, easier, safer, and cost-saving than the traditional verification process.

How Can Blockchain Help with KYC Verification?

In the upcoming time, blockchain-based technologies will help bring down cost savings in an industry that utilizes ID verification. Let’s dive deeper into the benefits of blockchain technology for KYC verification:

1. Distributed User Data Collection

A KYC verification system based on blockchain technology will aid financial institutions in enhancing the ID verification process. This is because currently the data is collected and sorted with a centralized system. Access to this data requires KYC providers to share their customer data with companies needing access to it.

With the integration of a blockchain solution to handle the KYC process, customer data for verification is available on a decentralized network and then can be accessed by third parties directly after permission has been given.

2. Centralization of Controls and Risks

By limiting human interference in the KYC and customer verification process, it is easy for FIs to reduce the risk of fraud to a certain extent. This can happen by achieving standardization within the industry overnight. Blockchain allows key regulator concerns to be solved, such as automating the AML customer risk rating process.

Blockchain-based KYC and AML systems have the potential to change industry tides and how banks and financial institutions tackle identity and onboarding.

3. Communication and Transparency

One of the biggest problems with the present KYC landscape is the lack of transparency between customers and businesses. Blockchain will facilitate active monitoring of customers from onboarding till the end of the business-customer relationship.

The immutable nature of blockchain is vital in building trust between all the parties involved in the KYC process. The ability to trust data stored on KYC blockchain software solutions removes the need for secondary validation processes or cross-checking.

Finally, a distributed ledger system makes the reporting and communication processes more efficient, thus saving time and money. Since involved parties can access reliable data, processes, mistakes, and fraud can be detected much more easily.

4. Suspicious Activity Reporting

Currently, doing verification checks during customer onboarding takes weeks at a time, this proves to be extremely expensive for businesses, and staying compliant becomes tougher with the growing costs. 

With a shared ledger, where the data can be managed and accessed by all involved parties, the process of KYC could be easily monitored. Any change to the data of a user will be accessible by all parties, so it is next to impossible to conduct data fraud. Having instant access to a shared ledger will help institutions save time during fraud detection and reporting. 

5. Comprehensive Authentication Process

A decentralized verification technology will help financial institutions quickly verify if a person is who he/she claims to be. This is vital for fraud prevention and compliance with KYC & AML regulations. 

The level of security and trust offered by Blockchain technology reduces the risk of fraud in certain scenarios. It may be possible for fraudsters to get access to sensitive data if a customer’s device is stolen, but they won’t be able to change any data on the blockchain, which leads to fraud prevention. Blockchain KYC verification solutions can change the workflow of the banking industry drastically due to their immutability and increased level of customer satisfaction.

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What Is The Complete KYC Procedure For Merchant Onboarding Process?

merchant onboarding kyc

Finishing the merchant onboarding process comes with its fair share of risks such as fraud, excessive chargebacks, and money laundering. To save businesses from this series of frauds, regulatory guidelines and rules are set in place to reduce the risk of fraud. Know Your Customer or KYC is a set of due diligence rules that has to be complied with by organizations to mitigate their chances of getting scammed. Few KYC requirements for merchants have to be followed for a more seamless process. 

Merchant onboarding requires carrying out a lot of due diligence checks for merchants which need to prior to onboarding, and the checks need to continue until the end of a relationship with an organization. Each financial organization may have different step-by-step KYC procedure compliance according to their needs, but the core of it remains the same. KYC compliance is crucial to mitigate risks. 

What is KYC?

Regulated financial organizations such as Banks, Payment aggregators, and investment companies conduct KYC every time a new customer tries to open an account with them. A new client can be an individual, an organization, or a legal entity, the primary focus, and aim of KYC compliance are to verify a customer’s identity, address, and other key factors, they do this verification using a set of documents. 

Combining this verification with other required due diligence checks improves the chances of identifying potential threats before they end up becoming bigger trouble. More than often, non-regulated entities like online markets, etc have to follow up with KYC compliance as a precaution. Following up with the KYC compliance allows banks, financial institutions, and FinTechs to secure themselves, customer information, and the entire system from attackers. Merchant KYC helps businesses to stay away from merchant-related fraud. 

Step-by-Step KYC Procedure

1. KYC Document Check or CDD Process

The foremost step in merchant onboarding KYC is a document check or Customer Due Diligence check, also known as the CDD process. It can be done using either an individual KYC form or a Business KYC form:

  • Individual KYC: If you are a merchant who is an individual, then the organizations will complete an individual KYC or CDD process. Businesses verify your identity using any “officially valid document”, if necessary, the process may require proof of current residence, utility bills, etc. Traditionally, the verification of documents was carried out using human resources, new technologies like DIRO’s document verification have digitized the process and reduced the risk of human error.
  • Business KYC: Whenever a business partners with another business, the business KYC process is conducted. One of the major differences is that the identity check is replaced with an “entity check”. This process differs based on the type of entity a business is. If the businesses partnering with each other are under a trust/partnership, then a trust/partnership deed will be needed. Businesses also conduct UBO checks during the KYC compliance. It is crucial to verify who has the actual ownership of the business, such as the directors, and shareholders,. A separate KYC process can be done for the UBO’s as well.

 2. Verification Against PEP Lists

The next step in the KYC requirement for merchants is to verify the name of onboarding customers, and beneficial owners against specific lists. Lists like the national and international terrorist lists or politically exposed person’s lists. If any of the names match a name that can be a national threat, then businesses need to report them to their respective regulatory bodies. In the USA, the KYC regulatory body is “Financial Crimes Enforcement Network (FinCEN)” 

Apart from that, businesses usually verify these names on blacklists, greylists. Banks, the Office of Foreign Assets Control, etc issue these lists. These lists help the organization fight terrorism and money laundering and reduce the chances of partnering with entities that can end up at a risk. 

3. Onboarding Policies and Merchant Screening

The next step is to do a background check, most organizations build an internal merchant onboarding policy for this step. The aim of conducting a background check is to verify the nature, purpose, and bona fides of a prospective client’s business.

Background research and merchant screening include running a series of tests such as licensing and registration checks, and credit checks. Combining that with verifying publicly available information such as business listings, reviews, and other activities can offer a better idea of how the merchant works. This background check and screening allows for reduced risks. 

4. Ongoing Due Diligence

After onboarding, businesses need to do constant due diligence checks to monitor any changes in merchant behavior. A change in website details or contact information change can be a hint of fraud. If there are a lot of red flags, businesses can review merchant profiles and conduct due diligence checks. Ongoing due diligence checks are crucial for a complete KYC process for merchant onboarding.

5. Transaction Monitoring

One of the most crucial checks after merchant onboarding is to verify the transaction, monitoring transactions can lead to figuring out red flags. Let’s say that a merchant exceeds the maximum permitted transaction limit, and shows an unusual refund pattern then these can be red flags. In case of any suspicious activities that look like money laundering or transactions that exceed the predetermined limit, businesses need to report these red flags to their regulatory bodies. 

6. Record Keeping

The next step in merchant KYC procedure is to maintain records of all the merchant transactions and ID documents collected in the last 5 years. Keeping records is vital, as they have to be presented to authorities upon request. There are regulatory bodies that ensure the effective implementation of rules and regulations by a business. 

7. Periodic Updates

The last but not the least step is to update both merchant risk profiles and KYC profiles at regular intervals. Ongoing due diligence checks assist organizations in improving their chances against financial crimes such as terrorist funding and money laundering. It is a key KYC requirement for merchants businesses are dealing with to keep updating the risk profile. 

DIRO’s Role in Streamlining KYC Procedure

Collecting, verifying, and maintaining records is just one trouble of KYC compliance. Banks and financial institutions spend countless resources to keep up with KYC compliance and mitigate the risks of financial fraud. 

Unfortunately, traditional methods are failing slowly with the rise of sophisticated methods used by criminals to find the weak point in bank systems. DIRO’s online document verification technology is made to eliminate this issue and improve the overall KYC/AML compliance. 

DIRO’s award-winning online document verification technology captures and verifies information right from the original web source. The technology helps check online documents instantly and reduces friction during customer onboarding. It offers 100% proof of authenticity for verified information. Utilizing DIRO’s document verification technology, organizations can improve their KYC compliance and onboarding process. 

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Why Anti-Money Laundering is Important for Financial Institutions?

anti-money laundering

Money laundering is a type of financial fraud, and it affects the global economy in a huge way. Criminals try to hide their illegal money from regulatory bodies, disguising its origin and converting the money into legal funds. Every year, losses due to money laundering equal 2-5% of the global economy ($800 million – $3 trillion). Anti-Money laundering refers to the activities financial institutions perform to achieve compliance with legal regulations to actively monitor for reporting suspicious activities. 

History of Anti-Money Laundering Regulations

The United States was one of the first countries to enact anti-money laundering legislation. The regulation came into existence with the Bank Secrecy Act (BSA) in 1970. BSA was an early effort to detect and prevent money laundering, since then BSA has been amended and made stronger by additional anti-money laundering regulations. The Financial Crimes Enforcement Network is the regulatory body that ensures that AML regulations are followed by financial institutions. 

In 1989, companies and organizations formed the global Financial Action Task Force (FATF). FATF’s goal is to devise and promote international standards to prevent the growing threat of money laundering. After the unfortunate attack of 9/11, the FATF expanded its regulation to include AML in its workflows. With 189 member countries, their main purpose is to ensure the stability of the global economy.

Why is Anti-Money Laundering Important?

 Money laundering often accompanies activities like smuggling, illegal arms sales, embezzlement, trading, bribery, and other schemes. Money laundering is a common part of organized crime including human trafficking, arms and drug trafficking, and prostitution rings.  

Anti-money laundering is also related to counter-financing (CFT), which financial institutions use to tackle terrorism financing. AML regulations combine money laundering, with terrorism financing.

Anti-Money Laundering & Counter-Terrorist Financing Laws and Regulations in the EU

The European Union has forced a number of regulations and laws in the past two years including:

  • Sixth Anti-Money Laundering Directive (AMLD6)
  • Markets in Crypto Assets Regulation (MICA)
  • Second Payment Services Directives (PSD2)
  • General Data Protection Regulations (GDPR)

According to industry experts, financial institutions and authorities do even more in their fight against money laundering and terrorist financing. The aim should be to close gaps and loopholes in the current legislation, clarify regulatory details, and toughen criminal penalties across the EU.

The new directive brought better insights and clarification and transparency in regard to some areas:

  • List of offense
  • Money laundering
  • Scope expanded
  • Stricter persecution and punishment (4-year sentences instead of 1 year)

According to some experts, the EU Second Payment Services Directive is bringing change and innovation to the online payment industry. The directive consists of two main elements of popular importance for e-commerce merchants: strong customer authentication and the emergence of two types of new regulated payment providers. Privacy and customer experience are among the most critical aspects that push new bank customers to complete the onboarding process.

General Data Protection Regulation (GDPR)

General Data Protection Regulation (GDPR) is a number of directives for the European Union (EU) that enhance the protection of the personal data of EU citizens. It also requires companies to comply with the latest rules and regulations that enhance the data privacy and security of every individual within the EU. These rules are strict and include many rules that increase the rights of data subjects. 

Three concepts are important under the GDPR:

  • Consent
  • Security
  • Legitimate interest
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How to Get a Proof of Address in The UK?

how to get a proof of address in the uk

Opening a new bank account or applying for a loan? The first thing that you need to prove is your address. One of the primary things to do is to provide valid proof of address in the UK. Specific documents are needed to prove your ID, such as a passport, a driving license, or by validating a rental/ownership of a property.

For a long time, banks have been relying on address verification as a security measure. It is a regulatory requirement that banks have to perform for each individual that’s opening an account. Although, proving their addresses may not be as simple for some people. There can be instances where someone has just arrived in the UK and therefore doesn’t have a bill or any documentation with their name on it.

Choosing the bank type you want to open an account with may be a deciding factor as different banks ask for different types of information. For Example, some banks may not even want proof of address as part of the account opening process. 

Why Do Banks Ask for Proof of Address?

As financial institutions, banks are required to comply with strict security measures to make sure fraudsters aren’t using new accounts for illegal activities such as money laundering or money embezzlement. 

That’s why the banks have to ensure that the person who is opening an account uses a valid identity. But, of course, it also helps ensure that the person is whom they claim to be, and banks do so by checking the validity of the address.

The two most important documents that a bank asks for before customers open an account are the photo ID of the person applying for a new account or a loan and their registered proof of address. Different banks may ask for a different types of documentation for verifying a person’s address. Usually, 1-2 documents will also be required for verifying your residential address. 

These documents usually have to be from a source, such as a UK photo driving license or a tax return document.

What Documents Required for Proof of Address?

The documents required for proof of address verification differ from bank to bank. Each bank also has different processes for verification in which different documents are provided. Additionally, the verification time required for each document is also a major factor for banks. 

Also, the documents a person provides to banks have to be up to date, and the verification time taken by each document has to be taken into account when supplying these documents. If a bank asks for a credit card statement or a utility bill for address verification, they can’t be older than three months. If the person uses a utility bill, it can’t be older than one year (12 months). And if you’re opening a new account, you need to confirm with your bank what documents they require for proof of address.

Some of the most common documents used by the bank as proof of address are:

  • A valid UK driving license
  • Recent utility bill (Gas bill, electricity bill, water bill, or landline phone)
  • Council tax bill
  • Recent credit card or bank statement
  • A recent credit union statement
  • Tenant’s agreement/ rental agreement

If you don’t have any of these documents for address verification, then you can reach out to your bank for additional documents that can be used for verification.

What if you Can’t Supply a Bank With Proof of Address?

If you’ve just arrived in the UK and you want to open a new bank account, it can be tough as you may not have all the necessary documents. The most common documents are utility bills and credit card bills, and new residents may not have either. 

Some banks allow for different types of documents such as:

  • A letter from the college or university, or language school if you’re in the UK for studying. Student documents can be used for verification.
  • A letter from your employer confirming your address.
  • A letter of referral from your existing bank can also be used as a letter of verification. 

As mentioned above, different banks rely on different document verification. So other documents can be used for verification.

Are There Banks in the UK That Don’t Need Proof of Address?

Almost all the major banks in the UK are required to have proof of address before allowing you to open an account with them. If you want to know about the documentation required by several banks, you can visit the website of the bank of your choice and decide if you have those documents or not. You can find a list of options in which a bank may accept documents other than those mentioned above on the Financial Conduct Authority website.

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Best Practices to Prevent Credit Card Fraud

credit card fraud prevention

Credit card fraud was the most frequent type of fraud reported in 2020 according to the Federal Trade Commission. And the amount lost annually to credit card fraud is a staggering $149 million. While it’s vital to ensure the security of their financial accounts, if you do end up being a victim of credit card fraud then you should know what to do next. And what would be the best practices for credit card fraud prevention?

What is Credit Card Fraud?

Credit card fraud is when a fraudster uses credit cards without the authorization of the card owner. They can use it to purchase products/services or obtain funds without the cardholder’s consent.

Difference Between Credit Card Fraud vs. Identity Theft

Both of these types of fraud are similar, but identity fraud is broader in reach. An identity thief steals your personal information, such as your Social Security Number, Opens a new account, gets a loan approved, and files for tax returns.

Credit card fraud is a different type of identity theft that happens when your credit card is used for unauthorized purchases. Customers who rarely check their credit card account online may notice some anomalies in the account that you didn’t make. While the majority of credit card issuers offer zero liability on fraudulent purchases, it doesn’t mean that you will turn a blind eye. This also raises the question of how banks prevent credit card fraud.

There are no particular credit card fraud prevention strategies that provide you total credit card fraud protection, but some small actions can lead to an increased risk of fraud, thus you should take time out of your schedule to learn how to secure yourself.

How Consumers Can Prevent Credit Card Fraud?

There are several methods and techniques that fraudsters utilize to steal your personally identifiable information. Fraud reports for 2020 increased over the previous year which isn’t surprising because most of the world went towards a digital transformation. Bad actors always look forward to weak moments for a customer to steal personal information.

Sometimes, being aware of the red flags and things that seem suspicious will help you make better decisions and avoid credit card fraud. Here are some common things to look out for:

1. Don’t Use Unsecure Websites

This is something that you can easily do. If any shopping site is secure you’ll see a padlock on the top left side before the address bar. Also, the web address will begin with HTTPS. Do not enter credit card numbers on a website that you see isn’t secure. And let’s be honest, if a business isn’t offering data security, you shouldn’t invest your time in it. Not using insecure websites is the primary credit card fraud prevention.

2. Beware of Phishing Scams

Phishing scams are very common and they can happen on the phone, email, texts, or anywhere else. The scammers might call and pretend they are from some government body and try to gather your personal information.

Scams as of today are very sophisticated, customers often get scam emails from what seems like their bank. If the email requests you reply with your credit card account number, you know it’s fake.

3. Beware of What You Post on Social Media

While social media is extremely exciting, it does have its downfalls. Fraudsters keep deriving new methods of stealing personal information through social media. Kids often end up sharing sensitive data on social media without being aware of it. To prevent credit card fraud, parents need to have a serious talk about what they share on social media. 

Anything you post about your personal life can be pieced together by fraudsters to build a profile for financial fraud.

4. Use Mobile Payment Apps

There are some chances that your card information may be skimmed by an in-store card reader, but it can still happen. Thus, it is better to increase the protection of credit cards by using mobile payment apps such as PayPal.

All the mobile payment apps use a technology named tokenization, which allows you to pay without exposing the actual card number. This way, your account stays safe from fraudsters even if the transaction data is exposed.

5. Don’t Save Credit Card Information Online

This may take some time to master, you have to stop, find your credit card number, and type it in every time you wish to make a transaction. It doesn’t matter if it’s a retailer that you trust, a data breach can put your private information at risk. This is an effective method of decreasing the risk of fraud.

6. Use a Password Manager

One of the primary rules with using passwords is that you shouldn’t use the same password or a combination of the same passwords over and over again. If a fraudster gets access to one of your passwords, then they’ll be able to gain access to all your accounts.

A password manager can help you generate and remember complicated passwords easily. Having a variety of complicated passwords can assist you in saving yourself from financial fraud.

7. Don’t Use Public WiFi for Financial Transactions

Public WiFi is riddled with fraudsters, trying to steal any information that they can find. If you conduct any kind of financial transaction on public WiFi, you’ll be vulnerable to hackers because these networks are often unencrypted. Whatever financial transactions you need to conduct you should do it on your personal network.

You can also use a virtual private network or VPN to encrypt the public WiFi. A VPN encrypts your incoming and outgoing traffic thus securing the transactions.

How Businesses Can Prevent Credit Card Fraud?

1. Secure Payment Processing

Almost all businesses should have secure payment processing systems. The best options are to use systems that rely on tokenization and encryption to protect sensitive card information during transactions and reduce the risk of data breaches. 

2. EMV Chip Card Technology

Another fraud prevention method is the use of EMV chip cards. Adopting EMV-compliant payment systems can reduce the risk of payment fraud. Chip cards are tougher to copy than magnetic stripe cards. 

3. Address Verification and CVV Checks

Using address verification checks and CVV checks can significantly reduce the number of card-not-present frauds and minimize the risk of fraud.

4. Fraud Detection Tools

Businesses that onboard a lot of customers globally need the help of fraud prevention tools. Technologies like DIRO business verification, online document verification, and utility bill verification can help businesses differentiate between legitimate and fake customers.

5. Employee Training

It is essential to educate your employees to recognize and prevent fraud. If your employees know something is fishy, they can minimize the risk of fraudulent activity, especially in retail environments.

6. Regular Monitoring

Monitoring transactions and customer accounts regularly can help in learning basic fraud patterns and upcoming trends. Identifying patterns is a great way to catch potential fraud early.

7. Chargeback Management

Having a chargeback management process can help businesses track, analyze, and respond to chargebacks. Chargeback fraud can be a major indicator of fraud.

Types of Credit Card Fraud

Credit card fraud can happen in several ways. They’re made specifically to target weak points in payment systems. There are vulnerabilities in each section of a payment system that a fraudster looks to exploit.

Here are some of the most common types of credit card fraud:

  1. Stolen or Lost Credit Cards

As the name suggests, this type of fraud happens when a criminal steals someone else’s physical card. The fraudulent actor then uses the card to make unauthorized purchases. Until the legit owner reports the card as missing or stolen, a fraudster can keep on using the card.

  1. Card-Not-Present (CNP) Fraud

CNP happens when a scammer obtains credit card information (card number, expiration date, or CVV) and uses the card to make illegal transactions. These transactions can be done online, by phone, or by mail without a physical card.

One of the most common ways to obtain card information is through data breaches, phishing, and other methods.

  1. Account Takeover Fraud

Commonly known as ATO, a criminal obtains illegal access to a credit card account or bank account. This is mostly done via ID theft or phishing. Once the account information is obtained, scammers change it, add themselves as authorized users, and request a new card.

They then use the new card to make illegal transactions.

  1. Application Fraud

This type of fraud happens whenever a criminal applies for a credit card using fake information. Once the application is approved and scammers receive the card, they use it for illegal transactions. The legit bank account owner then has to deal with the financial ramifications.

  1. Skimming

Skimming is another type of credit card fraud. Fraudsters use a small electronic device, known as a “Skimmer”. This small device steals credit card information from the card’s magnetic stripe during legitimate transactions. Fraudsters often place these devices at an ATM or a payment terminal.

Criminals can then use the captured data to create counterfeit cards or carry out illegal transactions.

  1. Phishing Scams

These are some of the most common types of credit card fraud. Phishing scams use emails, phone calls, and texts to trick cardholders into revealing their credit card information.

Users receive an email that may look like it’s from a legitimate bank/company/retailer. Most of the time, the motive of the email is to steal the user’s account information.

Emails ask users to “confirm” their account information by clicking a link or a button.

Which Businesses Are Most Susceptible to Credit Card Fraud?

There are specific businesses that are more vulnerable to credit card fraud. Here’s a list of businesses that are more at risk of credit card fraud:

1. eCommerce and Online Retailers

As these businesses conduct CNP transactions, they’re more open to fraud. There’s no way to verify the authenticity of the cardholder, so they’re more exposed to fraud.

Additionally, online transactions are more vulnerable to data breaches, phishing, and malware attacks.

2. Small Businesses

Small businesses don’t have the resources to invest in robust fraud prevention and detection. They don’t even know about the latest developments in credit card fraud trends. This makes small businesses more vulnerable to different types of fraud.

3. High-Risk Industries

Businesses operating in high-risk industries like gambling, adult entertainment, finance, etc tend to experience more instances of fraud. Criminals love to target these industries because the volume of transactions is higher than in other industries.

4. Businesses with High Employee Turnover

Businesses that have a high number of employee turnover are more vulnerable to fraud. Why? Because the consistent shift in employees makes it tough to maintain rules and regulations. There are even cases where employees partake in fraudulent activities due to a lack of procedures.

5. Businesses With Outdated Technology

Retailers that use outdated point of sale (POS) systems or payment terminals are more vulnerable to skimming and other types of fraud.

Older technologies aren’t up to the latest protocols so they’re more susceptible to fraud.

How Banks Can Prevent Credit Card Fraud?

While customers don’t have to bear the burden of credit card fraud, financial institutions have to take the brunt of the fraud. To prevent this type of fraud, FIs need to comply with KYC regulations and AML regulations, continuously monitor the transactions, and utilize technologies.

Technologies such as DIRO online document verification solutions can help financial institutions stay on top of acts of fraud.

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Wire Transfers and Best Practices to Avoid Wire Transfer Fraud

how to avoid wire transfer fraud

All of us have heard the term wire transfer being thrown around in fancy movies and shows. Wire transfer is one of the most popular methods of moving money from one place to another. In actuality, do you know what is wire transfer and how do wire transfer work?

Whether you’re sending the money to family overseas or concluding international business payments, it is vital that you determine if your money is in good hands or not. Wire Transfers are complicated and the more you know about them, the more your business will be safe from the risk of fraud. Businesses need to follow the best practices for wire transfers.

What Is a Wire Transfer?

To put it in simple words, a wire transfer is an electronic method of sending money from one person or business to another business. Using wire transfer, money is transferred from one bank to another one by filling out some basic documents. There are different types of wire transfers and you need to know what are the different types of wire transfers for most efficiency.

How To Send a Wire Transfer?

The easiest way to send a wire transfer is to visit your bank and fill out a form for a wire transfer.

  • The recipient’s name and full address
  • Branch name of the recipient and full address
  • Bank account number of the recipient
  • Recipient bank’s BIC/Swift Code
  • ABA or routing number if the money is being sent to the USA
  • IBAN (International Bank Account Number) if money is being sent to Europe.

What Are The Different Types Of Wire Transfers?

Wire transfers can be of two main types:

  1. Domestic Wire transfer: Where money is sent from one bank to another one within the same country.
  2. International Wire transfer: Money is sent to a bank account that is based out of another country.

Domestic and international wire transfers can further be broken down into two categories:

  1. Intra Bank: In which money is transferred from one account to another one within the same bank.
  2. Inter-Bank: Money is transferred from an account in one bank to an account in another bank. 

How do Wire Transfers Work?

Wire transfers are sent via networks that connect different banks or the same banks. You can think of the network as a middle man between the banks in an electronic money-sending transaction.

They don’t personally handle any money, but instead, they help in sending the international money order from one bank to another one. 

Domestic Wire Transfers:

  1. Intra-Bank: Both the money sender and the receiver belong to the same bank. The bank’s software is instructed to transfer the funds between its accounts or branches. The money is debited from one account and credited to another one. 
  2. Inter–Bank: The one who sends the money and the one who receives the money belong to different banks. The banks are members of a secure, closed network that collects the money and completes the wire transfer by sending it to the desired location. One of the most famous examples of a wire transfer is ACH transactions. 

International Wire Transfers:

  • Intra-Bank: Some big banks have branches in several countries, and smaller banks have accounts of their own in foreign banks. So even in international wire transfers, both the senders and the receivers can have accounts in the same bank.

The SWIFT network is the network that most banks use for these transactions. This means transactions can be completed without needing any intermediary bank.

  • Inter-Bank: Not all banks have their accounts overseas, in this situation, an intermediary bank is used as a middle man. The payment must pass through compliance regulations in the country of the sender, the intermediary bank’s compliance, and the recipient’s compliance. This means inter-bank transactions can take much longer. 

Different types of networks can be used for international inter-bank wire transfers. Some common examples based on the region are Canada & U.S (ACH). Europe (SEPA). India (NEFT/IMPS/RTGS).

What is the Cost of Wire Transfers?

It is common knowledge that wire transfers are expensive, on average the domestic wire transfers cost $25 per transfer but the cost can reach up to $35. 

International wire transfers are even more expensive, they can cost anywhere from $30-$80, at times can cost even more. The worst part is that the person who is receiving money will also have to pay a fee of $10-$15. Wire Transfers are so expensive because of multiple hidden fees that add up throughout the completion of the process.

What’s The Time Taken by Wire Transfers?

Wire Transfers are slowly becoming obsolete, because of the time taken to complete the process. Now that online transfers have become a norm, there’s no real need for wire transfers. 

Domestic wire transfers are said to take just one day, however, they can take more than one business day. When it comes to international wire transfers, it can take 3-5 business days but there have been multiple cases of it taking more than a week. There is a difference in time because wire transfer goes through a domestic network as opposed to international networks that have to clear multiple compliances which adds more time to the process. 

Add in the time difference and different opening times of banks in the destination country, it adds up extra hours/days until the transaction is completed.

Are Wire Transfers Secure?

Wire transfers are secure, but not completely secure. As wire transfers need the recipient’s bank account number and a network (SWIFT) code, any errors in entering this information can send the money to some other account. 

It can take weeks to recover the money or you may never get it back. If your wire transfer has gone through multiple intermediaries, it may be almost impossible to get the money back. Fraudsters have made their way inside wire transfers, fraudsters can pretend to be a legitimate business and once you transfer money to them, it’s impossible to get the money back. There are some practices that you need to learn how to avoid wire transfer fraud.

Can Only Banks Send Wire Transfers?

Some companies that aren’t banks offer wire transfer services, one of the most used services is Western Union. Some people may think that just because they aren’t using a wire transfer, they’re using a better option, in most situations that’s not the case. 

A non-bank-based wire transfer may complete faster, but it will surely cost much more. To make things worse, if you wire a payment to be collected in cash, fraudsters can use identity theft techniques to claim the money.

There are some non-banks or e-wallets that offer digital services where you set up your account which acts as an intermediary between the banks for your wire transfer. PayPal is a common experience that charges a very high percentage of currency conversion while making international payments. 

Best Practices for Preventing Wire Transfer Fraud

Companies that rely on wire transfer fraud need to employ best practices to increase company-wide policies designed to increase employee awareness and prevent wire transfer fraud. Here are some of the wire transfer best practices:

  • Education is vital, learning about email scams and educating your employees is needed to protect your financial assets. 
  • Requests for changes, immediate action, or lack of availability by phone should be handled strictly. Employees need to follow the company process. 
  • Always verify the authenticity of each wire transfer request by using two-factor or multi-factor authentication. Call the person who’s receiving the money, using the same number you used to call before. 
  • Don’t use email for wiring instructions, use physical methods instead like mail, fax, or a phone call. 
  • Carefully verify all the emails that request wire transfers. Emails are one of the most common methods of fraud. Before sending the money, you need to verify who is asking for money and why?
  • Businesses should use encrypted emails that contain sensitive information.
  • If your business insurance policies don’t cover cybercrime fraud, then it’s time to change the policies. 
  • Following KYC compliance is one way to reduce fraud. While it may take time, if you can conduct KYC on new wire transfers, it can lead to fraud reduction for your business. 
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AML Technologies: Helping Businesses Stay Compliant

aml technologies

For most people, money laundering is a crime that just happens in movies, TV shows as it doesn’t have anything to do with them. Unfortunately, money laundering is a huge problem for businesses all over the globe. Other types of financial fraud are also common for businesses, especially financial services and FinTechs that allow users to exchange funds. With the use of proper AML technologies, organizations can stop the flow of money laundering. 

These businesses and institutions can be used to finance criminal empires and support terrorist funding without being aware. This opens the business to legal actions and huge fines by a regulatory body for not complying properly with AML regulations. Banks, financial institutions, credit unions, and others must stay compliant with AML technologies, by utilizing the latest technologies and by training employees.

Below we have listed some of the best and modern sophisticated technologies to keep an eye out for as AML continues to evolve.

Sophisticated AML Technologies for Developing Effective AML Compliance Programs

Developing effective AML compliance programs isn’t a choice for businesses, financial institutions are legally obligated to comply with AML regulation. Financial institutions of all kinds must utilize new AML technologies as it is one of the best ways to stay compliant. 

AML regulations state that banks collect customer information and monitor all suspicious transactions and activities. Suspicious activities of all kinds must be reported to financial regulatory authorities like FATF. Here’s our pick for technologies that help financial institutions comply with existing AML regulations.

1. Automated AML Screening Solutions

Financial institutions and other money-related businesses have millions of clients. Monitoring every single of these customers is almost impossible without using automated AML screening solutions. 

AML technologies automatically check the clients of a business against national and international checklists. These lists can be made up of global and regional lists, watchlists, PEP lists, and other lists. With automated screening, businesses will be able to identify high-risk individuals and complete a fair and complete risk assessment. These actions fall under the term “RPA (Robotic Process Automation)”, which means the technology uses AI to screen and monitor accounts for potential money laundering. 

The best AML screening solutions use AI-powered automated AML screening to assess all the risks and perform monitoring.

2. Transaction Monitoring Tools

Suspicious activities according to the government can be a single transaction or a pattern of unusual high-risk transactions. For example, the Bank Secrecy Act (BSA) states that any transaction in the US for more than $10,000 should be reported. 

However, financial criminals are also aware of these regulations so they use several transactions of less than $10,000 to stay out of suspicion. To detect all suspicious financial transactions, a business should look for complex patterns. 

Monitoring every single transaction is without a doubt one of the best ways to stay compliant with AML regulations, but using automated software will make this a much easier task. Tools such as DIRO online bank account verification can help in reducing financial fraud by verifying if the person using the account is legit or not.

3. AI-Based Solutions

Artificial Intelligence has already infiltrated almost every part of our lives. It can instantaneously analyze a huge amount of data and use specifically designed algorithms and detect anomalies that humans can’t.

AI can have countless implementations in a spectrum of industries, ranging from cybersecurity to fraud prevention to data management. Artificial intelligence is not exactly a tool, if used properly it has characteristics of an AML screening and transaction monitoring solution. 

4. Machine Learning Solutions

Machine learning is a small part of AI and it is a type of software program that utilizes data and algorithms to recognize patterns in transactions that can be deemed suspicious. Over time, the machine learning program detects changes in customer behavior, which makes it easy to identify suspicious activities.

These machine learning solutions are built to analyze data and anticipate the behavior of a customer. If a client’s transaction habits suddenly change, then these solutions will notify the businesses of any suspicious transactions. Thus sudden changes in a customer’s financial habits may include unusually large deposits and withdrawals, change in frequency of transactions, and so on. 

Need for Effective AML Technologies

Non-compliance with the AML regulation can cause you to pay huge fines imposed by regulatory bodies. The total amount as fines imposed in 2020 surpassed 14 billion dollars, with Goldman Sachs and Westpac the largest organizations being fined. Non-compliance won’t just lead to fines, it can also make it harder to detect and prevent criminals from entering the financial institution’s internal systems. 

Each country has its own regulatory body and law enforcement specialists whose only aim is to protect the financial system. In the U.S FinCEN is the regulatory body that watches over all the financial institutions and ensures that the regulations are being followed. 

With the rapid increase of money laundering and digital transformation in the banking industry, complying with AML regulation has become even more important for regulators and businesses. While businesses are legally obligated to comply, doing so will help in preventing money laundering.

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API zur Verifizierung des Bankkontos: Welche Möglichkeiten hat Ihr Unternehmen?

api . zur Verifizierung des Bankkontos

Der Online-Zahlungs- und ACH-Branche fehlt die Autorisierungskomponente, die normalerweise bei Kreditkarten verfügbar ist. Im Gegensatz zu Kreditkarten, bei denen Benutzer autorisieren können, während sie die Zahlung der Kunden über ihre Karten vornehmen, kann die ACH- und Scheckverarbeitung die Bankkontoverifizierungs-API erfordern, um das Zahlungsrisiko zu mindern.

Wenn wir über das Onboarding neuer Kunden sprechen, kann ein fehlendes Verifizierungssystem ein großer Reibungspunkt sein, wenn die Unternehmen wiederkehrende Zahlungen leisten müssen. Die erfolgreiche Überprüfung des Bankkontobesitzes kann sogar die unzähligen Risiken von Finanzbetrug reduzieren. Die meisten Fälle von Geldwäsche passieren, weil Finanzinstitute Strategien und Due-Diligence-Modelle entwickeln müssen, um Fake- und Kontoübernahmebetrug während des Onboardings auszumerzen.

In der Finanzdienstleistungsbranche helfen die Schritte der Kontoverifizierung Unternehmen dabei, zu überprüfen, wem das Konto gehört und ob ein Betrüger das Konto für illegale Zwecke verwendet. Während regulatorische Anforderungen die Banken dazu zwingen, kann das Einhalten von Vorschriften dazu beitragen, das Betrugsrisiko zu verringern und die Kunden-Geschäftsbeziehungen zu verbessern.

Was ist die Bankkontoverifizierung?

Seit der Pandemie ist die Betrugsrate exponentiell gestiegen. Der Grund? Millionen Menschen verlieren ihren Arbeitsplatz und stehen nun vor einer Finanzkrise. Unternehmen, die ständig Online-Transaktionen mit ihren Kunden oder Händlern haben, müssen sich vor Betrügern hüten, die die Identität der Kunden annehmen können. Früher verließen sich Unternehmen, Banken und Finanzinstitute darauf, dass Kunden genaue Bankdaten angeben, und es gab keine Möglichkeit zu überprüfen, ob die bereitgestellten Informationen der Person gehörten, die sie bereitstellte. Manchmal machen Menschen Fehler und geben die falschen Details preis, oder manchmal versuchen sie, Betrug zu begehen, indem sie absichtlich die richtigen Informationen weitergeben.

Aus diesem Grund ist die Überprüfung des Bankkontos von entscheidender Bedeutung. Organisationen, Banken und andere Unternehmen, die in der Finanzbranche tätig sind, müssen die Kontoinhaberschaft überprüfen, bevor sie eine Transaktion abschließen. Die Überprüfung des Bankkontos hilft ihnen zu verstehen, ob die Informationen gültig sind und wem das Konto gehört. Die Überprüfung von Bankkonten hilft sowohl dem Sender als auch dem Empfänger, sicherzustellen, dass das Geld am richtigen Ort gesendet und empfangen wird.

Warum benötigen Unternehmen eine Konto Verifizierung?

Die Beseitigung von Betrug ist der Hauptgrund, warum Banken einen Kontoverifizierungsprozess verlangen. Die meisten Unternehmen, die in der Finanzbranche tätig sind, sind auch an regulatorische Anforderungen gebunden (Unternehmen müssen möglicherweise die Kontoinhaberschaft überprüfen, um die AML-Richtlinie einzuhalten). Die Kontoüberprüfung kann Unternehmen auch davor bewahren, Millionenverluste in Form von Betrugsverlusten und Bußgeldern bei Nichteinhaltung von Regulierungsbehörden zu vermeiden.

Die Überprüfung der Kontoinhaberschaft verhindert das Risiko menschlicher Fehler und reduziert die Zeit- und Ressourcenverschwendung beim Bereinigen der gemachten Fehler. Darüber hinaus hilft es Unternehmen, sich vor bösartigen Akteuren zu schützen, die Betrug wie Geldwäsche, Terrorismusfinanzierung und Rechnungshinterziehung begehen wollen. Die Überprüfung, ob die bereitgestellten Kontoinformationen gültig sind und im Besitz der Person sind, die die Informationen bereitstellt, kann zu reibungsloseren Arbeitsabläufen führen, Zeit und Geld sparen und die Sicherheit vor Betrug gewährleisten.

Verwenden der Kontobestätigungs-API

Die Kontoverifizierung kann auf verschiedene Weise erfolgen, aber nicht alle Methoden sind großartig und so effizient, wie Unternehmen es sich wünschen. Durch die Integration eines API-Schlüssels in die Website können Unternehmen den Verifizierungsprozess verbessern.

Die Online-Bankkonto-Überprüfungs-API von DIRO bietet eine sofortige Dokumentenüberprüfung, die von Unternehmen verwendet werden kann, um die Kontoinhaberschaft zu überprüfen. Mit über 7000 Dokumententypen weltweit können Unternehmen ihren Kampf gegen Online-Betrug verstärken. DIRO bietet eine API, die in die Website integriert werden kann und bei der Überprüfung der Kontoinhaberschaft, des Adressnachweises, der Stromrechnungen und vielem mehr helfen kann.

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Avoiding Money Laundering Risks in Cryptocurrency Industry

Avoid Risk of Money Laundering

In a couple of years, cryptocurrencies have exploded and are being used for transactions around the world. Due to its core nature of anonymity and lack of regulation, the cryptocurrency industry soon became the hub for illegal activities, the majority of which consisted of money laundering.

Since the industry was being targeted heavily, crypto businesses, regulators, and FIs adopted stringent security measures to reduce the rate of fraud. As of today, less than 1% of all Bitcoin transactions are made up of illegal activities. The same number was 35% back in 2012.

Bitcoin may be the biggest name in the crypto industry, it surely isn’t the only currency being used to launder money and destabilize the global economy. Regulatory bodies are skeptical about the unregulated nature of cryptocurrencies and want to put them under some kind of regulation moving forward. In the latest Anti Money Laundering Directive (AMLD6), some guidelines were released for crypto businesses operating in the EU. For crypto businesses to keep growing while establishing trust, it is vital to take some measures to reduce the risk of money laundering in the industry.

Cryptocurrency and Money Laundering

Back in 2019, criminal organizations and individuals laundered more than $2.8 billion using unregulated crypto exchanges. There are both advantages and disadvantages to using crypto to transact funds. Criminals are always deriving new ways to take advantage of the loopholes in the system to launder as much money as possible. To keep this in check, regulators have been working around the clock to identify the shortcomings and take preventive measures.

Every crypto exchange currently has the ability to identify potential risks that can be taken advantage of by fraudsters. Most of the cryptocurrency markets rely on the anonymous nature to grow their business, fraudsters on the other hand take advantage of this fact to convert their illegal money into legal funds. Being able to provide a certain degree of anonymity while reducing the risks of money laundering is facing up to be the biggest challenge for the industry. 

When financial institutions like banks and credit unions are heavily regulated and are legally obligated to follow a series of regulations, the lack of the same in the crypto industry makes it harder for regulatory bodies to allow crypto to be a mainstream form of transaction. The risk of money laundering in cryptocurrencies can be broken into the following categories:

1. Source of Funds

Sources of digital assets like cryptocurrencies can be tied to any number of illicit activities. For example, any funds transacted from a platform with little to no KYC/AML checks can be considered a red flag.

In a similar way, a single crypto wallet can be tied to multiple banks and credit cards, stating that a group is using a singular wallet to launder money. 

2. Suspicious Transaction Patterns

In some situations, the risks of money laundering in the crypto industry can be tied to a series of suspicious transactions.

For instance, criminal organizations tend to transfer money multiple times without a believable commercial explanation, which can be considered a red flag. Some common suspicious transaction patterns are:

  • High-frequency transactions, all more than $10,000 from different wallets into a single account.
  • Transactions from crypto wallets that don’t perform customer due diligence (CDD) checks. 

3. Money Laundering Risks Within a Specific Jurisdiction

Different geographical areas have different laws about KYC and AML regulations. Combine this with a lack of preventive measures or no regulatory bodies, and it creates opportunities for individuals and organizations to commit illicit activities. 

In an area that is deemed high-risk, there will be a larger pattern of illegal or suspicious transactions. As there are no laws that protect legit traders, it is better to stay away from high-risk areas. 

4. Frequency & Size of Crypto Transactions

Regulators and crypto exchanges need to thoroughly monitor the frequency and size of a transaction to eliminate the risk of money laundering from the crypto industry. Frequent transactions or high-volume transactions can be a disguise for money being laundered around the system. Some common activities to keep an eye out for are:

  • Clearing transactions below the reporting limit
  • Continuous high-value transactions during a single period into the same account
  • Quick transfer of funds from regulated jurisdictions to unregulated areas

How Regulators Respond to Existing AML Risks?

Legal businesses and organizations are always at the risk of their platform being used to launder money. Some common examples are:

  • Reusable debit cards
  • Initial coin offerings (ICOs)
  • Video game payment portals
  • PEP bribery
  • Money service businesses
  • Securities trading

Regulatory bodies are aware of common threats and risks of money laundering, that’s why they keep on developing regulations to minimize the risk and increase compliance in a vastly growing industry (Cryptocurrency). 

Financial institutions can stay compliant and reduce the risk of money laundering by following the guidelines set forth by the Financial Action Task Force (FATF). National governments are also trying to develop the latest methods to detect potential weak points that allow for money laundering and build methods to prevent it. 

Regardless of the constant changes in regulations and integration of technologies in the workflow, the risk of money laundering in the crypto industry is huge. A lot of work has to be done to ensure that the industry can keep its core value of anonymity while reducing the risks of money laundering. However, the question remains, “how do legit traders keep using cryptocurrencies and stay risk-free?”

Robust Customer Due Diligence Checks to Prevent Money Laundering

Needless to say that the current systems of due diligence aren’t enough to stop or reduce the flow of money laundering in the crypto industry. Crypto exchanges and wallets need to employ strong digital customer due diligence checks that can help them comply with KYC and eliminate the risks of money laundering. 

Being able to verify if a customer is who they claim to be during the initial steps of onboarding can help in slowing down the pace of money laundering. 

DIRO online document verification software provides instantaneous online document verification. With over 7,000 types of documents globally, DIRO can help crypto exchanges perform strong due diligence checks. DIRO verifies documents like address documents, bank statements, income tax return documents, student records, and more by cross-referencing data from an original web source and eliminates the use of fake and forged documents by 100%. If a criminal organization and entity can’t gain access to crypto exchange and wallet during onboarding, the flow of money laundering will automatically slow down. 

DIRO online document verification API key can even help organizations reduce the cost of manual verification and speed up the process while enhancing the onboarding experience for legit customers.

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KYC & AML Guide for Crypto Businesses

KYC & AML Guide for Crypto

Money laundering is a huge threat to the global economy and unfortunately, cryptocurrency has become the magnet for fraudsters looking to launder money with minimal friction. Ever since it started growing, the crypto industry has become holy ground for money laundering and terrorist funding.

To disrupt the flow of money laundering and terrorist funding, regulatory bodies all over the world are implementing anti-money laundering measures. These measures can help prevent money laundering using cryptocurrency exchanges and wallets.

Robust internal AML programs include full-proof KYC procedures to identify and verify users. Using this, authorities have to root out suspicious activities in the crypto industry. This will also lead to more expensive customer onboarding for customers in the crypto industries and make the process full of friction. Manual verification processes won’t work for the crypto industry that is slowly getting regulated.

Fortunately for the crypto industry, there are thousands of FinTechs that can help achieve compliance while still offering a positive customer experience.

Importance of KYC & AML Regulations in Crypto Industry

Over time, the financial industry is evolving and cryptocurrencies are rapidly changing the way transactions take place. For international monetary exchanges, virtual currency is taking the place of traditional currency.

However, this comes with its fair share of challenges, a major issue is that criminals launder money using anonymous crypto exchanges. The fifth anti-money laundering directive makes it clear that crypto exchanges and wallets have to operate under anti-money laundering regulations.

This means a robust AML program helps identify and protect against suspicious activities. Crypto exchanges and wallets need to integrate KYC & AML regulations in the onboarding workflow to protect against financial crime.

Currently, most crypto exchanges don’t have proper AML strategies. A recent study states that 69% of crypto exchanges don’t have a complete and transparent KYC procedure in place.

Understanding AML Regulation

The term anti-money laundering or AML dictates a set of rules and legal regulations that are built to identify fraudsters and prevent illegal activities. It includes activities such as trading illegal goods, tax evasion, drug, and human trafficking, and laundering ill-gotten funds. 

To prevent money laundering and other financial fraud, regulatory bodies make it a legal obligation for banks and the financial industry to conduct due diligence checks while onboarding customers. The unregulated nature of the crypto industry has given birth to a whole new type of financial crime, where criminals can launder money and cover their tracks.

This is a huge issue on cryptocurrency gambling websites, money laundering crypto mixer platforms, and exchanges.

How Does KYC & AML Affect Crypto Exchanges?

For businesses operating in the crypto exchange, AML programs are a must, for protection against fraud and to stay compliant with growing regulations. This means the implementation of an effective AML program that includes a customer Acceptance Policy (CAP), Customer Identification Program (CIP), continuous monitoring, and risk management.

The CAP refers to the identification of new customers using official ID documentation. CIP is the process of verifying a customer from this documentation and against official databases. Ongoing monitoring allows crypto exchanges to identify suspicious transactions and ensure customer details aren’t outdated. 

In the USA, FinCEN puts all types of crypto exchanges the same way. This means that all cryptocurrency exchanges must carry out all KYC and implement effective AML programs, regardless of the type of cryptocurrency. 

Why is KYC Important for Crypto Exchanges?

Money laundering has become a global issue and the losses incurred to the global economy due to money laundering equal almost 5% of the global GDP. These procedures help financial institutions to mitigate and manage fraud. So how is KYC useful for crypto exchanges?

  1. KYC Builds Trust and Transparency

For cryptocurrencies to become a streamlined service, there need to be some regulations set in place to eliminate fraud. By implementing KYC procedures, exchanges can demonstrate that they are trustworthy and have the right regulations set in place to prevent fraud. 

  1. KYC Reduces the Risk of Financial Crime

Proper KYC procedures reduce the chances of financial crime as users are identified and verified. Having robust KYC programs can help weed out criminals and high-risk candidates, which in turn reduces the likelihood of illicit activity occurring through exchange or wallet. 

  1. KYC Will Ensure Stabilization in Crypto Market

AML and KYC regulations are important for stabilizing crypto exchanges for upcoming years. For customers to truly trust a system, they need to know the system in assessing risks to protect the users.