Identify fraud continues to rise yearly, forcing businesses and companies to delve deeper into their customers’ history for identity verification. There is tons of information available when it comes to customer identity verification. However, reviewing this information can be time-consuming and overwhelming. That is why there is a need for a risk and compliance management guide, and here is what you need to know.
What Is Identity Verification?
This is the process of confirming the authenticity and legitimacy of an individual’s identity. While any authority or representative can easily match your appearance and face to the photo on your government-issued ID, digital identity verification uses cutting-edge technology to help verify and confirm if you are who you say you are. ID verification is the process of determining an individual’s real identity.
The Importance Of Identity Verification
This process comes with tons of benefits to offer businesses and customers. Some common ones include;
- Improved accessibility
- Helps avoid penalties for non-compliance
- Reduces fraud and fights financial crime
- Streamlines customer experience
- Protects minors
What Is Know Your Customer (KYC)?
KYC is a set of standards financial services industries and investment industry uses to verify their customers as a part of the broader anti-money laundering policy. These standards were set in 2002 by FinCEN to help enforce and implement guidelines to help protect the financial systems from money laundering, illicit use, and terrorist financing.
Who Uses KYC Program?
Several businesses have shifted to online operations, and in-person customer interaction is limited. This has significantly increased the need for KYC programs. Therefore, any business dealing with money movement should consider using the KYC program. This will help them protect their business from identity fraud and protect customer information.
Additionally, businesses handling the use of credit cards should also consider using KYC programs. This helps protect the company from the cost of chargebacks. If you run an online business, implementing a KYC program is vital. This way, you build trust with your customers and protect your business from identity fraud.
Steps To Verifying A Customer’s Identity
With digital identity verification and several free ID verification software readily available, businesses can implement different methods for identifying their customers. However, there are some key steps to follow to help support your KYC obligations;
- Understand your needs, the risks you are comfortable with, and the level of security you would like.
- After identifying the ID verification system you need, identify the method that works best for you. Then go ahead and implement it.
- Always let your customers know of the changes made in the verification process. You can include detailed guidelines or tutorial videos to guide them. Also, ensure you handle any issues your customers might have.
- Dig deeper into your customer’s activities and look for any red flags.
- Using the identity verification software, analyze the customer’s data. You can use a public or private database of records.
- Risk assessment. This is where you alert your team of any potential risky customers, and you can label them as high or low risk to help you determine how much research you need to do regularly.
- Keep and maintain the verification records of your customers. Keep updating and accessing the records on an ongoing basis. This will help you get any evidence should there be any compliance issues.
- Use customer identity information as leverage to support your customers and build long-lasting relationships. Once your customers notice you care about their security and privacy, their trust in you will improve your brand reputation.
If you are looking to implement a larger risk and compliance program, you need to have KYC processes. Digital identity verification is the new game changer for businesses and teams maintaining the KYC and AML programs. If you have an online business, this is the time to invest in DIV and KYC programs.
