How can businesses practice the best KYC practices for a seamless customer verification process and minimise fraud? Below, we’ll discuss how financial crimes are becoming a bigger threat, outline how KYC can help to avoid financial crime and other common scams in the digital sphere and share how companies such as Soft2Bet are innovating the future of KYC.
Financial crime becoming an increasingly bigger threat in a digital world
As society has largely adopted digital platforms, financial crimes, fraud, and scams have evolved and become much more relevant threats. Cybercriminals commit illegal activities such as money laundering and exploit various vulnerabilities through phishing, identity theft, or payment fraud. Money laundering and terrorist financing are significantly more common in modern times, putting pressure on businesses to comply with Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF) regulations. It’s crucial for companies to follow these frameworks to identify and prevent these illegal activities; otherwise, they risk incurring heavy fines, sanctions, and irreparable reputational damage.
Cybercriminals succeed largely because many businesses that facilitate online transactions lack strong customer verification processes. KYC helps to avoid financial crimes and scams because it makes it harder for criminals to create fake accounts, start fraudulent transactions, and transfer illegal funds. Several high-profile cases of digital financial crime highlight how important it is for businesses to enforce proper KYC measures and comply with AML and CTF.
Without KYC and other preventative measures, the online world becomes a lot more dangerous. Customer and data security should be a priority for businesses that handle sensitive information. Unfortunately, however crucial these protocols are for the health of a business, they are not that easy to implement. Nevertheless, although it requires significant investments in technology, training, and labour, KYC should be seen as an essential part of business operations.
How exactly does KYC help fight crime, fraud, and scams?
KYC helps businesses identify, verify, and store customer information in a centralised database. This assists mitigating digital crime and obstructs creation of fraudulent accounts as each customer is required to provide various documents and information before they can interact with the platform. Examples of documents a KYC process would require include proof of address, identification, photo verification, and sometimes other biometric data. By collecting this data, businesses can keep track of who is using their services and take swift action if illegal activities occur.
Modern businesses that deal with sensitive information require robust KYC to help avoid financial crimes and scams. With active monitoring and automation, companies can identify irregular patterns in customer activity, which could signal potential fraud, and flag them for deeper manual inspection. These protocols are crucial in safeguarding business reputation and protecting customers from threats.
In Soft2Bet’s case, the company uses a customer relationship management (CRM) system to complement and streamline its KYC process. These systems store customer data securely, giving the company a centralised database to conduct audits and run compliance checks with ease. Having invested in data analytics, Soft2Bet implements algorithms that automatically detect and escalate suspicious activity to reduce strain on human resources. With less reliance on manual labour, it provides more real-time protection from fraudulent activities, creating an overall safer ecosystem for customers.
The future of KYC and its current innovations
While not as flashy as technological innovation, the most important development for the future of KYC will be creating a standardised framework for all digital businesses to follow. This will ensure customers receive widespread protection with minimal risk of vulnerabilities. By following a standardised KYC framework, the global digital world can ensure it shares information swiftly to keep crime at a minimum and protect user data.
Ohad Straschnov, Soft2Bet’s Senior Compliance Director, commented on the future of KYC, saying “Soft2Bet is constantly evolving and implementing new technologies to stay up to date with the latest KYC processes. This helps us comply with global regulations and developments to help businesses keep customers safe when conducting digital transactions. The most important development for the future of KYC is ensuring we collaborate with global businesses to build a reliable database that allows us to help maintain a safe digital ecosystem for all.”
Regarding advancements in KYC technology, the most powerful tools that businesses handling sensitive information can adopt are artificial intelligence and machine learning. These technologies allow businesses to reduce resource strain and human error by automating document verification, enabling real-time risk assessment, and speeding up the KYC process for customers. Additionally, AI-enhanced systems can analyse large databases quickly to spot patterns and identify any irregularities, allowing businesses to take quicker action.
Lastly, advancements in biometric verification, such as facial recognition or fingerprint scanning, can assist AI and machine learning algorithms as these methods are more accurate and reliable. However, there are legitimate concerns surrounding the storing and usage of customer biometric data, which makes it crucial for businesses to comply with GDPR laws and inform users of the biometric verification processes that happen as they go through a KYC process.
Employ KYC to protect your customers from financial crime
As companies like Soft2Bet continue to innovate, advance, and update their internal KYC processes, they contribute to a secure and trustworthy ecosystem where customers remain protected. KYC is the foundation of trust between customers and businesses, ultimately boosting authority and reputation.
The development of technology such as AI, machine learning, and biometric verification further helps to avoid financial crimes and scams. With automation, security teams can focus on taking meaningful action rather than analysing volumes of data to spot irregularities and fraudulent patterns.
Embracing KYC and adopting globally standardised frameworks will shape the future of digital safety.
