Market Guide for Identity Verification
Market Guide for Identity Verification
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KYC Compliance

Boost account opening conversions and speed onboarding while meeting stringent AML and KYC compliance obligations.
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What is KYC?

Know Your Customer (KYC) refers to the process of verifying the identity of your customers, Ultimate Beneficial Owners (UBOs) and third-party businesses during onboarding and throughout the customer journey. The KYC process typically includes the identity verification practices used by regulated bank customers to assess and monitor customer risk. KYC verification is a legal requirement for anti-money laundering (AML) measures.


Who is Impacted?

Regulations are becoming increasingly strict for financial institutions such as banks, credit unions, credit card companies and fintechs, as well as real estate and insurance companies. These firms must verify customer identities during the opening and ongoing monitoring of accounts. KYC policies require “reasonable due diligence” to know (and retain) the essential facts concerning every customer. Whether you are technically subject to KYC regulations or not, companies of all sizes are embracing KYC procedures to protect themselves and their customers.

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KYC Compliance and Your Customer Identification Program (CIP)

How do you know someone is who they say they are? How do you answer this question when your customers aren’t sitting across the desk from you? According to ConsumerAffairs, cases of identity theft have soared by 584% over the last 20 years, demonstrating how critical KYC checks are in customer relationships.

For financial services companies in particular, KYC compliance has a huge impact on how they enable customers to open accounts and perform financial transactions on their preferred device. Customers want to bank online, but banks must contend with AML and KYC requirements while also fighting fraud, financial crimes, terrorism financing and other criminal activities.

At minimum financial institutions must collect the following information for identity verification:

  • Name
  • Date of birth
  • Address
  • Identification number

Proof of identity can be verified by documents like passports, driver’s licenses, or public utility bills. The customer onboarding process in high-risk industries such as gambling or cryptocurrency may trigger enhanced customer due diligence checks on public databases, consumer reporting agencies, and watchlists.

Embracing eKYC Verification

To help meet your KYC regulatory obligations and build a comprehensive risk assessment profile, you need an identity verification solution that can deliver convenience to your customers and protection for your business. Electronic Know Your Customer (eKYC) is simply using online processes to verify customer identity and customer transactions. More and more financial services companies are using eKYC to onboard and monitor their clients.

They are looking to mobile and web-enabled solutions that leverage on-device technology, frictionless risk signals, biometric authentication (such as facial recognition with liveness detection), compliant machine learning and identity experts to achieve accurate identity results within a seamless digital environment your customers want. eKYC is quickly becoming recognized as a legally valid form of identification, and is widely used by companies to verify customer identity and comply with AML regulations. For example, the Reserve Bank of India has allowed the use of eKYC for opening bank accounts and investing in mutual funds, and several Indian crypto exchanges use eKYC to onboard customers.

 

How Jumio Can Help

Jumio enables financial institutions to fulfill KYC requirements with accurate, real-time online ID and digital identity verification. Our solutions have helped banks and other financial institutions replace slow, ineffective and manual KYC processes with more automated solutions that can be embedded within the online account setup and onboarding experience.

Jumio's AI-powered end-to-end identity verification and authentication solutions deliver key benefits to organizations striving to maximize onboarding and meet KYC and AML regulations.

Verify customers across the globe

Easily service your global client base and meet compliance mandates in multiple jurisdictions. Jumio supports over 5,000 identity document types in over 200 countries and territories.

Verify customers across devices

With a cross-device verification process, you can easily verify your customer’s identity across platforms including mobile, web and API.

Fast and easy customer experience and onboarding process

Streamline the customer experience and save time and money with a simple onboarding process for new customers.

Instant feedback to improve conversions and reduce drop-offs

Instant feedback helps users take a high-quality scan and selfie on the first try, minimizing frustration and abandonment.

KYC Compliance Frequently Asked Questions

1
KYC requires collecting customer information and confirming the person’s identity from their driver’s license, ID card or passport. Other document verification, such as bank statements and utility bills, might be required to establish proof of address. Additionally, more sophisticated KYC compliance processes may use biometric or selfie verification processes.
2
The exact implementation and arrangement are up to the financial institution. Typically, the three pillars of the KYC process include:
  • Customer Identification Program (CIP)
  • Customer Due Diligence (CDD)
  • Ongoing Monitoring
3
Incorporating sound KYC verification practices helps you conduct business with legitimate customers. KYC checks are a critical function for organizations to aid in protecting consumers and the entire financial market from bad actors performing illegal activities. Investing in KYC processes is more than just compliance with regulatory requirements — it is also critical for mitigating financial and reputational risk as the result of dangerous fraudsters.
4
Following the 2001 Title III of the Patriot Act, the United States Financial Crimes Enforcement Network (FinCEN) began outlining mandatory elements of KYC procedures including a Customer Acceptance Policy (CAP), Customer Identification Program (CIP) and risk management. The specific practices of KYC compliance will depend on the risk assessment of the organization. The risk assessment will consider factors such as the nature of the business, the types of customers or clients, the geographical location of the business and the potential risks associated with the business activities.
5
Customer due diligence (CDD) and enhanced due diligence (EDD) are both KYC processes. Customer due diligence is performed on all accounts during onboarding to determine the person’s identity and risk profile, including making sure they’re not on a sanctions list. Enhanced due diligence is generally only performed on accounts with a higher risk profile, especially those that pose a risk of suspicious activity like money laundering or terrorist financing. It involves greater scrutiny, such as checking the person’s source of funds and business area and more closely monitoring their transactions on an ongoing basis.
6
Politically exposed persons (PEPs) generally require a higher level of identity verification than regular customers. As these customers tend to be higher risk, they generally require a more comprehensive enhanced due diligence verification process.

Learn More

Guide/Whitepaper

Ongoing Customer Due Diligence and Remediations

Guide/Whitepaper

The ABCs of eKYC

Guide/Whitepaper

How eKYC is Streamlining Digital Banking in APAC

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