
The Most Frequently Asked Questions About Perpetual KYC

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Maintaining the accuracy of customer data presents a considerable challenge. Automating it has traditionally been expensive and difficult, leaving room for human errors. In the past, customer data updates were carried out periodically, typically every one, three, or five years. However, most resources were allocated to high-risk activities, neglecting routine maintenance and regular updates for a significant portion of the customer base.
The consequence of this approach is accumulating outdated information within businesses, including obsolete addresses, expired driver’s licences, and outdated contact details. This accumulation leads to both latent and immediate risks, such as the potential for hefty fines. Furthermore, obsolete KYC data fails to accurately reflect an individual’s current risk level or suitability for financial products. This is where the concept of Perpetual KYC (PKYC) emerges.Â
Let’s dive deep into the blog to learn more about PKYC.
Perpetual KYC is a continuous Know Your Customer (KYC) procedure to verify and track customers’ identities and behaviours. KYC is a regulatory obligation imposed on organisations to combat illicit activities like money laundering, terrorist financing, and fraud. It is important to note that the specific implementation and requirements of perpetual KYC can vary based on the jurisdiction, industry, and regulatory frameworks governing the organisation.
The key difference between traditional and perpetual KYC is their frequency and data update approach. Traditional KYC typically follows fixed cycles, such as one, three, or five years, for refreshing customer data. It often involves manual processes and periodic reviews of customer information. On the other hand, perpetual KYC adopts a continuous and automated approach, utilising real-time monitoring and automated systems to verify and update customer records constantly. Unlike traditional KYC, which can result in the accumulation of outdated data, perpetual KYC ensures that customer information remains accurate and up to date throughout the entire relationship with the business. PKYC is a proactive approach that minimises risks, enhances compliance, and enables businesses to make more informed decisions based on current customer data.
PKYC also comes with its own set of challenges. Some of the key challenges associated with PKYC include:
Whilst PKYC offers significant benefits, addressing these challenges requires careful planning, robust infrastructure, adherence to privacy regulations, and ongoing monitoring and improvement of processes.
The future of compliance will likely embrace perpetual KYC as a valuable approach. Here’s why:
Whilst the adoption of perpetual KYC may vary across industries and jurisdictions, its benefits align with the future direction of compliance. Embracing this approach can help businesses navigate complex regulatory environments, manage risks effectively, and offer great customer experiences in the digital age.
Shufti Pro offers a real-time identity verification solution to help businesses achieve PKYC. Our AI-powered IDV solution assists firms in implementing perpetual KYC by ensuring accurate customer verification within seconds, continuous monitoring of risk profiles, and compliance with evolving regulatory requirements.
Still confused about how PKYC helps your businesses in managing risk effectively?