
Video KYC: Taking Traditional KYC to the Next Level

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Know Your Customer (KYC) has undergone continuous evolution since its inception. Its purpose is to authenticate customer identities and assess their risk profiles. Over time, KYC has adapted to meet customers’ needs, embrace technological advancements, and effectively combat fraudulent activities.
To illustrate this, consider the scenario where customers preferred an online account opening process. In response, banks incorporated KYC procedures into their online platforms and eventually extended them to mobile devices. This was made possible by leveraging innovative technologies allowing customers to digitally submit their government IDs and other necessary documents. As criminals devised new tactics to bypass these security measures, banks introduced selfie verification as a means of liveness detection to counter spoofing and other fraudulent practices. The next phase of digital KYC’s evolution involves integrating video into the authentication process.
Know Your Customer (KYC) procedures were carried out manually, primarily within the domain of financial institutions. For example, when initiating a partnership with a new client, banks would require them to complete forms, scan identity documents, and stay in a waiting period for a response. Whilst certain institutions still employ traditional manual customer verification methods today, many have embraced digital customer verification services.
In contrast to conventional approaches, video verification offers significantly enhanced security and facilitates the detection of potential fraud with greater ease. Customers are no longer obligated to physically visit the premises of the institutions they wish to avail themselves of, as they can complete the entire process remotely from the convenience of their homes or workplaces. Furthermore, video KYC enables substantial time savings, as the entire procedure can be finished within a matter of seconds, yielding instantaneous results. Moreover, video KYC solutions surpass manual KYC in terms of accuracy, benefiting from automated algorithms that possess a level of perception often exceeding human capabilities.
Video KYC is widely employed in the financial sector, primarily by entities such as banks, lenders, fintech firms, payment processors, credit unions, insurers, and more. This prevalence can be attributed to the stringent KYC obligations imposed on the financial industry as part of Anti-money Laundering (AML) regulations. However, numerous other industries are also subjected to regulations mandating various levels of customer identity verification. For example, the INFORM Consumers Act requires online marketplaces operating within the United States to authenticate sellers’ identity and bank details who meet specific criteria. In Utah and Arkansas, recently enacted laws necessitate companies to check the age of individuals seeking to open an account. Likewise, digital health companies, adhering to HIPAA requirements, must confirm the identity of patients before disclosing Protected Health Information (PHI) to them. In each scenario, video KYC can be crucial even if not explicitly mandated by law.
No specific regulation mandates financial institutions to adopt video KYC practices in the United States. However, it is important to note that KYC regulations vary across different countries, such as:
Therefore, it is crucial to have a comprehensive understanding of the KYC requirements in each jurisdiction where your company operates or provides services.
Digital video KYC is a sophisticated process offering significant benefits for businesses regarding secure and remote user onboarding. Despite its requirement for more than just standard document and selfie verification, comprehensive digital KYC solutions enable companies to achieve regulatory compliance, protect against fraud, and maintain high conversion rates.
Shufti Pro offers a robust video KYC solution crafted for diverse industries. We strive to instil global trust through our video KYC solution that safeguards your organisation against identity theft, fraud, and various financial crimes. Our video KYC solution offers real-time verification accessible anytime and anywhere. As a result, our customers consistently achieve higher conversion rates and elevated levels of customer satisfaction.
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