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Archaic and lengthy KYC procedures were soon to be rendered obsolete by the rapid rate of digitisation seen throughout the 21st century and the Covid-19 pandemic served as a catalyst for propelling numerous sectors into more efficient and entirely remote KYC practices. Banking and other financial institutions embraced such changes with more readiness and urgency, as such sectors are more prone to vulnerabilities that give leeway to financial crime. The amelioration of KYC across industries has shifted the regulatory landscape to be in concurrence with digital change, alongside the need to combat the growing rates of ID theft, fraud and other financial crimes.
Download Shufti Pro’s 2022 ID Fraud Report for more insightful global trends and data to streamline your company’s security operations.
In this blog post we’ll be breaking down the new and digitised video KYC process, encompassing useful information for your business, such as differences between the old and new, benefits, varying requirements across countries and industries that have (and should) incorporate video KYC.
What is a Video Interview KYC?
Video Interview KYC is a means of video identification conducted remotely online and face-to-face with the assistance of a KYC agent. On this video call, customers are also required to digitally submit their identity documents to proofing.
Traditional KYC vs Video Interview KYC
Know Your Customer (KYC) is a long-standing and obligatory process seen across a variety of industries, especially within banking, most of which is in place to ensure an organisation conducts business with legitimate and safe customers and adhere to KYC and AML (anti-money laundering) regulatory requirements ; depending on the nature of an organisation and the business it conducts, this may include local/national compliance and international regulations too.
Traditionally, KYC entails manual and in-person checks of a customer. For example, when a customer wishes to open an account with a new bank, one was previously required to go into their local branch and bring in the required documentation for proof of identity and this would all be verified in person by a real person. This process is referred to as the manual customer identification programme (CIP) and could often take weeks to schedule and complete, often deemed the cause of high drop off rates during the onboarding process.
The video customer identification process merely does the same as traditional KYC, but in a remote manner and promotes better security, cost efficiency and is much quicker as it is an entirely remote process.
The Growing Need for Video Interview KYC
Remote video verification has taken many industries by storm, largely attributed to its elevated efficiency and cost-effective nature – its robust security capabilities are also highly desirable to organisations who must combat the growing threats of fraud with more sophisticated technology, whilst ensuring a quick and smooth onboarding process to provide a good customer experience.
Digitisation has served many industries with new technological abilities to streamline traditionally lengthy processes, however it has also given criminals new capabilities to bypass security measures, catapulting us into a frenetic fraud landscape. This is how Video Interview KYC can combat such threats, like identity fraud:
Imposters bypass security measures by utilising AI and advanced technology with fake or stolen identities identity documents. Criminals attempt to bypass facial verification systems by presenting a digitally manufactured face, created via 3D-rendered models, photographs, 3D printed masks and more. Facial spoofing attacks are often hard to detect, so choosing an adequate IDV provider like Shufti Pro comes highly recommended, and additional security is implemented with a KYC assistant – Video KYC combines human and artificial intelligence to detect spoofing in real-time.
Synthetic identities are far more sophisticated and much harder to detect, as real information, such as a social security number (SSN) , is incorporated into a fake document to successfully identify as another by falsifying such data – illegitimately passing onboarding and KYC checks. Such forged documents are hard to detect in the initial stages of fraud but video KYC verification provides an effective method of mitigation to these new threats.
Deep fakes are falsified videos made with the use of deep learning technology, made with the intention to bypass security measures and gain unauthorised access to a system. For example, if the verification requires a video of the customer, a deep fake video is submitted during this stage of face verification.
The term ‘deep fake’ comes from the underlying technology used in the process, as deep learning algorithms teach themselves to overcome problems by deciphering large quantities of data and then alter the video to be perceived as a passable ‘person’ in a video verification process.
Shufti Pro’s award-winning KYC solution houses a plethora of verification tools, all of which utilise advanced machine learning and AI to combat such threats – with the power to detect and flag spoofing attacks and deepfakes in real-time. Find out more on our revolutionary KYC here.
How does Video Interview KYC work?
As previously mentioned, traditional KYC and video interview KYC share many similarities, however the video KYC process requires users to confirm their identities by presenting valid ID documents for proofing, whilst face verification is simultaneously conducted during the video call.
What are the Requirements for Video Interview KYC?
KYC requirements and procedures differ from country to country, however most follow a similar protocol of the central banking authority issuing guidelines pertaining to customer onboarding and identification. In addition to this, global regulatory authority bodies also set standards for KYC AML (anti-money laundering) regulatory standards.
Video Interview KYC across the World
UK: The United Kingdom ranks at one of the largest economies in the world and is one of the biggest financial service providers globally. The Financial Conduct Authority (FCA) sets legislation and requirements pertaining to KYC and AML compliance, alongside further guidance and rules laid down by the independent intergovernmental Financial Action Task Force (FATF).
India: The Securities and Exchange Board of India (SEBI) in April 2020 allowed investors to perform digital KYC procedures using Video In-Person Verification (VIPV). The verification process entails submission of identity documents through an online form or with an in-person video session with the verification expert. SEBI requirements issued on the VIPV process are listed below:
- The VIPV process is initiated by the authorised Registered Intermediary (RI) official upon the consent of the investor/user.
- The environment must be free from interruption, and the user should be easily recognizable on the camera.
- The process should include random questions and the responses are recorded to analyse the overall liveness.
- The user should display their signature, Officially Valid Documents (OVDs), and the KYC form. These details can also be validated through an OTP.
- The verification expert should run a series of tests to ensure the Aadhaar card photo resembles the person in the video.
- At the end of the session, the video recordings must be kept at a safe and secure place with date and time records.
Spain: The financial intelligence unit in Spain, SEPBLAC (Servicio Ejecutivo de Prevención de Blanqueo de Capitales), requires banks to perform video-conferencing online ID verification of their customers during onboarding. According to the regulation on non-presence identification of February 2016, banks in Spain are obligated to practise video interview KYC guidelines when enrolling customers to their platforms.
Germany: The German supervisory authority BAFIN (Bundesanstalt für Finanzdienstleistungsaufsicht) in 2017, video identification procedures are necessary for banks to reduce money laundering activities. For this purpose, employees need to be trained to perform video KYC of prospects in real-time over a live video call to verify their identity documents. Video verification of banking customers ensures that anti-money laundering policies are carried out to the fullest.
Portugal: There are several authorities which take relevant measures to ensure safe and secure onboarding of customers. Some of them are listed below:
- Portuguese Securities Market Commission
- Bank of Portugal, which is the central bank authority of the state
- The Bank of Portuguese
Although video KYC requirements are not mandatory in the country, financial entities and online businesses are allowed to perform video-based verification of their customers. It helps in complying with the recommendations of the Financial Action Task Force (FATF) and guarantees the safety of customers.
Other regulatory authorities that allow organisations to perform video KYC verification:
- In Latvia, FKTK (Financial and Capital Markets Commission) is a public institution which carries out its operations autonomously.
- FINMA is a supervisory authority for the financial market in Switzerland.
- The CSSF (Commission de Surveillance du Secteur Financier) is the entity responsible for financial regulation in Luxembourg
- CNBV (Comisión Nacional de Bienes y Valores) also known as the National Banking and Securities Commission charters requirements to regulate financial systems in Mexico.
It is important to note that different industries across the world have varying requirements, thresholds and regulators – it’s imperative that your organisation tailors its KYC process to meet your industry requirements , effectively eliminating the risk of non-compliance penalties and sanctions.
For more information on how to improve your KYC practices and meet national & global compliance with ease, get in touch with one of our KYC experts today.
Which industries can benefit from Video Interview KYC?
Digitisation has altered consumer behaviour dramatically in recent preceding years and customer-centric solutions that offer real-time verification are essential in delivering a satisfying customer experience and minimising drop-off rates during the onboarding process. KYC solutions that harness the power of both human intelligence and AI are beneficial to a plethora of sectors.
Banking `& Financial Institutions | Video Interview KYC
Banks and other financial institutes have had a long-standing history of coming under heavy scrutiny from regulatory bodies. Traditional KYC’s manual process is lengthy and video KYC meets parsimonious ambitions head on with efficiently reducing man-power and hours dedicated to verifying customers. Video KYC can prove to be an effective way to verify customers in real-time and comply with KYC/AML requirements.
For more information on spotting AML red flags in the financial industry, read our blog.
Payment Industry | Video Interview KYC
The nature of the payment industry is highly collaborative so the requirement for proper due diligence checks are far greater for effective fraud prevention. After the introduction of AMLD5, the payment industry now falls under the obligated entities to mandate the KYC process. The minimum threshold of prepaid cards has lowered from 250 to 150 euros. Payment industry can secure payments from fraudsters and prevent money laundering through video identification.
Insurance Providers | Video Interview KYC
Insurance is one of the hardest hit sectors when it comes to large-scale fraud. Through fake documentation and stolen identities, scammers not only financially exploit insurance companies in the process, but illegally acquire payouts intended for legitimate customers often in vulnerable positions (e.g. medical insurance, health insurance etc). With video verification in place, insurance providers can ensure that only authorised and real customers are using their services.
Remote Companies | Video Interview KYC
The era of Covid revolutionised work globally, introducing remote working to combat rising rates of infection; due to the ease, efficiency and cost-effective nature of remote working, it has persisted post-pandemic, alongside hybrid working. This gave leeway for criminals to gain unauthorised remote access to enterprise information, systems and assets. Using video KYC ensures companies employ legitimate individuals and only authorised employees have access to such company information or digital infrastructure.
Mutual Funds | Video Interview KYC
Mutual funds encompasses the practice whereby different investors contribute their money to buy stocks and securities. This pool of funds is collected by a central authority or manager and is then used for various investments. The KYC process is one of the most essential parts of customer onboarding when it comes to new investors. Today, with the power of electronic Identity Verification (eIDV), online businesses for mutual funds can verify customer identities effortlessly in real-time.
Video KYC allows investors to validate investments across fund houses. Once the user submits their request for video identification, they receive a one-time password on their mobile number, which is used to activate the video KYC live session with the verification expert. Upon successful approval of the applicant, a unique folio number is generated against the account with the fund which serves as an identification proof for future investments.
Non-Banking Financial Companies (NBFCs) | Video Interview KYC
Whilst NBFCs do not possess a banking licence, they provide many of the services ascribed to that of a bank – however, their services are dedicated to serving a very niche and specific clientele. The many benefits seen within banking due to the implementation of video KYC are also applicable to NBFCs – easier onboarding, less manpower dedicated to manual checks, an elevated user experience and increased conversion rates.
For example – The Reserve Bank of India prompts financial companies to save user data on safe and secure databases or cloud storages. The user data from the video KYC process is used to validate their identity and safely kept for future verifications.
Crypto | Video Interview KYC
Today, with digital payments in popular demand, the cryptocurrency market has become the epicentre of virtual currency exchange. With the power of blockchain technology, safe and secure crypto transactions are performed over encrypted channels. But, due to the decentralised nature, it can be a potential avenue for criminal identities. Online crypto platforms need to ensure that users engaging with trading platforms do not pose the risk of fraud – since mining of cryptocurrency is a growing concern.
To better identify a user’s identity within, video KYC identification is a necessary security path to venture. Individual’s could be verified through a series of checks over a live video call, including validating their original identity documents, submitting a photo of their face and providing other essential details regarding their personally identifiable information. This way, a verified portfolio can be created against the cryptocurrency users that can be used to carry out legitimate exchanges.
Real Estate | Video Interview KYC
The real estate industry employs over 2 million people worldwide and caters to a variety of property goals, such as buying, selling, leasing and listing estate – whether it’s residential, commercial or industrial. Unfortunately, money laundering is ubiquitous in this sphere due to the nature of easily being able to convolute the source of funds and cash flow. It is estimated that approximately a staggering $1.6 trillion is lost through money laundering in real estate every year, and many fields are experiencing an astronomical increase as financial crimes continue to grow yearly.
Meeting KYC and AML requirements ensures an organisation is implementing necessary measures to combat money laundering and prevents those operating within the sphere of real estate commencing business relations with those involved with financial crime – it provides quick and efficient flagging of possible high-risk and prohibited individuals and entities. Allowing the formation of ties with partners and brokers by validating them through video verification provides a quick and robust mechanism for performing Know Your Customer (KYC) for the client.
For more information on how your business can meet KYC & AML requirements with ease, get in touch with one of our KYC experts today.
Car Rentals | Video Interview KYC
Video KYC for car rentals can help tackle the problem of stolen vehicles and theft of expensive car parts. Before renting out cars to customers, rentals should ensure user credentials are legitimate. Criminals use fake IDs and documents to rent cars, and once they are successful in acquiring the vehicle, they disappear – and because the ID provided was not legitimate, there’s often no way to track them down. Many steal valuable parts such as the engine, and wheels, and proceed to dump the vehicle after.
With new ways and means of customer verification, rental companies can now remotely verify their users through video verification procedures by taking into account original identity documents and verifying their authenticity. The video KYC process is almost as real as a live interaction with a person, which allows the verification expert to flag potential fraud attempts.
A Checklist for Effective Video Interview KYC
Companies that are looking to explore and transition from traditional and manual verification to video KYC may be faced with some difficulties – what features do I need? What best fits my clientele? How does this new software integrate with our organisation’s infrastructure?
Our KYC experts have a few tips that will help:
Your customers may be situated across the world and your organisation may operate worldwide, so you need to ensure that your video KYC solution can cater to this. Ensure that documents across the world are supported and available to use in a vast range of languages. We cater to people across the world, supporting 10,000+ documents, in 150+ languages.
Whilst transitioning to new technology, we understand that many fear for the additional large costs that this process can incur. At Shufti Pro, we offer pay as you go pricing so you only pay for what you need and use. Check out the IDV market and see if this suits you or what price packages are available and choose what is best suited to your business and industry needs.
It’s an understood fact that every business has different KPIs and business requirements. The video verification solution has different features to offer and not every enterprise needs all those features. The best solution provider is the one that presents a customised solution as per business needs.
The video interview KYC process involves handling valuable data of customers that need to be secured in accordance with international standards of data handling. You need a solution provider that offers high level encryption to prevent data theft and maintain consumers’ privacy.
Omnichannel user engagement
Customer satisfaction is the major contributor to business growth. A video KYC solution offering omnichannel for user engagement and verification enhances user experience because the user doesn’t have to switch channels to complete verification.
Shufti Pro’s award-winning video KYC solutions
With pioneering technology harnessed by our KYC experts, Shufti Pro’s KYC solution can detect the most sophisticated fraudulent attempts – securing your organisation from ID theft, fraud and other financial crimes. We’re a global company dedicated to creating global trust and our tools reflect this goal. With real-time verification available anywhere at any time, our customers have a proven track record of increasing conversion rates and uplifting custom satisfaction standards.
Talk to our KYC team now for more information on how to revolutionise your verification process.