The KYC documents considered acceptable vary depending on the jurisdiction in which the KYC process is conducted. Some of the generally accepted documents are listed below. KYC regulations have profound implications for consumers and financial institutions. Financial institutions are required to follow KYC standards when working with a new customer. These standards were introduced to combat financial crime, money laundering, terrorist financing and other illicit financial activities. If you`re doing a manual proxy check for your business, here are some tips for properly reviewing documents: With PXL Vision, you can check all of the above. Our solution is capable of extracting data from a variety of identity documents, verifying the authenticity and validity of the identity document and capturing the customer`s facial biometric data. It also compares biometrics and identification document to validate the client`s identity. Of course, our solution is scalable and cost-effective for any business (saving up to 92% of total cost of ownership compared to other solutions).
Finally, our solution offers a simple and seamless user experience. KYC stands for “Know Your Customer”. It describes the process of verifying the identity of (new) customers. The KYC process is carried out to prevent illegal activities such as money laundering or fraud and, in turn, to protect both the company and the customer. More and more identity documents now come with a biometric NFC chip. With the NFC reading functions of the smartphone (if any), we can also read the information of the document and check if the chip of the document has been tampered with. This technology offers the highest level of security when inspecting documents. If fully automated checks fail, there are steps to manually verify identity documents. It depends on the security requirements of our customers or the applicable regulations. PXL Vision has developed an easy-to-use tool called PXL Ident that guides our clients` back-office staff through a simple manual verification process. List of documents commonly accepted as standard proof of identity: The history of Know Your Customer or KYC dates back to 2001 in the United States under the Patriot Act after 9/11.
Before the 2000s, KYC practices were designed to prevent money laundering, but after 9/11, everything changed. In addition, day-to-day businesses are exposed to operational, legal and reputational risks related to fraud and online fraud, the consequential damages of which are unmatched. Therefore, regulators have developed KYC or know-your-customer processes to prevent fraud and money laundering practices. The central legal basis for the Know Your Customer principle and KYC controls and verifications in Europe and the UK as well as the US is essentially as follows: The submission of KYC documents and the verification process are part of the AML framework, which banks and financial institutions are legally required to comply with. AML`s goal is to verify with a high level of certainty that customers are who they say they are – and that they are unlikely to be involved in criminal activity. It is important to note that the same document cannot be used to confirm both the identity (POI) and place of residence (POA) of the client. Thus, at least two documents are required for the KYC process. PXL Vision`s identity verification platform may implement an API from another service provider to perform POA verification. In Switzerland, for example, where PXL has a large customer base, Swiss Post uses an API to check POA documents. The basic requirements for the KYC process are set by laws and regulations. The exact KYC requirements (e.g.
KYC documents) vary by industry, with financial services and banks typically having to implement the strictest KYC processes. Since the KYC process was digitized, KYC verification is performed using various methods or technologies (e.g. NFC, AI), security devices (e.g. hologram), and various security controls (e.g. biometrics, availability). These may include the following phases or processes: In addition to EU directives, Financial Action Task Force (FATF) regulations provide a legal framework for know-your-customer activities in European markets and the UK. Address Verification – A Proof of Address (POA) is obtained, which verifies the address on government-issued identity documents against the POA. Their legal and compliance teams are highly paid, intelligent and valuable resources. eKYC enables a better working environment, which translates into a more engaged workforce. The purpose of KYC is to protect both the bank and the financial markets from illegal activities. This includes involvement in fraud, money laundering, corruption or bribery.
While sufficient collection of this information is required at the time the account is opened, the institution must verify the identity of the account holder “within a reasonable time”. Identity verification procedures include documents, non-documentary methods (this may include comparing information provided by the customer with consumer helplines, public databases, and other due diligence measures), or a combination of both. KYC checks are carried out through an independent and reliable source of documents, data or information. Each customer must provide credentials to prove their identity and address. Involves checking government-issued KYC documents, ID cards, passports, or even health insurance. Financial institutions may refer to these assets when verifying the identity of potential customers. This involves verifying a client`s identity using documents, including a national identity document with a document reader and advanced document verification software. KYC is an essential process to determine customer risk and whether the client can meet the institution`s requirements to use its services. It is also required by law to comply with anti-money laundering (AML) laws.
Financial institutions must ensure that customers do not engage in criminal activity by using their services. The Indian government has notified six documents as “officially valid documents” (OVDs) to provide proof of identity. These six documents are passport, driver`s license, voter card, PAN card, Aadhaar card, issued by UIDAI and NREGA Job Card. Financial institutions typically perform KYC processes before opening customer accounts. Money laundering continues to spread, with bad actors increasingly finding innovative ways to camouflage and hide their illicit sources of funds. Illegal sources include drug trafficking, terrorist financing, tax evasion, corruption, smuggling, etc. Therefore, Know Your Customer procedures are accepted by companies around the world as a customer identification and anti-money laundering measure. The guidelines are issued by regulatory authorities specific to each country, territory and/or jurisdiction. Most identity documents have a line of machine-readable code (MRZ). We extract the information and perform various tests in the ZMR itself.
We then extract more information from the rest of the document, called the Visual Inspection Zone (VIZ). However, it is not enough to extract information from the document, we also want to make sure that we are dealing with a genuine identity document and not a fake one. To assess the authenticity of an identity document, we analyze hundreds of different key visual features and perform various security checks. Identity theft: KYC helps financial institutions provide proof of a customer`s legal identity. This can prevent fake accounts and identity theft through forged documents or stolen identity documents. Limit money laundering, terrorist financing, corruption and other illegal activities. Other jurisdictions have similar provisions; More than 190 jurisdictions around the world have committed to abide by the recommendations of the Financial Action Task Force (FATF), an intergovernmental anti-money laundering organization. These recommendations include identity verification procedures.
These processes help prevent and identify money laundering, terrorist financing and other illegal corruption schemes. In May 2018, the U.S. Financial Crimes Enforcement Network (FinCEN) added a new requirement for banks to verify the identity of individuals of customers of legal entities that own, control and profit from businesses when those organizations open accounts. The two basic mandatory KYC documents are proof of identity with photo and proof of address. These are necessary to establish identity at the time of opening an account, such as a savings account, term deposit, mutual fund and insurance. The reason why many companies turn to e-KYC to enable convenient onboarding processes and profitable customers in return. As online transactions increase due to the ever-increasing presence of online businesses, it has become crucial to ensure the legality of online customers. This is where e-KYC comes in, allowing companies to verify a person`s identity through digital verification mechanisms. The Australian Transactions Reports and Analysis Centre (AUSTRAC) also changed KYC/AML regulations when the pandemic hit the world.
Alternatives were proposed to ensure better compliance with proposed identity verification protocols. According to AUSTRAC, electronic copies of government-issued identity documents can be used and other identity documents can be used for verification. In case any of the above alternatives do not work, KYC video should be done for identity verification. Most documents usually do not have to be more than three months old³ to show that the address is up to date.