As the Internet becomes more and more accessible, the risks of issues like fraud and money laundering also increase. Different industries need to avoid illegal activities. They also must ensure the safety of their customers’ personal information. Since everyday things can be done online, while sitting behind a screen, the potential for fraudulent pursuits is at an all-time high. One way to do so is by the use of KYC processes. Let’s see what this entails and how it becomes a crucial part of any institution’s due diligence.
What is Know Your Customer (KYC)?
As the name suggests, KYC is a verification process that informs a company about its customers’ identities. It varies from one industry to another. However, the primary aspects include:
- Document verification,
- Facial verification,
- Address verification.
These three elements tell a company who its customers are. It also informs whether their information is legitimate. Various laws and regulations influence other parts of the Know Your Client procedure. This depends on which industry is considered.
KYC Verification in Online Casinos
Online gambling is all the rage these days. New Irish online casinos are popping up regularly, attracting thousands of users worldwide. Since every online casino deals with real money, having a strong KYC procedure is necessary. Many top rated casino sites do this already, as online casinos’ safety depends on it. Users go through a verification process in every top casino checked by Irishcasinorius experts, so gambling in Ireland is secure. Customer identification is essential to prevent fraud on online gambling sites. This is why your ID and proof of address are often required when registering for an account.
KYC in Financial Institutions
ID verification is especially important for banks and financial institutions to thwart attempts of money laundering. Many wrongly believe that KYC and AML (Anti-Money Laundering) are separate processes, but they go hand in hand. The Know Your Client actions at a bank involve verifying identities and addresses via government-issued documents. Not only banks but other financial services like cryptocurrency exchanges also have a KYC process. Cryptocurrency platforms may also perform additional checks. This includes assessing people’s credit history, previous legal issues, risk factors, etc.
Real Estate Verification of Identity
KYC checks are usually termed VOI, or Verification of Identity, in the real estate industry. The process involves checking the identity and address details of customers who are buying or selling property. Companies also confirm their clients’ financial history and stability. All this is important to ensure that a property isn’t being bought for suspicious activity, etc. Document verification when dealing with real estate is a vital step to prevent fraudulent or otherwise dangerous activities.
Conveyancing KYC is done when a property is being transferred from one person to another. After confirming the client’s identity, the company usually checks their creditworthiness, owned assets, and current income. Such information is needed to make sure the transaction will go through and to avoid judicial settlements.
Job Candidates’ Identity
No one wants to hire someone who might end up becoming a risk or liability for the company. That’s why every company should verify the identity of each candidate. It’s no secret that technology has changed our lives in many ways. People don’t need to physically appear in offices to drop their CVs. Instead, they can simply apply online. This is what makes KYC necessary for recruitment purposes. Other than confirming someone’s identity, companies also need information about their employment history, criminal history, and qualifications.
Alcohol Industry Customers’ Identification
Many industries still don’t follow KYC requirements. The alcohol industry is a good example of this. Since IDs are not always checked during deliveries and purchases, underage drinking continues at a rapid pace. More and more kids are drinking, which leads to plenty of other issues like drunk driving, underage pregnancies, assault, etc. There is a dire need for ID verification when alcohol is being bought to minimize this issue. The industry also needs to develop infrastructure that is equipped to detect fake documents.
KYC in Medical Institutions
Among the biggest threats faced by the medical industry in this regard is identity theft. Many people tend to steal the identities of actual patients, including their insurance data. This is then used to buy drugs prescribed to the patients. Such fraudulent activities are harmful to those who actually need the medication. Hospitals and pharmacies find it tough to know who is a real patient and who is not.
This is why KYC and AML regulations are so important to implement in the healthcare sector. Identity verification through technology like facial or fingerprint verification is one solution. When institutes ask their customers for insurance data while utilizing some sort of recognition technology, the risk of fraud is reduced.
Knowing Your Customer holds a ton of weight, especially in today’s digital world. These days, everything can be done online. A lot of the time, you don’t have to meet your customer physically. Ensuring their identity, therefore, becomes impossible without KYC practices in place. This is particularly true for the financial industry where people can commit fraud and launder money. But other industries also need KYC, whether it is an Irish casino, a healthcare institute, or a company hiring someone new.