18 Mar KYC: how to simplify compliance with MyBank
KYC processes are a crucial part of AML legislation. But how to ensure compliance with regulations without incurring lengthy and complex procedures that can generate customer dissatisfaction?
Let’s find out how MyBank can support a smooth and secure onboarding process.
Key takeaways:
- What is AML
- Who is affected by AML
- What is KYC
- What makes KYC so crucial
- KYC compliance: the biggest challenges
- KYC: how MyBank can help
What is AML
AML (Anti Money Laundering) is the term for a wide set of measures and regulations enforced across the globe, with the aim of preventing the use of the financial system for money laundering and terrorist financing.
The European Union (EU) is among key international AML regulatory bodies establishing standards and guidelines to effectively tackle financial crimes.
With their comprehensive procedures and checks, AML regulations play a pivotal role in promoting transparency and accountability in a variety of transactions, while fostering a culture of trust among businesses, financial institutions, and their customers.
Who is affected by AML
Financial institutions are primary implementers of AML regulations. Their involvement in financial transactions makes them more vulnerable to money laundering risks. Furthermore, they are required to adhere to strict anti-money laundering measures. They are required to notify authorities of any suspicious activities in order to ensure compliance. However, the regulations also apply to a number of different business sectors, such as legal, insurance, real estate, and many more.
A larger number of companies are putting AML high on their list of priorities to prevent reputational damage.
What is KYC
KYC (Know Your Customer) refers to a series of highly precise checks through which businesses verify the identity of their customers to ensure they are acting legally.
Essentially, personal identity information is gathered, and background checks conducted prior to customer onboarding. The KYC process is perhaps the most critical aspect of AML compliance: checks serve as the first line of defence against financial crimes such as money laundering, fraud, and terrorist financing.
What makes KYC so crucial
The KYC onboarding procedure allows businesses to confirm the true identity of their customers and identify any potential risks associated with transacting business with them. It is a crucial step for safeguarding businesses against fraud, which greatly helps in building a foundation of trust between them and their customers.
KYC compliance: the biggest challenges
Balancing user convenience with security, ensuring privacy compliance, and handling varying regulations are among the main challenges businesses face to comply to KYC rules.
Financial institutions are particularly affected by complex and lengthy procedures linked to KYC checks: for nearly four in ten (37%), the KYC onboarding process can take between 121-180 days – half a year. As a result, almost half (48%) of financial institutions worldwide say they have lost clients and, therefore, revenue due to slow and inefficient onboarding. [1]
KYC: how MyBank can help
The simplification that MyBank digital wire transfer provides within the due diligence/KYC process is part of the regulator’s third-party use case.
By acting as a facilitator for remote identification, fully in line with the relevant legal requirements, MyBank wire transfer relieves obliged entities from requesting and archiving customers’ paper-based documentation, thus generating significant administrative and service-related efficiency.
[1] KYC Trends in 2023 | A Global Research Report (fenergo.com), Fenergo