KYC “know your customer” is a combination of documents required for businesses. It brings up the process of identity verification and also addresses the verification of insurance companies and other financial institutions either before or during conducting a business with clients and customers. It has made it easier for governments and different institutions to validate the customer’s identity and address details. KYC acts as a precaution against illegitimate activities such as corruption and money laundering etc. It helps track such illegal activities by suspecting them before the matter goes out of hand. After completing a legal procedure, it helps people gain access to their company’s premium products, and make transactions faster than before. KYC supporting documents include photographs, address verification, and in-person verification (IPV).
Types of KYC Documents
There are two broad categories of KYC document verification.
- Identity proof (POI)
Proof of identity requires photographs of the individual. Several IDs can be used for POI purposes including; passports, National identification Cards (NIC), health care, voter ID cards, and driving licenses.
- Point of Address Verification (POA)
Document of address verification cannot be older than 3 months. The documents include utility bills such as (landline, electricity, gas, bills), bank statements, maintenance bills, and identity cards issued by the government.
The Importance of KYC
KYC plays a crucial role in maintaining the reliability of a financial system. KYC (know your customer) helps in identifying and validating the clients through reliable sources of documents and information. It reduces the rate of terrorism, bribery, money laundering, and other forms of financial scams. KYC is important because it reduces the rate of human error. Customers have to follow KYC regulations because it’s been in practice for many years.
Document Validation Services
Identify frauds that happen everywhere around the world. People with a smartphone or a computer webcam effortlessly capture their appropriate documents and extract important data for verification. It verifies the submitted document against a large database of official government papers. It automatically takes the highest-quality image, and its physical tampering check determines if the document’s original photograph is genuine or has been tampered with or replaced. The document format and data fields on the provided document are recognized by OCR technology (Optical Character Recognition). It retrieves and validates essential data for use in registration pages and CRM systems. The authenticity and reliability of KYC can only be built by a document verification services provider.
- Identify the document type and analyze the optimal timeframe for the best image quality picture
- Make sure that the document is reliable and authentic against the extensive library
- Recognize and bring out data from documents in an efficient manner
- Reduces the risks of fraud and money laundering through document validation services
- Introduce an auto-fill form to reduce the rate of errors and maximize the speed of the process
- Use (OCR) optical character recognition technology to extract the data from the documents in the finest way possible
Verification Of KYC Documents
It is important to understand how to verify KYC documents. The features of online document verification include:
- Fraud Prevention
Document verification ensures that the security and agreement prevent fraud as much as possible.
- Open banking API
API online document verification can be united with different processes to smooth the workflow.
- Better customer experience
It verifies the documents and speeds up the onboarding process to provide customers with the best experience possible.
- Low costs
Online document verification reduces the need for manual verification leading to fewer errors.
ID Document Verification
After the user uploads their documents as evidence, the document is identified and analyzed in different ways. After completing the validation, the data gets extracted from the documents. Below are the two techniques to extract the data:
- Document data extraction through OCR in which the system auto-generates the data from the document and checks the reliability of the information.
- When the user manually enters the information, the IDV checks the entered information of the user against the document that is already present.
KYC document verification and validation services are significant for financial institutions to prevent illegal activities like fraud, scams, and financial crimes. It enhances the level of security and safety, verifies accuracy, and enhances the overall customer experience. The KYC verification process enhances effectively if the financial sector adopts the digital KYC system. So, Adopting KYC systems can help companies to keep their companies safe and secure from illegal activities. Documents that get verified with the help of artificial intelligence are the best option in this digital-oriented world.