KYC Compliance: Effective Verification KYC Process

November 2020
Know Your Customer, also known as KYC, is a process to onboard customers, verify identities, assess and monitor legal risks of customers in order to comply with regulatory measures like Anti Money Laundering (AML) measures.

You can find out more about KYC in our previous blog article

What is a general KYC process for compliance? It basically includes following 3 steps:

  1. Identification verification

  2. Perform Customer Due Diligence / Enhanced Due Diligence

  3. Ongoing monitoring

Identification Verification

This is an initial stage of onboarding a customer to understand whether they are who they say they are by collecting following information:

  • Name

  • Date Of Birth

  • Identity Document

  • Address

It’s usually done through a document-based process by regulatory parties or trained staff to ensure the data provided by the customers is accurate. This process is also referred to as a Customer Identity Program (CIP). 

Perform Customer Due Diligence / Enhanced Due Diligence

Once identification is confirmed, Customer Due Diligence will be performed, which includes the checking of potential customers against sanction lists, politically exposed persons (PEPs) lists etc. to ensure the customer can be trusted. This process can be either manual or digital and is usually performed by comparing the provided information against the huge amounts of data on various sanction lists, PEPs databases and consumer reporting agencies. 

If the customer is determined to be a high risk party, the businesses can decide whether to continue with Enhanced Due Diligence, meaning to collect additional information from customers to gain deeper understanding of their background, involvement in businesses, and further assess the risks. 

Ongoing Monitoring 

It is important to monitor customers after they have been onboarded. Businesses are responsible for ongoing monitoring for any suspicious activities of the customer. The ongoing monitoring includes oversight of financial transactions. Businesses have to pay attention to following activities:

  1. Abnormal financial activities and transactions. 

  2. Adverse media mentions. 

  3. Business involvement with people on sanction lists or who are politically exposed. 

Digital KYC / Electronic KYC (eKYC)

As mentioned above, these processes can be done manually or digitally. Processing KYC manually represents a significant cost to businesses, with some companies spending 10% of their revenue or more on the KYC and due diligence required to onboard new customers. As a result, this process is increasingly being carried out on computers to take advantage of the benefits provided by digitalisation, and, even more recently, Artificial Intelligence and Machine Learning have been applied to further improve customer onboarding solutions.

In this remote business environment we increasingly find ourselves in, it is a lot more efficient to conduct KYC processes digitally and make use of technology to streamline onboarding processes and also maximize accuracy. With the entire process digitized, it doesn't only save time and cost, but also enhances reporting and traceability of customers’ profiles and records. It also benefits the ongoing monitoring of the customer profile as patterns can easily be spotted and reported to mitigate risks. 

How can Blockpass help?

Blockpass is a unique, reusable Digital Identity (DID) solution for organizations that participate in regulated industries and in the increasingly remote business environment where trust needs to be verified digitally. Blockpass offers an alternative process to cumbersome, repetitive and expensive Know Your Customer (KYC) and Anti-Money Laundering (AML) checks through a seamless merchant dashboard that is setup immediately with pay-as-you-go and no initial fee.

Blockpass’ KYC Connect® platform enables businesses to select requirements for customer onboarding that can include ID authentication, face-matching, address checking, AML ongoing monitoring and/or screening of sanctions lists, politically exposed persons (PEP), and adverse media. Through Blockpass, end-users easily create a verified portable identity that they can control and re-use to onboard with any service instantly. Sign up for a FREE test in the admin console