Obtaining the correct information about a potential customer is essential to a financial institution’s risk management program. The right information can help identify a customer’s risk level, determine the correct risk management procedures, and monitor the customer for suspicious activity. The best way to accomplish this is through a good KYC policy.

The most basic KYC procedure is identifying a customer’s identity. Businesses can do this through paper or digital identity verification techniques like a Credit Check. It also includes identifying the identity of the individual who controls the legal entity. This process should be performed within a reasonable time frame.

In most instances, there will be other types of background checks required, including DBS Checks.


Ensure Customer Risk Ratings Are Accurate

Ensure customer risk ratings are accurate and keep them updated. Using a sophisticated tool such as KYC (Know Your Customer) ensures that the right due diligence measures are in place. These measures include verifying a customer’s identity, verifying the owners of legal entities, and ensuring that the customer’s information is current.

In addition, there is an array of data and information available to financial institutions. These include a customer’s banking product choices, account number, and credit rating score. These data points are analysed to come up with a customer risk profile. Using these profiles, financial institutions can make intelligent decisions on when and how to manage accounts. This helps to reduce risk and increase profits.


Ensure KYC Compliance is Cost Effective and Scalable

KYC Checks are necessary to ensure your financial institution is not being used for illegal or fraudulent activities. A strong KYC compliance program can help you increase your AML compliance, prevent terrorism financing, and protect your customers.

A key element of KYC compliance is comprehensive customer due diligence. This process is designed to identify and classify customer risks and verify customer identity. Typically, this includes collecting and verifying customer credentials and documentation.

Increasing due diligence requirements on businesses, and increased regulatory pressure on operational teams, have created a heavy administrative burden.

Businesses need to assess customer risk and then verify the identity of these customers to ensure they are eligible for certain financial products. Failing to meet these requirements can lead to stiff fines and reputational damage.

Given the ramification of not carrying out KYC Checks, companies and organisations will want to ensure that a robust process is in palace that is affordable but also protects the businesses and ensure it conforms to regulatory guidelines.

Outsourcing KYC Checks to a professional not only eases the pressure for businesses but can also provide a series of other benefits. For example, carrying out DBS Checks can take several weeks in some instances, but this isn’t the case when using a professional third party.

The experience professionals have regarding background screening ensures businesses obtain same-day results which allows for easier onboarding, faster customer applications and protects businesses against the pitfalls of fraud and money laundering.