How KYC/KYB Requirements for FinTech Help Protect Customers from Financial Crime

December 13, 2022

How KYC/KYB Requirements for FinTech Help Protect Customers from Financial Crime

A significant consumer shift from in-store purchases towards e-commerce has led to an increase in cyberfraud. But how can a business secure its clients? Payrow spoke to www.thelondoneconomic.com about advanced solutions used to detect e-fraud and other financial crimes as early and quickly as possible.

Sadly, the more digital services, such as online shopping or banking, people use, the more personal information they share and the less protection of their data and money transactions they have. As a result, the rate of fraud on the internet is rising dramatically. 

To rectify the current state of affairs, companies implement Anti-Money Laundering policies, KYC (Know Your Customer) and KYB (Know Your Business) verification systems and other advanced data protection mechanisms. 

All the measures that FinTech companies and banking institutions use have increased transparency of the British financial market, providing customers with reliable defence. The UK business is trying to work ahead of the curve to predict potential problems and identify deficiencies that may turn into threats at an early stage.

Learn more about KYB/KYC processes in the extract from the article below:

Customer Due Diligence is a quintessential part of any relationship with a financial institution – it represents a collection of processes designed to collect and evaluate relevant information about a customer or potential customer. In brief, it’s about making sure people and businesses are who they say they are. 

What is KYC?

KYC (Know Your Customer) — this is a process that  verifies  the identity of a person. It may include checking identity documents or online identity databases (such as Credit Reference Agencies), determining the liveness of a person (such as the use of phone or computer cameras to detect the presence of a live user), as well as biometric data in some applications. 

Companies attracting customers remotely have adapted to use electronic or database-led verification systems to comply with their regulatory KYC obligations. As a result, KYC processes have taken on an electronic form – eKYC (electronic Know Your Customer), helping diligence protocols adapt to an inter-connected digital world. These developments have also led to new ways of thinking about high-risk structures and individuals, and how to manage them in a digital infrastructure.  

What is KYB?

KYB (Know Your Business) – this is a process similar to KYC, but tailored for the identification and verification of organisations. Just as individuals, companies have various footprints across multiple systems, such as incorporation data, performance data, ultimate beneficiaries, changes in ownership and administration, et cetera. Gathering this information creates a comprehensive picture of an entity, assisting in fulfilling the regulatory obligations to know a business. Moreover, KYB (and KYC of course) are continuous Anti-Money Laundering processes that continue throughout the life of a customer, adapting as they go, and ensuring you’ll always know your customer. 

KYB rules vary by jurisdiction but generally require firms to implement risk-based AML programs and conduct due diligence in their  B2B relationships. This equates to collecting and analysing data such as registration documents, licensing, and the identities of the owners/directors to assess the level of risk that each new or continuous interaction may have. 

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Read the full article on www.thelondoneconomic.com!

The London Economic is a large UK-based digital media company. The TLE newspaper journalists review breaking news on entrepreneurship, sports, culture & lifestyle topics. In 2017, the articles of this newspaper were the most frequently shared publications in Britain.  

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