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How to Spot Fraudulent Users with KYC Protocols

How to Spot Fraudulent Users with KYC Protocols

by | Apr 10, 2023 | Blog, Events, KYC - Know Your Customer

How to Spot Fraudulent Users with KYC Protocols

While we often speak about the many risks and crimes that Know Your Customer (KYC) protocols help to circumvent (the reactive approach), the cybersecurity industry can sometimes forget to highlight the specific ways KYC software and practices offer protection (the proactive approach).

With the number of digital users rapidly expanding globally, knowing how to accurately verify someone’s ID and assess their true risk profile is essential to ensuring compliance and upholding important safety standards set by your local jurisdiction.

2023 has shown that the exchange of digital assets and a more competitive than usual marketplace have driven technological advances further than ever before. Staying on top of evolving trends, while still remembering the core basics of Customer Due Diligence (CDD), are two of the best ways to keep your business as well as your clientele safe from evolving cybercrime, fraudsters, money laundering (AML), and many other types of financial and identity crimes.

Below, we’ll take a closer look at some of the fundamentals of spotting fraudulent users in your database. Read on to learn more

Focus on Specific Areas of KYC Documents

While KYC processes and verification documents are unfortunately unable to provide 100% security against fraud and criminal activity, they do play a valuable role in catching key details that may indicate a higher risk profile and/or uncover problematic associations that allow your organization to act accordingly. When reviewing documents like a passport or driver’s license, it’s important to closely review everything submitted and evaluate data points like:

  • Identification photos,
  • Full name,
  • Date of birth,
  • Expiry date,
  • Document number,
  • Address,
  • and more.

With personal identity documents being one of the most popular commodities on the black market, knowing how to spot inconsistent details is one of your best lines of defense, and having automated solutions in place—such as iComply’s modular suite of KYC programs—helps to remove the risk of human error or oversight.

Cross Reference Materials and Verify Photos

One of the most important parts of KYC is ensuring your verification process doesn’t exist in a vacuum. Using multiple points of reference, including more than one document, and being able to compare passport/ID photos with a live representation of an individual all help to reduce fraudulent users. The more databases you are able to (safely and legally) access to conduct your verification, the stronger your confidence can be with regard to the validity of the identities in your system.

iComplyKYC conducts CDD and EDD using some of the world’s most trusted record bases, giving you access to the information you need to move forward, while still respecting ethical guidelines pertaining to accessing private information.

Triple Check All Information and Little Details

Any information contained in the Machine Readable Zone (MRZ) should clearly match the standardized setup of the document in question. For example, passports should have issuing and expiration dates that match up, font types should align, and any other security details (e.g. reflective strips) should be consistent with all government-issued documents. If any detail seems questionable, the application and/or user should immediately be flagged and escalated for further review.

Manual vs Automated Review

While manual document review may be effective on a small scale, the reality is often inefficient when it comes to keeping up with onboarding, constant re-evaluation, and adjusting to shifting global regulations. Automated software solutions like iComplyKYC help you navigate complicated KYC processes with confidence and ease, allowing you to focus on your business operations while still remaining compliant. Our world-leading end-to-end suite of KYC + KYB software is able to integrate with existing frameworks in a matter of minutes, mitigating headaches and removing the frustration of downtime during adoption.

iComply is proud to partner with businesses across North America and Europe to ensure you have everything you need to stay compliant and ahead of the curve when it comes to circumventing criminal activity through your organization. Learn more about how you can stay ahead of evolving AML and fraud standards, and discover why iComply is your leading choice for software solutions by talking to our team today!

DISCOVER ICOMPLYKYC NOW

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Is your AML compliance too expensive, time-consuming, or ineffective?

iComply enables financial services providers to reduce costs, risk, and complexity and improve staff capacity, effectiveness, and customer experience.

Request a demo today.

The Importance of KYC Compliance for Fintechs
The Importance of KYC Compliance for Fintechs

Nov 1, 2024

The Importance of KYC Compliance for Fintechs Know Your Customer (KYC) compliance is crucial for fintech companies to verify the identities of their customers, mitigate risks, and adhere to regulatory requirements. This article...

Eye On Compliance in 2023: Top KYC Trends

Eye On Compliance in 2023: Top KYC Trends

by | Apr 3, 2023 | Blog, Events, KYC - Know Your Customer

Eye On Compliance in 2023: Top KYC Trends

As Q2 of 2023 ramps up, the compliance industry continues to face a fast-paced environment of global changes and challenges when implementing protective measures against fraud, money laundering (AML), and other forms of financial crime (FinCrime). 2022 brought no shortage of showcase incidences highlighting the importance of compliance measures; with an estimated 90% of FinCrime activities still going undetected, it’s more important than ever to stay on top of evolving practices and emergent data to build a safer global marketplace for all.

At iComply, we recognize how vital KYC and AML measures are when it comes to circumventing crime and ensuring your business is aligned with all relevant regulations. Below, we’ll take a closer look at some of the most prevalent trends and points of consideration emerging in 2023, as well as why partnering with a trusted software platform like iComplyKYC is one of the best ways to streamline your compliance. Read on to learn more.

Core Takeaways

Before we delve into some of the more specific factors to be aware of in 2023, it is worth noting that the compliance industry as a whole—as well as financial institutions subject to regulation—need to be aware of the following 3 major themes at the forefront of AML and KYC protocols:

  • Adapting to upcoming legislation
  • Embracing proactive strategies
  • Investing in continued education and training

While the uncertainty arising out of COVID-19 led to a brief slowdown in the addition of new regulations and difficulty in amassing concrete statistics with regard to AML and fraud, there is no denying that we have seen a marked increase in fraudulent activity, specifically in cybercrimes. Ransomware, targeted phishing campaigns, evolving digital scams, and other crimes committed through “cyber-enabled” means have risen to the top of Interpol’s risk profile for fraudulent activity. Making sure your organization is aware of and implementing the new recommended standards resulting from these activities is crucial.

In addition to a significant increase in cybercrime, 2023 AML and fraud prevention focal points include:

Addressing New Geopolitical Risks

The ongoing conflict between Ukraine and Russia has highlighted the importance of monitoring sanction lists and maintaining Know Your Customer (KYC) and Enhanced Due Diligence (EDD) protocols that are able to adapt quickly to changing circumstances. International sanctions can lead to an increase in the risk of money laundering, with criminals becoming ever more creative with their methods of circumventing regulations and restrictions; this means financial institutions and digital asset management firms must be hyper-vigilant when it comes to spotting fraudulent or criminal users and dealing with them swiftly and effectively.

Monitoring Digital Assets

As major scandals like the sudden collapse of FTX in late 2022 have reminded us, the growth of digital asset markets like cryptocurrency exchanges has presented unique challenges when it comes to monitoring and accountability. With 2023 ushering in the implementation of regulations like the Financial Action Task Force’s Travel Rule (Recommendation 16), and with the EU poised to approve an upcoming Markets in Crypto-Assets (MiCA) Regulation, businesses and institutions need to be ready to pivot accordingly—especially as more stringent guidelines are being designed to safeguard against digital fraud and other forms of cybercrime that go undetected.

An Increase in “Challenger” Banks and Alternative Payment Companies

The number of alternative payment companies and “challenger” (aka “Neo” / “digital”) banks across the globe have increased significantly in the last few years, and international regulators have grown concerned with ensuring they are subject to the same (if not higher) level of compliance standards. Decentralized banking systems present a high risk for fraudulent activities without the proper measures in place, and such institutions should anticipate the arrival of more legal safeguards that help keep criminals at bay in the coming months and years.

Facing the Challenges of Digital Identities and the Metaverse

COVID-19 accelerated the shift to a more prevalent online global community, with users worldwide adopting digital avatars through venues like Meta and utilizing other services that enable an online persona. While the metaverse remains in its fledging stages, it presents a very real threat and a high potential for money laundering, human trafficking, terrorist and adjacent activities, and other financial crimes as it continues to develop. With these risks already beginning to surface and a precedent already being set due to fraudulent activities on existing platforms, we can likely expect the international regulatory guidelines to implement protective measures and thoroughly analyze any evolving concerns as they make themselves known.

Lay the Foundation for Safety Through Compliance With iComply

At iComply, we’re proud to help financial institutions and companies facing ever-complex compliance guidelines streamline their operations and build a strong foundation of safety. Our modular suite of KYC + KYB software makes it simple for business leaders to stay informed and compliant with the latest AML legislation, and our modular platform can be set up within minutes, alleviating headaches, tedious manual work, and downtime woes.

Learn how you can stay ahead of evolving AML and fraud standards, and discover why iComply is your leading choice for software solutions by talking to our team today.

DISCOVER ICOMPLYKYC

learn more

Is your AML compliance too expensive, time-consuming, or ineffective?

iComply enables financial services providers to reduce costs, risk, and complexity and improve staff capacity, effectiveness, and customer experience.

Request a demo today.

The Importance of KYC Compliance for Fintechs
The Importance of KYC Compliance for Fintechs

Nov 1, 2024

The Importance of KYC Compliance for Fintechs Know Your Customer (KYC) compliance is crucial for fintech companies to verify the identities of their customers, mitigate risks, and adhere to regulatory requirements. This article...

Digital Identities in 2023: Trends and Updates

Digital Identities in 2023: Trends and Updates

by | Apr 3, 2023 | Blog, Events, KYC - Know Your Customer

Digital Identities in 2023: Trends and Updates

With the first months of 2023 already showing uncertainty in both financial and digital markets (re: Silicon Valley Bank and Credit Suisse), business leaders are looking for ways to stay on top of evolving trends and patterns of risks to mitigate the harm caused by money laundering (AML), fraud, and unintentional funding of criminal/terrorist activities (CFT).

As more users adopt digital identities and integrate virtual payment methods, platforms, and practices in their daily lives, global regulators are carefully monitoring trends and actively looking to implement standards that help to circumvent the risks associated with criminal corruption.

Below, we’ll take a closer look at some of the anticipated and notable trends expected in 2023 in the digital universe as online and virtual avenues continue to expand.

Full Speed Ahead

As mentioned above, there are no signs that the creation and usage of digital identities will slow down (quite the opposite, in fact). Digital identity verification has become a pressing issue for regulators as user “personas” become more prevalent in daily matters such as government verification, banking, healthcare, the workforce, and education.

With the identity verification market expected to be worth in excess of US$38.5 Billion by 2033 (source), it should not be a surprise to those in industries adjacent to or directly utilizing ID verification that it is highly likely global regulars and lawmakers will introduce new guidelines that aim to establish a universal understanding and standard of compliance for countries to follow.

The speed with which digital identities are being implemented in innovative ways not only opens the doors for groundbreaking societal and technological advancements but also opens the door to a world of unknown vulnerabilities that place citizens and organizations at risk. Compliance standards and KYC protocols (more on that below), continue to grow in importance as a result, making it essential for businesses and institutions to be ready to pivot as needed.

Did you know: iComply’s unique, modular suite of KYC programs makes it easy to stay compliant with fincrime mandates across the globe and can integrate into your existing frame in minutes?

Data Privacy and Security Concerns

Identity fraud has become one of the most prevalent forms of criminal activity in the digital sphere, causing significant harm to the individuals directly targeted, as well as funding illicit activities with stolen funds and assets. Protection against such crimes is crucial for the privacy and security of your most sensitive client data. In 2023, we expect to see an even more competitive security technologies industry as legislators and manufacturers seek to keep private data safely where it belongs, and out of the hands of nefarious users.

Increased Risk for Fraud

With more users adapting to digital lifestyles at such a rapid pace, inevitable gaps in our current security frameworks could lead to an increased risk for fraud. Ransomware, geo-targeted phishing, and cloud security breaches are expected to increase in 2023, with online banking and electronic transfers being particularly vulnerable. There is also considerable talk—with a growing number of AI advancements entering the spotlight—of concerns that machine learning (ML) could be used to manipulate user likenesses, generate new identity documents that might be harder to debunk upfront and other such issues that come with recent technological advancements. Integrated biometrics and a focus on refining Enhanced Due Diligence (EDD) will be essential to combat these risks.

Digital Asset and Cryptocurrency Exchange Regulation

Cryptocurrency and digital asset exchanges have been under close monitoring over the past several years, and 2023 is poised to implement several watershed regulations to help combat the risks and challenges presented by decentralized banking. In addition to the travel rule, the Markets in Crypto Assets (MiCA) regulation (not anticipated until 2024) puts additional safeguards in place to tie transactions to known persons and give institutions the ability to accurately assess and react to risk in real-time. The Travel Rule and MiCA are most likely the start of a long line of subsequent crypto and digital asset regulations that will continue to evolve—especially as global task forces keep an eye on new issues that come to light over time and as information technology enables new methods to counteract criminal intent proactively.

Stricter Compliance Enforcement

With such prevalent risks arising out of the rapid pace of technological advances and digital user adoption, the time has come for businesses and institutions across the globe to wholly embrace the fact that KYC and AML protocols are far from optional. Failure to comply with existing and future standards carries the threat of hefty fines and can place your client base in significant peril. To avoid the heavy repercussions that come with non-compliance, it is essential to routinely review your processes and protocols and to ensure that you are using the best software available to serve the unique needs of your business.

Stay Ahead of KYC Risks with iComply

At iComply, we know that the costs of non-compliance can be devastating. To help you mitigate risk and stay on top of current legislation, we offer a unique, end-to-end suite of KYC + KYB software that utilizes a modular platform that can be integrated into your workflow seamlessly with minimal downtime.

Learn how you can stay ahead of evolving AML and fraud standards, and discover why iComply is your leading choice for software solutions by talking to our team today!

DISCOVER ICOMPLYKYC

learn more

Is your AML compliance too expensive, time-consuming, or ineffective?

iComply enables financial services providers to reduce costs, risk, and complexity and improve staff capacity, effectiveness, and customer experience.

Request a demo today.

The Importance of KYC Compliance for Fintechs
The Importance of KYC Compliance for Fintechs

Nov 1, 2024

The Importance of KYC Compliance for Fintechs Know Your Customer (KYC) compliance is crucial for fintech companies to verify the identities of their customers, mitigate risks, and adhere to regulatory requirements. This article...

What Triggers an AML Investigation?

What Triggers an AML Investigation?

by | Jan 30, 2023 | Blog, KYC - Know Your Customer

What Triggers an AML Investigation?

Money laundering and financial fraud are two of the biggest risks facing businesses and institutions worldwide, with an estimated USD $800 million to $2 billion laundered annually. To combat this, global legislators such as FinCEN, FINTRAC, and various European governing bodies create and enforce strict anti-money laundering (AML) protocols as well as Know Your Customer (KYC), Customer Due Diligence (CDD), and Enhanced Due Diligence (EDD) processes where necessary.

With the global pandemic having accelerated the already steady shift to more and more transactions being conducted online, the importance of willful compliance and protection continues to grow for organizations worldwide.

At iComply, we know that staying on top of best practices and evolving mandates can be tricky; partnering with a robust AML software provider like iComply is one of the best ways to protect your organization and avoid costly fines. Below, we’ll highlight several key factors that can trigger an AML investigation, and explore how a vetted software platform can keep you safe when it matters most.

What Are AML Investigations?

As the term indicates, AML investigations are investigations pertaining to suspicious financial activities that may be tied to fraud and/or money laundering. Though not every suspicious activity may warrant a full-scale investigation or be indicative of fraud, businesses and institutions must be prepared to uncover, report, and act on further details to stay compliant with jurisdictional legislation.

To that end, every company’s AML protocols should have a clear list of activities and data that warrant further investigation, and an active investigation must move forward should that threshold be met. Common trigger factors include:

  • Sudden, uncharacteristic financial behaviours (i.e. excessive transfers)
  • A client becoming subject to a government investigation
  • Negative SEC reports
  • Whistleblower activities or lawsuits coming to light
  • Transaction monitoring alerts
  • Internal audits

What Happens Next?

Once an alert is raised, your compliance team should step in swiftly to follow up and conduct a more thorough assessment of the right course of action. Not every identified “threat” will warrant a full investigation (which is typically quite costly and time-consuming), but taking a closer look will give your team a better idea of what steps are necessary as you move forward.

Core factors to look at include:

Revisiting Risk Profiles

AML protocols should always have an integrated KYC component—meaning that, should a risk arise, you can revisit your existing customer profile. Take a moment to (re)assess your customer profiles and look for incongruities. Has there been a sudden shift in risk level for the country they operate out of? Any recent shifts in active board members? Is this individual or entity a relatively new addition to your customer base, or a longstanding account with no previous issues? Each factor has a role in determining overall risk and dictating what needs to be done.

What is the Customer’s Baseline?

Every profile will have a different baseline to help determine what is considered ‘normal’ for their operations. Rising interest rates and other economic factors have put a strain on plenty of otherwise normal clients which can lead to brief periods of irregularity in their business operations that, while odd, are explainable given the circumstances. If you recognize significant discrepancies in recent behaviour or prolonged activity changes, this is often a sure sign that something is amiss and safety protocols need to be enacted.

What Happens if There is a Viable Threat?

If your review process makes it clear that your organization needs to escalate the risk factor, filing a Suspicious Activity Report (SAR) may be in order. Once identified, you have 30 days to do so and an additional 90 days to file the final report after an initial investigation has been opened. Failure to comply with this mandate can result in hefty fines for businesses, as well as significant headaches for your operational teams to overcome in the future if not corrected.

To avoid the risk of fines and other non-compliance issues, implement a clearly defined investigation process that incorporates reliable KYC and AML software you can trust, and ensure your compliance and operations teams are adequately trained to be as proactive as possible.

AML Protection With iComplyKYC

At iComply, we know that AML protections are essential to the operation and safety of your business. Our modular suite of KYC, KYB, and AML products not only ensures you have everything you need to manage and maintain a wide range of jurisdictional AML regulations but also streamlines and automates your customer identification and risk screening processes more intuitively than ever before.

Book a demo with our team today to learn more about iComply’s AML solutions and discover how iComplyKYC can be customized to fit the unique risk screening needs of your organization.

DISCOVER ICOMPLY

learn more

Is your AML compliance too expensive, time-consuming, or ineffective?

iComply enables financial services providers to reduce costs, risk, and complexity and improve staff capacity, effectiveness, and customer experience.

Request a demo today.

The Importance of KYC Compliance for Fintechs
The Importance of KYC Compliance for Fintechs

Nov 1, 2024

The Importance of KYC Compliance for Fintechs Know Your Customer (KYC) compliance is crucial for fintech companies to verify the identities of their customers, mitigate risks, and adhere to regulatory requirements. This article...

Business Continuity After Fraud: How to Recover and Build a Foundation for Success

Business Continuity After Fraud: How to Recover and Build a Foundation for Success

by | Jan 23, 2023 | Blog, KYC - Know Your Customer

Business Continuity After Fraud: How to Recover and Build a Foundation for Success

Has your business recently faced difficulties due to a fraudster, money laundering, or other criminal activity? Whether your experience stems from a failure to comply with existing AML legislation or from overlooked vulnerabilities in your current KYC or KYB protocols, knowing how to build the best path forward after a fraud case is essential to long-term success.

At iComply, we know that the standards for compliance are ever-shifting within the financial market, and that tracking evolving rules and criminal activity can be tricky. In the first half of 2022 alone, the global market has seen over a billion dollars worth of AML fines handed out in North America and the UK alone. iComply knows the best way to avoid becoming one of these statistics is to be proactive in your operational processes and to be ready to adapt when necessary.

Below, we’ll discuss how you can begin the process of recovering after an experience with fraud and how you can set up your organization for a better, more secure future.

Why Fraud Happens

The business and financial services markets have had their share of fraudsters and criminal activities going back as long as you’re willing to dig. The unfortunate reality? Where there is room to profit legally, there’s often even more opportunity to capitalize and profit illegally. While there are countless methods and circumstances under which fraud, money laundering, terrorist funding, and other illicit activities occur, the biggest culprit is often a fundamental lack of protections in place for a business or institution.

Governing bodies like the FATF institute global mandates to attempt to prevent financial crime; however, without an active approach to compliance in place, holes in the safety net offered by such legislation begin to widen and leave everyone more vulnerable to damaging mistakes.

What to Do After Dealing With Fraud

The unfortunate reality is that sometimes, even with the best tools and practices in place, fraudsters do succeed. Regardless of legislative or financial repercussions, your organization should know how to recover from fraud and reset with better safeguards for the future. Should you need to regroup and move on, it’s important to start by:

Review (and Renew) KYC, KYB, CDD, and EDD Protocols

Know Your Customer (KYC), Customer Due Diligence (CDD), and Enhanced Due Diligence (EDD) are all designed to help safeguard against money laundering, counter-terrorism funding, and other financial crimes. In the absence of a trusted software platform like iComplyKYC and/or skilled in-house support equipped to assess and respond to threats accordingly, the effectiveness of your countermeasures suffers greatly. Taking the time to review what you currently have in place gives your team(s) the ability to earnestly reassess active safeguards, identify shortcomings, and refresh any weak areas so your organization doesn’t experience the same issues in the future.

Identify the REAL Problem

Whenever there is a breach of security, there are typically several factors that enabled that attack to succeed. In order to learn from mistakes and move forward, business leaders need to know exactly what happened. Take the time you need to get the full story. Did your software fail? Was it a user error or a manual review mistake? The more you know, the more you can understand what to address in the future and which key areas your organization can improve.

Educate and Prevent

The best approach to preventing criminal activity is to be as proactive as possible. Once you identify where to refocus your protective efforts, double down on educating your team members, making protocols and procedures as reliable and transparent as possible, and committing to consistent learning organization-wide as compliance standards continue to evolve.

Close the Door

In the aftermath of fraud, you’ll likely have quite a few loose ends that will need to be tied up before you can fully focus on revamping your KYC approach. Pay any fines as quickly as possible and/or pursue whatever you may need to in order to recoup any viable damages. Once you’re able to close this chapter fully, looking into the future will feel much more attainable for all parties involved.

Your Trusted Partner for Compliance: Meet iComplyKYC

iComply is proud to be a world leader when it comes to delivering KYC and financial crime compliance. Our team understands that staying on top of ever-evolving protocols is more than simply avoiding fines—it’s about using a system you can trust.

We offer businesses and institutions across North America and Europe a truly end-to-end KYC platform, with KYC onboarding and AML screening services for both individuals and legal entities. With a lightning-fast setup and various options to customize your unique needs, iComply is your trusted provider for digital KYC and CDD solutions.

Give yourself peace of mind and the reassurance of reliable, robust compliance by viewing our platform today! Discover how we do it by talking to our team today and booking a demo.

learn more

Is your AML compliance too expensive, time-consuming, or ineffective?

iComply enables financial services providers to reduce costs, risk, and complexity and improve staff capacity, effectiveness, and customer experience.

Request a demo today.

The Importance of KYC Compliance for Fintechs
The Importance of KYC Compliance for Fintechs

Nov 1, 2024

The Importance of KYC Compliance for Fintechs Know Your Customer (KYC) compliance is crucial for fintech companies to verify the identities of their customers, mitigate risks, and adhere to regulatory requirements. This article...

Reviewing Customer Risk Profiles After Onboarding

Reviewing Customer Risk Profiles After Onboarding

by | Jan 23, 2023 | Blog, KYC - Know Your Customer

Reviewing Customer Risk Profiles After Onboarding

As we ease into a new year, there’s never been a better time to review your organization’s AML and KYC protocols to ensure you are as protected as possible. Criminal activities continue to grow increasingly complex and fraudsters find new ways to fly under the radar, as technology grows more innovative. The message to financial institutions and Virtual Asset Service Providers (VASPs) is clear: to fall behind on your due diligence practices is to leave yourself vulnerable to costly fines and adverse long-term repercussions.

At iComply, we know that managing KYC, KYB, CDD, and EDD protocols can be tricky, especially with the constantly evolving nature of AML legislation. With North America and the UK receiving the highest AML fines in the first half of 2022 (USD $1 billion and $18 million, respectively), businesses wishing to avoid the pain of being caught unprepared need to stay on top of best practices.

Below, we’ll discuss core KYC fundamentals, as well as how often you should be reviewing your customer risk profiles after onboarding is complete.

What is the Core Objective of KYC?

Know Your Customer, better known as KYC or KYB, is a form of AML and fraud protection that seeks to prevent financial crime by learning identifying details about a prospective individual or business to form vetted partnerships. By verifying the parties your organization deals with, you can remove many of the risks that come with the unknown and allow your operations to proceed confidently, with the safety and accuracy you can trust. Through advanced forms of KYC, Customer Due Diligence (CDD) and Enhanced Due Diligence (EDD), dig beneath the surface to get important details that keep you on the right side of the law and ready to move forward with any business relationship or partnership safely.

The main objectives of the KYC process are:

  • Identify and verify the identity of customers (both humans and organizations);
  • Properly evaluate the nature and purpose of customer relationships to develop customer risk profiles; and
  • Continuously monitor, identify, and report suspicious transactions on a risk basis to update client information as needed.

Due diligence measures are typically concerned with 4 main types of risk:

Customer Risk

Are you able to vet a client, their activities, and their known pattern of behaviours? Are there any high-risk factors, ownership structures, or political exposures you need to be worried about? CDD and EDD can dig past the surface to see who or what is hiding behind any given name.

Geographical Risks

Sometimes the location of a business or prospective client can uncover additional risks that you’ll want to be aware of, such as heightened exposure to money laundering activities or jurisdiction-specific requirements. In addition to knowing where a business is incorporated, you’ll also want to know where their main headquarters are and if there are any other locations you need to record and report.

Product and Service Offering

Certain products and services (virtual asset exchanges, for example) have more inherent risk where fraud and money laundering are concerned. How open and transparent is your prospective customer or business partner’s past, what additional risk factors are you aware of, such as additional team members or owners to be wary of, etc.?

Delivery Channel Risk

The delivery of any good or service is never fully without risk, but to mitigate unnecessary risk, knowing a wide variety of extenuating factors is critical to avoiding conflicts and damaging risks.

Using dedicated KYC software and protocols that help to automate much of the review process is one of the best ways to gain a clear picture of the above information and rest easy knowing you are compliant, prepared, and ready to act.

How Often Should You Review Your Risk Profiles

The financial world moves quickly, and with global regulations and risk factors constantly shifting, the reality is that businesses need to maintain up-to-date client and partner risk profiles to operate effectively. International sanctions issued in 2022 have been a strong reminder that global standards and sources of data can change instantly. Without the right tools to adapt to these changes quickly, you risk exposing your organization to extensive fines and other avoidable risks.

While the frequency you need to review your risk profiles will vary somewhat depending on your industry, services offered, etc., standard protocols advise at least once every 3 years (typically for lower-risk clients) or as needed for additional information. Being prepared to review your profiles on an annual (or more frequent) basis gives you the ability to adjust to evolving information and protect your company from costly liability allegations caused by failure to act. Rather than leaving reviews to chance and circumstance, it’s best to have reliable protocols in place alongside dedicated KYC software that can automate much of the review process, helping to reduce or eliminate manual errors and streamline operations.

EDD with iComplyKYC

At iComply, we know that balancing the need for CDD and EDD with the demands of day-to-day business operations can be challenging. Our modular suite of KYC products makes it easy to tailor your workflows to your specific requirements, including standard CDD, EDD, continuous risk monitoring, and more.

iComplyKYC allows you to focus on the ins and outs of running your business while reducing the cost of running ID verification and KYC protocols by up to 80% all while keeping you compliant with requirements in nearly 250 different jurisdictions. When it comes to streamlining your KYC and CDD process and simplifying risk profile reviews, iComply has you covered!

Book a demo with our team today to learn more about iComply’s range of KYC solutions, and discover how our platform can be customized for your organization.

learn more

Is your AML compliance too expensive, time-consuming, or ineffective?

iComply enables financial services providers to reduce costs, risk, and complexity and improve staff capacity, effectiveness, and customer experience.

Request a demo today.

The Importance of KYC Compliance for Fintechs
The Importance of KYC Compliance for Fintechs

Nov 1, 2024

The Importance of KYC Compliance for Fintechs Know Your Customer (KYC) compliance is crucial for fintech companies to verify the identities of their customers, mitigate risks, and adhere to regulatory requirements. This article...