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Ensuring KYC Compliance: Best Practices for the Legal Industry

Ensuring KYC Compliance: Best Practices for the Legal Industry

by | Sep 20, 2023 | Blog, KYC, News & Events

Ensuring KYC Compliance: Best Practices for the Legal Industry

When we think of Know Your Customer (KYC) and AML protocols, most people tend to associate the terms (and practice) with businesses involved in the financial sector, and for good reason. Banks, digital vendors, and other forms of financial institutions are beholden to strict international regulations in order to protect against money laundering (AML), counter-terrorist financing (CTF), fraud, and other illicit activities. While financial institutions may be one of the most visible industries that utilize KYC protocols, multiple other sectors handle sensitive information that leaves clients and the public vulnerable to attack without the proper measures in place.

The legal industry is a sector that demands confidentiality and security, with due diligence (CDD and EDD) becoming essential to the protection of all involved parties. Legal enterprises face unique challenges where KYC is concerned, and with major firms running the risk of interacting with sanctioned individuals, politically exposed persons (PEPs), and other risk-prone customer profiles, knowing who you’re partnering with is crucial to preventing criminal activity within in, or through the use of, your organization.

Below, we’ll take a closer look at some of the specific details businesses in the legal industry need to stay on top of to maintain KYC best practices, mitigate risk, and maintain the integrity of their operations.

Understanding Due Diligence

Due diligence (also known as CDD or EDD) refers to processes and checks in place that help businesses and institutionsconfirm the identity of and accurately assess the related risk associated with a specific individual or organization. For law firms, in particular, due diligence is vital when it comes to identifying potential conflicts of interest, reputational risks, financial viability, problematic associations (or sanctions), unethical practices, and more.

How KYC Aids in CDD For Law Firms

KYC is a critical aspect of due diligence for law firms. KYC incorporates multiple processes/procedures designed to verify the identity and assess the suitability of clients before initiating a business relationship. KYC regulations vary across jurisdictions, but it is a near-universal standard that adequate procedures must involve collecting and verifying core information like identity documents, proof of address (business and/or personal), and funding sources. Steps involved in conducting KYC generally entail the following:

Identification and Verification

The first step to accomplish the above goals is to obtain accurate identification information from clients. This entails collecting documents like full legal name(s), DOB, nationality, passport or valid government identification cards, and other related documents that comply with relevant jurisdiction-based regulations. Once information is collected, law firms may request additional information as needed to conduct Enhanced Due Diligence (EDD) and then will conduct verification to ensure all data is authentic and reliable in order to empower a trustworthy relationship moving forward.

Source of Funding

Law firms must be able to identify the source of their client’s funds to help prevent money laundering or other financial crimes. This also helps to protect against dangerous associations and ensures non-problematic transactions going forward. Clients may be asked to provide bank statements, tax returns, or other relevant financial documents. Law firms must also assess their clients’ overall wealth and financial background, including investments, activities, and transaction volume.

Risk Assessment

Once an entity or individual’s identity and funding have been verified, law firms (and other enterprises subject to KYC mandates) conduct a risk assessment to evaluate any potential hazards to conducting business with a specific client or the risk inherent with a specific transaction. Such assessments consider a wide variety of factors, including the client’s industry, geographical location, business reputation, political exposure, and any previous legal issues.

Clients that are determined to be high risk may require more extensive investigations (via EDD or other measures) and ongoing monitoring to ensure compliance with anti-money laundering (AML) and counter-terrorism financing (CTF) regulations.

Ongoing Monitoring

Law firms, just like any other business, must be aware that KYC is an ongoing obligation to maintain efficacy. Criminal activity is rarely a “one-time” risk, and thus those utilizing verification and risk assessment protocols must commit to the routine monitoring of clients to identify any suspicious activities or changes in the client’s circumstances. Monitoring includes reviewing client information, transaction patterns, and conducting periodic reviews of client relationships. In case of any red flags or anomalies, law firms are responsible for reporting them to the relevant authorities.

Discover the iComply Advantage Today

Knowing that you have access to trusted, automated verification and security protocols is essential for legal firms and other industries governed by KYC mandates. iComply’s suite of innovative, modular-based KYC programs is designed to simplify compliance and adapt seamlessly to evolving legislation, meaning you can easily stay on top of conducting due diligence. Our software leverages cutting-edge AI and blockchain technology to ensure complete regulatory compliance across 245 jurisdictions worldwide and allows you to effortlessly construct fully automated workflows tailored to unique client types, jurisdictional requirements, and more, all with minimal disruption.

Empower your organization with a comprehensive 360º view of KYC data and set your legal firm up for success with iComply’s digital identity verification solutions today!

Ready to take the next step?

Contact us today to explore iComply’s comprehensive, modular compliance solutions or to book a demo with one of our experienced product specialists.

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.

Ensuring KYC Compliance: Best Practices for the Legal Industry
Ensuring KYC Compliance: Best Practices for the Legal Industry

Sep 20, 2023

When we think of Know Your Customer (KYC) and AML protocols, most people tend to associate the terms (and practice) with businesses involved in the financial sector, and for good reason. Banks, digital vendors, and other forms of financial institutions are beholden to...

Simplifying KYC Compliance with iComplyKYC
Simplifying KYC Compliance with iComplyKYC

Sep 20, 2023

Today’s business and commerce markets are moving faster than ever, and with a rapidly evolving landscape, knowing that you have the best protocols and tools in place to stay compliant with Know Your Customer (KYC) and Anti-Money Laundering (AML) standards is...

Simplifying KYC Compliance with iComplyKYC

Simplifying KYC Compliance with iComplyKYC

by | Sep 20, 2023 | Blog, KYC, News & Events

Simplifying KYC Compliance with iComplyKYC

Today’s business and commerce markets are moving faster than ever, and with a rapidly evolving landscape, knowing that you have the best protocols and tools in place to stay compliant with Know Your Customer (KYC) and Anti-Money Laundering (AML) standards is essential. 2022 saw nearly $5 billion levied against businesses globally for counter fraud infractions, and with cyber security remaining a chief concern amongst global regulatory boards, staying on top of KYC is no longer a nicety, it is an absolute necessity.

In order to create a streamlined approach that meets the demands of all jurisdictional mandates, utilizing a proven KYC software like the suite of multi-faceted solutions offered by iComplyKYC is one of the best ways to stay on track and ensure you have everything you need to stay compliant and efficient.

Below, we’ll take a closer look at the importance of KYC procedures, as well as the benefits of partnering with a vetted industry leader like iComply. Read on to learn more.

Why KYC Matters

As we enter to a cultural and socio-economic shift that sees more consumers and businesses moving their operations online and into the digital world, the risk of criminal activity in increasingly decentralized markets is higher than ever before. Identity theft, fraudulent claims and misappropriation of funds are on the rise, and due diligence legislation has become vital to circumvent criminal activity. In addition to hindering multiple illegal ventures, KYC also allows your business to establish trusted customer identities, and accurate risk profiles, and avoid accidental association with those who may have ties to illicit activity like money laundering, human trafficking, terrorist funding, and more.

The iComply Approach

iComply believes in establishing trust in every transaction and removing the barriers that often keep companies from creating streamlined anti-fraud systems. Our unique modular suite of KYC software makes it easy to integrate our platform into your existing system, and leverages advanced technologies such as edge computing, machine learning, and refined algorithms to provide a seamless end-to-end experience. Backed by industry partners like Microsoft and Deloitte, iComplyKYC offers users the following:

Real-Time Monitoring and Risk Identification

As recent world events have reminded us, customer profiles and associated risks can change rapidly in the face of evolving conflicts and previously undiscovered associates. Being able to consistently evaluate and seamlessly reassess the known risk of your user base is essential to preventing criminal activity, and failure to identify new, problematic details, can spell disaster for businesses.

iComplyKYC gives you access to real-time monitoring of over 150 million data sources, including sanctions lists, watchlists, regulatory bodies, and adverse media. This comprehensive coverage enables businesses to stay up-to-date with potential risks and promptly identify any suspicious activities.

Natural Language Processing

iComplyKYC employs sophisticated Natural Language Processing (NLP) powered by artificial intelligence for efficiency. NLP enhances identity verification by finessing and assessing core human traits (as well as identifying human users) through the understanding of speech patterns, named entity recognition, spam/bot detection, and more.

The integration of NLP into iComplyKYC allows our platform to quickly identify, aggregate, and adjudicate potential risk results, significantly enhancing the speed and accuracy of compliance processes while also reducing the risk of human error.

Customizable Compliance Workflows

Every jurisdiction has its unique regulatory requirements, and global regulatory boards often implement new mandates to correspond with the rising risks of specific criminal activity. iComplyKYC is designed to be adaptable and easily integrated with over 250 jurisdictions worldwide. Our team knows that the ability to pivot and restructure in real-time, alongside evolving laws, is key to avoiding fines and contributing to the effective elimination of financial crime globally.

iComply’s KYC software also offers fully integrated data visualization, empowering businesses with actionable insights and information precisely when they need it. This feature allows compliance teams to make informed decisions quickly and efficiently.

Creating a Better Path Forward

At iComply, we know KYC and AML protocols are one of the most important parts of creating a strong preventive foundation against fraud and other forms of finCrime. We know that staying on top of constantly evolving legislation can be tricky, but we believe that the key to reducing opportunities for crime lays in creating trusted and secure digital ecosystems that empower businesses to act with confidence (and compliance) through every stage of their interactions with clients and other institutions. Learn more about how we can help empower your KYC practices by contacting our team today.

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.

Ensuring KYC Compliance: Best Practices for the Legal Industry
Ensuring KYC Compliance: Best Practices for the Legal Industry

Sep 20, 2023

When we think of Know Your Customer (KYC) and AML protocols, most people tend to associate the terms (and practice) with businesses involved in the financial sector, and for good reason. Banks, digital vendors, and other forms of financial institutions are beholden to...

Simplifying KYC Compliance with iComplyKYC
Simplifying KYC Compliance with iComplyKYC

Sep 20, 2023

Today’s business and commerce markets are moving faster than ever, and with a rapidly evolving landscape, knowing that you have the best protocols and tools in place to stay compliant with Know Your Customer (KYC) and Anti-Money Laundering (AML) standards is...

Travel Rule Facts: What to Know About FATF’s Recommendation 16

Travel Rule Facts: What to Know About FATF’s Recommendation 16

by | May 3, 2023 | Blog, KYC, News & Events

Travel Rule Facts: What to Know About FATF’s Recommendation 16

Are you aware of the key details pertaining to the Financial Action Task Force (FATF)’s Travel Rule?

As a relative newcomer into the global securities and digital legislation field, the Travel Rule—also referred to as “FATF Recommendation 16”—has garnered significant attention as of late, particularly with 2022 closing the year with several alarming instances of crypto market-related security issues. While the Travel Rule has not been “formalized” into governing legislation, it is referenced as such because it closely resembles U.S. requirements pertaining to documenting both the originator and recipient identities of virtual asset transactions.

Recommendation 16 represents the understanding of both FATF and the global financial legislation community that the exchange of virtual currencies and assets like cryptocurrency opens new avenues for financial crime and corruption. Below, we’ll take a quick look at some of the basics of the Travel Rule, as well as what to anticipate from continued legislative efforts in the future.

What is the “Travel Rule”

The Travel Rule was introduced in 2019 as a way to establish better visibility and more consistent standards for transactions using virtual asset service providers (VASPs). As described above, the Travel Rule recommends that virtual exchanges attach a unique identifier to both the originating and destination wallet in order to verify and assess the known risk attached to involved entities.

By removing the “anonymous” nature of virtual exchanges and implementing a form of traceable accountability, the risk of fraud lowers and it becomes difficult for criminals to conduct illicit activities like money laundering, terrorist financing, and more.

At present, the guidelines suggested by the FATF predominately apply to transactions exceeding $1000 USD/ €1000, with exchanges under this amount only needing the name of the originator/beneficiary as well as the specific VA wallet or transaction code for each. If a transaction exceeds the $1,000 threshold, the following data points are recommended:

  • Originator/Beneficiary name
  • Account number of the Originator and Beneficiary (wallet address)
  • The geographical address of the Originator
  • National identity number (SSN or SIN) for all involved parties
  • The Customer ID number for the ordering institution
  • DOB and place of birth

While the Travel Rule is often discussed when pertaining to VASPs, it is also applicable to financial institutions when a transaction involves virtually masked parties (e.g. a wire transfer that ‘legitimizes’ the assumed value of cryptocurrency during cashout).

From Recommendation to Legislation

As mentioned earlier, the Travel Rule we know today remains more of an international recommendation rather than a globally upheld financial regulation. With that being said, the European Parliament is currently in the process of implementing a new bill designed to close known gaps in the current EU regulatory environment.

The Markets in Crypto-Assets (MiCA) is expected to be voted on in early 2023, with possible adoption in 2024, and aims to establish harmonized rules for crypto-assets handled within the European Union.

Under the current framework of MiCA, crypto-assets are defined as any “digital representation of a value or a right which may be transferred and stored electronically, using distributed ledger technology or similar technology” and regulated into 3 different categories:

  • Asset-Referenced Tokens (ARTs)
  • Electronic Money Tokens (EMTs)
  • Other

Under current guidelines, MiCA does not apply to security tokens, NFTs, or E-Money Directives.

Both the Travel Rule and MiCA play a vital role in the continued regulation and safekeeping of virtual asset exchanges. Digital and cyber-based crime is anticipated to become one of the most prevalent forms of fraud in the next few years (source); with this in mind, a continued commitment to compliance and security is essential for all institutions and entities that interact within the global marketplace.

Protection with Ease through iComply

At iComply, we know that staying on top of constantly evolving AML and KYC protocols can be challenging, especially with the rapid pace virtual assets continue to expand. We are proud to offer a one-of-a-kind end-to-end suite of KYC + KYB software that makes it simple to stay informed and compliant with the latest AML legislation, taking a strict stance against the harms caused by all forms of fincrime.

Our KYC software, iComplyKYC can be integrated into your existing framework within minutes and easily configured to match the regulatory guidelines of nearly 250 international jurisdictions, giving you safety and peace of mind when it matters most.

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.

Ensuring KYC Compliance: Best Practices for the Legal Industry
Ensuring KYC Compliance: Best Practices for the Legal Industry

Sep 20, 2023

When we think of Know Your Customer (KYC) and AML protocols, most people tend to associate the terms (and practice) with businesses involved in the financial sector, and for good reason. Banks, digital vendors, and other forms of financial institutions are beholden to...

Simplifying KYC Compliance with iComplyKYC
Simplifying KYC Compliance with iComplyKYC

Sep 20, 2023

Today’s business and commerce markets are moving faster than ever, and with a rapidly evolving landscape, knowing that you have the best protocols and tools in place to stay compliant with Know Your Customer (KYC) and Anti-Money Laundering (AML) standards is...

EDD In Review: Taking A Brief Look at Enhanced Due Diligence

EDD In Review: Taking A Brief Look at Enhanced Due Diligence

by | Apr 27, 2023 | Blog, KYC, News & Events

Are your Enhanced Due Diligence (EDD) protocols up to the task of mitigating risk in an increasingly digital world? With Interpol’s new Global Crime Trend report strongly indicating that money laundering, phishing, and online scams pose a significant risk to businesses and financial institutions, as well as suggesting that fincrime is expected to drastically increase in the coming years, the importance of investing in your EDD processes is more significant than ever.

At iComply, we’re proud to partner with businesses and institutions across North America and Europe to offer comprehensive KYC and EDD solutions you can trust. Backed by powerful technologies like biometrics and edge computing, iComplyKYC gives you access to a robust suite of KYC products that make Customer Due Diligence (CDD) and EDD straightforward, saving you time and money while streamlining your operations.

Below, we’ll take a quick refresher look at some of the basics of Enhanced Due Diligence, why it matters, and the benefits of partnering with iComply for your compliance needs.

What is Enhance Due Diligence?

As the name suggests, EDD refers to a more in-depth level of customer investigation and identity verification conducted during onboarding, as well as on a necessary basis in response to changing risk profiles, world events, a change in known associations, and more. Enhanced Due Diligence serves as an extra layer of protection by enacting increased scrutiny to garner details not typically found using conventional CDD methods.

EDD procedures are more robust than standard CDD assessments and provide highly detailed reporting that can be reviewed on a routine basis for high-risk clients, reporting that can be used to prove “reasonable measures” have been taken to adequately conduct threat assessments.

Why EDD Matters

The value of Enhanced Due Diligence expands well beyond simply staying compliant with KYC and AML protocols. EDD plays a vital role in helping to safeguard the global market against the very real, pervasive threats posed by financial crime, fraud, and other related activities. When implemented properly and routinely reviewed, EDD protocols allow countries and global legislators to strengthen their efforts against humanitarian atrocities like human trafficking, forced labour, terrorist funding, and more.

Simply put, EDD is about more than checking a box to avoid fines; it helps protect vulnerable people against exploitation and threats that would otherwise go unseen.

Spotlight On: earn more about the importance of AML legislation in combatting human trafficking here.

When is Enhanced Due Diligence Necessary?

While Customer Due Diligence (CDD) is considered a standard practice under KYC protocols, EDD may be reserved for higher-risk cases or circumstances where enhanced information is necessary to move forward safely. Key examples that would warrant the need for EDD to be conducted include:

  • When dealing with businesses or third-party entities on the High-Risk Third Countries list
  • Interactions involving companies in sectors with an increased risk for money laundering including gambling, securities, and industries specializing in the transfer of virtual assets
  • Interactions with PEPs or PEP-adjacent individuals (e.g. family members, friends, colleagues, etc.)
  • Deals involving Shell corporations
  • Private and correspondent banking entity deals
  • Interactions with companies that have any known ties to funding terrorist activities or that have been blacklisted

When conducting EDD, organizations must ensure that highly detailed documentation is readily accessible, and that routine reviews are conducted to adequately and continuously assess risk. Failure to comply with either of these measures may result in fines and can expose your business, as well as your customers, to the risks associated with fincrime and other non-ideal circumstances.

Transparency Made Simple

At iComply, we believe that staying compliant with AML and KYC standards, including EDD processes, should be simple. Our world-leading, modular suite of KYC products makes it easy to compile and respond to key customer data, navigate changing legislation, and reduce the cost of fincrime compliance by automating up to 80% of your KYC protocols. iComplyKYC is designed to seamlessly integrate with your existing security framework within a matter of minutes and gives you access to compliance measures in nearly 250 jurisdictions across the globe.

When you need information you can trust and KYC processes designed to tackle the market with ease, iComplyKYC has you covered.

Book a demo with our team today to learn more.

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.

Ensuring KYC Compliance: Best Practices for the Legal Industry
Ensuring KYC Compliance: Best Practices for the Legal Industry

Sep 20, 2023

When we think of Know Your Customer (KYC) and AML protocols, most people tend to associate the terms (and practice) with businesses involved in the financial sector, and for good reason. Banks, digital vendors, and other forms of financial institutions are beholden to...

Simplifying KYC Compliance with iComplyKYC
Simplifying KYC Compliance with iComplyKYC

Sep 20, 2023

Today’s business and commerce markets are moving faster than ever, and with a rapidly evolving landscape, knowing that you have the best protocols and tools in place to stay compliant with Know Your Customer (KYC) and Anti-Money Laundering (AML) standards is...

Is it Time For a KYC Overhaul?

Is it Time For a KYC Overhaul?

by | Apr 27, 2023 | Blog, KYC, News & Events

Is it Time For a KYC Overhaul?

Are your organization’s processes due for a KYC and regulatory compliance update? If it’s been quite some time since you’ve reviewed your Know Your Customer (KYC) and Anti-Money Laundering (AML) protocols, there is a strong chance you may be at risk for fines and exposing yourself and your customer base to the opportunity for fraudulent or criminal activity.

As one of the most prevalent sources of crime and corruption across the globe, financial fraud exposes the global community to significant dangers, with an estimated 90% of money laundering crimes still going undetected. In 2022, the SEC levied an alarming US$6.4 Billion in fines for non-compliant entities.

With decentralized banking and the exchange of digital assets like cryptocurrencies becoming a growing focal point among regtech entities, it is more important than ever before to stay on top of your KYC practices and streamline your operations through the use of a trusted eKYC platform like iComplyKYC.

Below, we’ll take a look at 4 key signs it’s time your organization should consider making the shift to a more effective eKYC program.

Onboarding Process

One of the biggest (and earliest) signs that you have a KYC problem within your institution is high abandonment rates during the onboarding process. While a certain level of attrition is to be expected, if you seem to be constantly losing users before they fully integrate into your system, this is a sure sign that a closer look is warranted.

Poor AML and KYC processes (more on that shortly) can force prospective clients to wait longer than usual to be fully verified and integrated, and manual reviews can draw the process out even more. The reality for most businesses is that if you keep people waiting, you weaken your chances for retention and cost your business valuable revenue. Implementing an eKYC platform like iComplyKYC greatly reduces these wait times, providing a better customer experience while still maintaining due diligence (CDD).

Ongoing Customer Reviews

KYC and AML protocols are not limited to new clients; in order to better reduce risk and circumvent crime, organizations need to be diligent in their routine reviews and maintenance of customer risk profiles. Recent political events in Europe have served as a valuable reminder that the sudden issuing of global sanctions and other major global events can catch unprepared companies off-guard and significantly hinder security efforts if your organization lacks the ability to pivot as needed with minimal notice.

iComplyKYC helps to combat the challenges associated with manual review by allowing you to set automation that makes it easy to review client risk assessments as needed, whether due to geographical events, routine check-ins, or uncovering previously undetected associations that may lead to the need for Enhanced Due Diligence (EDD) to be conducted.

Better Risk Screening

When screening candidates and prospective clients (or reviewing existing profiles as per above), not all data is equal in its ability to adequately assess and capture risk. iComplyKYC uses the most trusted and legally accessible databases across the globe to ensure accurate results for both automated and manual screening and to reduce the risk of false positives with fuzzy matching and Levenshtein distance algorithms. This means a far better screening process with results you can trust.

Standardized Efficiency

Another major issue facing KYC processes is a lack of standardized practices that often lead to communication breakdowns and sensitive client data being improperly assigned. Implementing an eKYC platform like iComplyKYC removes ambiguity and keeps everyone on the same page, empowering your organization to move forward with confidence and transparency at every level.

Streamline Your KYC with iComply Today

Having streamlined KYC and EDD protocols is essential to retaining customers, as well as staying compliant in an increasingly fast-paced digital world. iComply’s innovative, modular suite of KYC products is designed to make it easy to integrate security measures and identity verification practices into your daily operations, with setup taking a matter of minutes and giving you access to compliant measures in nearly 250 jurisdictions worldwide. iComplyKYC uses edge computing to provide a truly end-to-end experience (let us show you how), and can reduce the cost of running KYC protocols by up to 80% saving you time and money where it matters most.

Book a demo with our team today to learn more about iComplyKYC and how our platform can be tailored to your specific needs and applications.

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.

Ensuring KYC Compliance: Best Practices for the Legal Industry
Ensuring KYC Compliance: Best Practices for the Legal Industry

Sep 20, 2023

When we think of Know Your Customer (KYC) and AML protocols, most people tend to associate the terms (and practice) with businesses involved in the financial sector, and for good reason. Banks, digital vendors, and other forms of financial institutions are beholden to...

Simplifying KYC Compliance with iComplyKYC
Simplifying KYC Compliance with iComplyKYC

Sep 20, 2023

Today’s business and commerce markets are moving faster than ever, and with a rapidly evolving landscape, knowing that you have the best protocols and tools in place to stay compliant with Know Your Customer (KYC) and Anti-Money Laundering (AML) standards is...

Exploring the Importance and Challenges of KYC Protocols

Exploring the Importance and Challenges of KYC Protocols

by | Apr 21, 2023 | Blog, Human Trafficking, KYC, News & Events

Exploring the Importance and Challenges of KYC Protocols

Are your fraud prevention protocols up to date with the latest Know Your Customer (KYC) and Anti-Money Laundering (AML) standards? In 2021, there was a 43% increase in fraud and computer misuse crimes compared to 2019, indicating that economic crime is on the rise. Having the right procedures and resources in place to prevent nefarious activities is essential for financial institutions and businesses.

With uncertain markets, ongoing global conflict, and a rapid influx of online banking users globally, 2023 has become a critical year for compliance legislation; failure to abide by evolving standards will likely spell even steeper costs for businesses than ever before.

At iComply, we know that using a proven KYC solution like our iComplyKYC platform is one of the best ways to streamline your operations and decrease your exposure to risk. As one of the leaders in identity verification and regulatory compliance, we’re proud to partner with clients across the globe to ensure you have everything you need to operate safely and efficiently. Below, we’ll take a closer look at some of the core elements that drive KYC legislation, as well as the benefits of using proven solutions like iComplyKYC.

What is KYC?

Know Your Customer (KYC) is a principle that refers to the practice of mitigating risk through the accumulation of verification-based information for unknown individuals and entities on a business level. From hiring new team members to securing a loan, adding a customer to your database, and more, KYC and AML protocols help to reduce the opportunity for criminals to conduct fraudulent practices and engage in nefarious activities like terrorist financing (CFT), human trafficking, the transfer of illegal products for financial gain, and more.

While KYC may not be a new concept (background checks have been an increasingly prevalent occurrence since the late 1970s thanks to both the Consumer Credit Protection Act and the Fair Credit Reporting Act), the constant push towards a more digital-centric existence makes being able to verify who you’re “working with” even more significant.

While each industry will have different points of consideration and corresponding legislation to accommodate when conducting KYC protocols, the end goal is to give businesses and their clients protection against fraud and other criminal acts that put the global marketplace at risk.

How Does KYC Mitigate Risk?

The unfortunate reality today is that international legislators and security watchdogs have yet to find a definitive method that completely halts the capacity for criminals to operate undetected in the financial sector.

While many of these crimes still go undetected, KYC and AML guidelines make it significantly harder for fraudsters to fly under the radar. By exposing fake users, flagging suspicious transfers, and performing other risk-reporting activities, organizations and regional legislators have a much better opportunity to address threats head-on and eliminate the misuse of funds or assets for nefarious purposes.

Addressing Global Challenges

One of the most difficult challenges facing the global regulation industry is pushing for the universal adoption of compliance guidelines, which, as mentioned above, currently differ regionally.

The EU and North America have the benefit of being able to leverage governing bodies like the FTC, Financial Action Task Force (FATF), Eurojust, Europol, and more, but not every country has embraced the need for KYC and fincrime prevention equally. This lack of balance presents regulators with a significant problem, as many of the highest-risk countries for illegal trafficking and fraudulent activity tend to have more relaxed (or an absence of) protocols that allow criminals to continue to operate unchecked with greater ease.

Though it may be easy to infer that financial crime is more centralized in such regions, the international community along with institutions that deal with financial and digital asset transactions must remember that rapidly evolving technology makes it more feasible than ever before for criminals to have a global reach. This makes compliance with KYC and AML protocols a necessity rather than a nicety; businesses need to be aware that failure to comply doesn’t simply result in fines, but can also lead to gateways for dangerous activities that affect the global community as a whole.

Why Partner With iComply

At iComply, we know the importance of having access to KYC protocols you can trust when it matters most. That’s why we’re proud to offer an innovative, modular-based suite of KYC programs that make it easy to stay compliant and adapt to evolving legislation.

iComplyKYC leverages cutting-edge AI and blockchain technology to ensure total regulatory compliance in over 245 jurisdictions worldwide and makes it easy to build fully-automated workflows for unique client types, jurisdictional requirements, and more with minimal downtime.

With a readily accessible 360º view of KYC data across your entire organization, you can move forward with confidence and know you are in the best position possible to combat fraud and financial crime and stay on the right side of KYC legislation in your region.

Ready to Discover More?

Contact us today to learn about iComply’s comprehensive, modular compliance solutions or to book a demo with one of our product specialists.

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.

Ensuring KYC Compliance: Best Practices for the Legal Industry
Ensuring KYC Compliance: Best Practices for the Legal Industry

Sep 20, 2023

When we think of Know Your Customer (KYC) and AML protocols, most people tend to associate the terms (and practice) with businesses involved in the financial sector, and for good reason. Banks, digital vendors, and other forms of financial institutions are beholden to...

Simplifying KYC Compliance with iComplyKYC
Simplifying KYC Compliance with iComplyKYC

Sep 20, 2023

Today’s business and commerce markets are moving faster than ever, and with a rapidly evolving landscape, knowing that you have the best protocols and tools in place to stay compliant with Know Your Customer (KYC) and Anti-Money Laundering (AML) standards is...