Did you know that Canadian consumers lose nearly $400 million each year to fraud? One of the most effective ways to prevent financial crimes and money laundering is through a process called Know Your Customer (KYC).

Not everybody understands the key information that they need, though.

So, what is KYC? Let’s take a closer look

What Is KYC?

It is a process that banks use to verify their customers’ identities. This involves collecting and verifying information such as name, address, date of birth, and other relevant data points. The goal of this process is to ensure that the customer can be trusted with financial transactions.

KYC verification is to both prevent and recognize fraudulent activity that may occur.

Banks must comply with KYC regulations to prevent fraud and money laundering. That’s crucial that you research KYC policy elements before using them.

So, keep the KYC meaning in mind to determine which applications you can use the KYC procedure for. This will go a long way toward helping you put the most out of it.

What Are the Benefits of Using KYC?

Using this process allows banks to take proactive measures to combat financial crimes, such as identity theft.

It also ensures that customers’ accounts are only used for legitimate purposes. It helps to reduce compliance costs by allowing banks to stay on top of their customer records.

KYC verification goes a long way when it comes to preventing fraudulent activity at your institution. By extension, this will also help preserve your brand reputation.

For example, let’s consider the 2017 Equifax data breach. A judge ordered the company to pay over $400 million to those who were affected. It also dealt a large blow to the reputation of the company.

It could be argued that the reputation never fully recovered. So, this is a situation that you want to avoid at all costs.

How Can Banks Use KYC to Improve Customer Service?

Using an automated KYC process helps banks to better understand their customers. This, in turn, allows them to provide more personalized services and products that are tailored to each individual customer’s needs.

Furthermore, it helps banks build relationships with their customers and create loyalty among them. This loyalty will go a long way when it comes to maximizing the number of people who continue to use your bank.

When people feel as though their information is safe, they will be more likely to use your institution. In turn, this will equate to better performance for your bank.

In contrast, your audience is much more likely to choose a competitor if you don’t. Be sure that you keep this in mind when moving forward.

How Can You Get Started With KYC?

There are a few different ways to get started. You can hire a third-party provider to handle the KYC process for you, or you can do it yourself.

However, it’s worth noting that a professional has all of the tools and resources that are required to get the best results. There’s also something to be said about the amount of time you will save by working with someone else. You can then allocate this time to other areas of your bank that need attention.

So, consider it an investment into the future of your financial institution.

Regardless of which option you choose, it is important to make sure that your KYC process complies with regulatory requirements. This will help ensure that you avoid obstacles you may have otherwise encountered.

What Are Common Signs of Fraudulent Activity?

Warning signs of fraud include sudden and large deposits or withdrawals, excessive transactions in a short period of time, and multiple accounts from the same person. It could also involve customers who are reluctant to provide information.

It is essential to be aware of these types of suspicious activities and report them accordingly.

The good news is that banks have access to software that can help discern fraudulent activity before it becomes an issue. This can often mean the difference between whether or not you are able to take the appropriate level of action.

What Should I Look For in a Professional?

Not all professionals are created equal.

That’s why it’s so important to research your potential options. Taking a look at their past reputation will help ensure you find someone right for you.

It’s essential that you consider what previous clients have had to say. This will help you substantially when it comes to making a decision.

Industry experience is another factor that you should consider. Unfortunately, it’s not uncommon for people to overlook this factor. Reputable companies will be more than happy to answer your questions.

If they haven’t worked with people like you before, it’s best to steer clear of them. It’s essential that you hire someone who understands your needs. Their billing structure is another important element to consider.

From here, you’ll know whether or not you need to adjust your budget. Are you able to communicate with them easily? If they seem to brush off your concerns, they aren’t the right choice for you.

Understanding KYC Doesn’t Have to Be Overwhelming

Initially, knowing the answers to “what is KYC” may seem daunting. The good news is that the guide above has everything you need to know to make the process simple.

Looking for more information on what we can do? Reach out to us today to see how we can help.