Digitalization of KYC: Realise More Effective KYC Controls

Know Your Customer is really significant, especially for finance sector. Know Your Customer checks refer to the process of identifying customers, examining their financial history, checking their residency information, and based on these, customer due diligence process before opening any customer account. With KYC, businesses aim to take measures against money laundering and terrorist financing activities. 


In particular, the pandemic process, whose effects we still see closely today, paved the way for digitalization activities in the field of finance, as in many other issues. However, the potential impact of the epidemic on money laundering activities has been observed in various ways throughout the process. FATF has frequently emphasized the importance of Know Your Customer and Customer Due Diligence measures against financial scandals and criminal activities related to these scandals. 


FATF has consistently argued that KYC and CDD measures should be developed with a risk-based approach and encouraged companies to take a risk-based approach. KYC and CDD measures implemented by FATF and other financial supervisory authorities are as follows; 


1) Implement simplified due diligence measures in medium and low-risk situations. 


Nowadays, it is much easier to carry out financial activities. The period of waiting for long queues at banks for any deposits is already over. Especially when we need to stay in our homes, the digital space offered to us is much more comprehensive. However, the digital settlement of payments and many other transactions brought various financial risks. 


Therefore, it is essential for companies to keep up with this new normal order and to strengthen their digital infrastructures. Businesses can also digitize these processes, which are among the pioneering activities in preventing money laundering, such as KYC and CDD. Due diligence measures should be applied not only for high-risk activities but also for medium and low-risk activities.


For example, accounts created to facilitate general government payments of individuals or businesses and provide access to digital payment solutions should be regularly audited and necessary measures. 


2) Provide your clients with guidance in their risk situations. 

Contrary to popular belief, CDD is a process that should be carried out not only before the customer opens an account but until the customer is disconnected from the company. 


However, suppose the customer cannot provide information due to various legitimate reasons such as being in quarantine or being sick, for ongoing situation determination. In that case, you should guide him / her on possible situations and measures to be taken instead of terminating the customer relationship as a company. 

 

3) Compliance with new FATF regulations under COVID-19. 

FATF has created a Money Laundering and Terrorist Financing Law on COVID-19 as of May 2020. According to the law, businesses should encourage their customers to use digital identity and other innovative solutions to more easily identify their customers while traveling and performing other transactions. 

Besides, reporting organizations should accept and store digital copies of documents as a temporary measure. 

 

Sanction Scanner Offers The Most Compatible KYC Solutions 

One of the challenges that compliance experts face in this extraordinary period is taking strategic steps towards digitizing KYC / CDD processes. The importance of having an advanced digital infrastructure and adapting to the new regulations created within the scope of COVID-19 continues to be emphasized. 


Sanction Scanner is an AML compliance software that enables companies to create compliance with AML and KYC regulations. Its PEP, Adverse Media Screening Services, and Enhanced AML Compliance Solutions enable businesses to perform KYC checks efficiently. 


Sanction Scanner contains more than 1000 sanction lists in its database. Through its API and integration capability, it meets the end-to-end needs of organizations in this field. Thus, you can regularly perform AML and KYC controls for your business, greatly reducing your workload. For more, you can contact us or request a demo. 

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