Whether recruiting an individual or setting up a partnership or alliance with a vendor or another business, it is crucial to know who you are dealing with. Instant KYC or Know Your Customer is designed to prevent misrepresentation and identity fraud. KYC verifies data related to individuals, businesses, vendors, or other third parties to root out impersonation, forgery, and other forms of identity theft.
Increased relevance of KYC in the digital economy
The technology disruption has kept pace with the fast growth of start-ups, shared economies, and larger businesses. As boundaries merge and businesses are increasingly going global, new customer bases are acquired. These necessitate faster and hassle-free recruiting, onboarding, and partnering processes. Manually conducted Know Your Customer checks to defeat the purpose of a fast and efficient business image, while also being low on accuracy. Paper-based proofs are, at times, forged or manipulated, resulting in false information. Multiple manual documents such as ID proofs, address proofs, licenses, and so on need to be checked as part of KYC, which can be time-consuming and laborious.
Given the rate of growth of digital economies, the inherent risks of identity theft and frauds are also on the rise. Information is shared on public domains across multiple platforms. This makes sensitive data vulnerable to theft and manipulation. Fake identities, digital forging, embezzlement, and misrepresentation are some of the dangers of a digital economy.
According to a recent estimate, 77% of frauds in India relate to identity theft. Close to 85% of fraud cases were related to identity thefts in the banking, credit cards, and mortgage loans sectors in 2017. In the U.S., 15 million consumers were targeted by identity thieves to the extent of $16 billion in 2016 alone. KYC is the crucial link that connects businesses to a safe and risk-free digital economy.
Usefulness of KYC
Thanks to e-KYC, a number of services can be availed in a hassle-free manner. It is possible to open a bank account in a matter of seconds with e-KYC. Aadhaar-based Know Your Customer can help get new mobile connections in a quick timeframe. KYC is also useful for setting up a new trading account. Establishing identity through KYC also enables a host of other services to be done in half the time it used to take with manual processes. These include health insurance, life insurance, and mutual fund investments. Businesses seeking a financial product or entering into a partnership can speed up the process with KYC.
Also Read: Smart KYC Solutions: The Need of the Hour for Employers
Tackling the challenges of onboarding
Businesses in expansion mode need to onboard employees in multiple locations as needed. Since employees represent the business and interact with customers, it is critical to ensure the right person is employed. In this scenario, it is essential to ensure smooth KYC and onboarding experience while ensuring adherence to strict Know Your Customer norms and filtering any fake applications out efficiently. KYC verifications are best entrusted to a third-party professional agency that specializes in identity verification and background verification. e-KYC is fast and discrete and provides a smooth onboarding experience for employees by cutting down on time. At the same time, the results of identity verification using e-KYC are accurate and prevent any fake applications.
Aadhaar-based e-KYC and its merits
Aadhaar-based e-KYC helps deliver enhanced customer experience while mitigating risks. Being an entirely paperless process, the results are instant, accurate, and reliable. With Aadhaar-based e-KYC, businesses can effectively identify employees, agents, clients, and vendors and check their compliance with Anti-Money Laundering (AML) laws. The validity of e-KYC is recognized by the Ministry of Finance for all financial services under the PML (Prevention of Money Laundering) regulations.
