Millions are spent annually on Know Your Customer (KYC) and anti-money laundering (AML) procedures as businesses strive to confirm identities and fight money laundering. The rise of online banking and payments has made due diligence increasingly complex to navigate - so what elements should you consider when building a robust and reliable eKYC solution?
To build a reliable eKYC solution, it's important to adopt a multi-layered approach to regulatory compliance. Single checks at onboarding, such as AML checks for PEPs, sanctions, adverse media, and global watchlists, are not enough to protect against sophisticated cybercriminals who may use stolen data and tampering techniques to bypass identity verification. To consistently know your customer throughout the customer lifecycle, it's necessary to have multiple types or layers of defense at onboarding and to implement ongoing monitoring. Digital identity solutions that offer a curated library of identity verification services and layer automated document and biometric solutions with trusted global data sources and fraud detection signals can be effective in this regard. As businesses strive to confirm identities and combat money laundering, it's essential to consider these elements when developing an eKYC solution.
1. Embed Flexibility into the eKYC Process
To build a successful eKYC process, it's important to consider flexibility and a layered approach. This allows businesses to tailor their workflows to various customer bases and risk profiles, minimizing friction for customers while carefully assessing their risks. By starting with standard KYC checks and adding additional layers for more regulated industries, such as document verification and biometric checks, businesses can anchor customers to legal government-issued identities and ensure that the person behind the screen is the same as in their documents. Building multiple KYC workflows optimized for different market conditions, geographies, and risk tolerance can help businesses achieve the lowest fraud rates and highest end-user conversion rates without the need for additional customer support. This approach allows businesses to take the right path with each customer, providing fast access for low-risk customers and enhanced KYC or AML verifications for riskier customers.
2. Fighting Fraud within the eKYC Process
To effectively protect against fraud, it's crucial to make fraud prevention an integral part of your eKYC process. Fraudsters use a variety of tactics, such as first-party fraud (misidentification) and third-party fraud (stealing someone else's identity), to subvert eKYC processes. In addition, repeat fraud at onboarding, fueled by global data breaches that supply stolen identity credentials, is a significant threat. Synthetic identity fraud, where a valid Social Security Number is paired with fake data to create a fake identity, is a particularly dangerous type of repeat fraud. To withstand these attack vectors, businesses should employ multiple fraud capabilities and adopt a layered fraud protection approach based on their risk appetite. This might include global document verification, fingerprint, or facial biometrics solutions that are designed to mitigate sophisticated spoofing and other passive fraud signals. By keeping fraudsters away from your platform, you can protect your revenue, brand, and customers.
3. Automate, Automate, Automate
To achieve compliance without slowing down onboarding, businesses should automate the identity verification process with AI-powered technology. This allows them to handle surges in volume and ensure fast and accurate verifications, regardless of the number of people being onboarded. By designing smart eKYC processes that provide reliable security online and a smooth onboarding experience, businesses can ensure safety and security in the customer onboarding process while meeting regulatory requirements and minimizing the impact on customer acquisition cost.
It's important to offer a variety of standard and creative solutions to ensure compliance and a positive customer experience, as 45% of consumers will abandon a sign-up process if it doesn't meet their expectations. By striking the right balance between expedited onboarding, compliance, and operational efficiency, businesses can ensure that legitimate customers are up and running in no time.
