The rise in fraudulent activities due to the digitization revolution has challenged the business world in recent decades. Imposters found new and sophisticated ways to deceive organizations. According to a report published by Statista Research Department on Sep 26, 2023, more than 31000 scam cases were reported in Singapore in 2022.
This year-to-year rise in online fraud is alarming. Businesses can face financial and reputational losses or even huge penalties or fines. To protect businesses from these damages, all businesses need to implement Know Your Customer (KYC) regulations. This blog will explore how a KYC solution can benefit businesses and customers to safeguard against fraud, identity theft, and other illegal activities by simplifying the KYC process.
What is a Centralized KYC Solution?
Centralized KYC automated solutions are a centered database that contains the Know Your Customer records of all the individuals who are availing of financial services through any fintech institution.
A centralized KYC solution was first initiated by India in 2017. It allows individuals to open an account, invest, purchase insurance, or entertain any other financial service without repeating the KYC process. By focusing on customer information, centralized KYC software solutions help organizations make the Know Your Customer process more simple and easier.
Are KYC Solution And c-KYC Services Two Different Notions?
The KYC verification process is carried out by organizations to comply with the regulations of anti-money laundering (AML) and countering terrorism financing (CTF). KYC verifies the identities of customers by authenticating their identity documents. These documents can be submitted digitally. On the other hand, a centralized KYC service is a repository of Know Your Customer records.
When the documents of an individual are submitted through a Know Your Customer process, they are registered in the centralized AML KYC solutions. The individual is granted a c-KYC number for further transactions. After that, when an individual wants to carry out any transaction with any other financial institution, he can submit this number for KYC verification instead of going through the whole process once again. In the same way, financial institutions can verify the identity of individuals by accessing the c-KYC registry without going through any Know Your Customer process.
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How Does the Centralized KYC Process Work?
The complete cKYC process is executed by an authorized centralized Know Your Customer solution provider or financial institution. These service providers offer businesses an intensive and automated centralized KYC solution. This solution carries out the c-KYC process efficiently and performs the following tasks:
- Data Collection
Centralized KYC solution providers gather personal information about customers. It includes name, address, or identity card number.
- Document Showcase
Documents, such as identity cards, passports, or driving licenses, are submitted as proof of identity and address to the c-KYC service provider. A photograph and some other documents may be required for verification purposes depending upon the nature of the service or product being availed.
- Validation Procedure
Information and documents provided by customers are authenticated and verified under the KYC and AML compliance by the cKYC service provider.
- Centralized KYC Number Insurance
Customers will receive a specific cKYC number from a c-KYC service provider. Individuals can use this number for KYC purposes in the future across all financial institutions.
How Does a Centralized KYC Solution Benefit Firms?
Implementing an efficient c-KYC solution can drastically improve the productivity and credibility of businesses. The following are some other benefits catered by c-KYC.
- Boost Client Satisfaction
cKYC ensures that the data stored in the registry is secure, and the stakeholders are not required to repeatedly check the Know Your Customer process for Fintech operations. It is convenient and time-saving as customers only have to show papers once. KYC solution enhance the client satisfaction levels and constructs their confidence.
- Reinforce Security Against Scam
Under the strict checks, KYC uae protects both businesses and customers against identity theft, fraud, and other criminal activities.
- Enhanced Onboarding
It makes the onboarding process simple, quick, and free of repeated KYC verifications.
- Improved Data Processing
A centralized KYC solution makes it convenient for fintech sectors to enter and supervise Know Your Customer records of clients, resulting in better data management.
- Time and Expense Control
Financial institutions and businesses can save time and money by repeatedly performing KYC checks by leveraging the Central Know Your Customer (cKYC).
Winding Up
A centralized KYC solution is crucial for businesses to eliminate the cost and time spent on repeated KYC processes for the same customer. It provides a centralized error-free database for the KYC records of customers, minimizing efforts to manage the data. Complying with the regulatory laws of KYC and AML, it mitigates fraud, corruption, and money laundering. Individuals can avail the opportunity to invest in different areas like mutual funds, the stock market, and insurance plans, using only a 14-digit c-KYC number. This is the initial move towards getting real-time Know Your Customer services in the online market.
