With KYC authentication becoming very popular these days, you may be wondering if it can benefit your business. Know Your Customer (KYC) is a process to verify the identity and other credentials of a financial services user. It is a regulatory process of determining the identity and other information of a financial services user.
The KYC process helps against money laundering and prevents the financing of terrorist activities. It is a mandatory process that is required by a lot of countries to make sure that the customers are actually who they claim to be.
To be mandated by the law, the KYC process also helps the financial institutions invarious ways. It helps lenders perform risk assessment by identifying the previous financial history as well as assets owned, limits fraud that result mainly due to hiding of identity, prevents money laundering and other anti-social activities and brings stability and investment to the country, because it makes the financial framework more trustworthy and less risky. KYC is leads to decreased uncertainty which allows institutions to lend more to customers and increase their profits
A number of countries and economic regions across the world oversee financial anti-money laundering agencies or regulators that overview financial transactions to prevent terrorism financing, tax evasion, and other anti-social activities. All the agencies are a part of the Global Financial Action Task Force (FATF), whose mandate is to overview financial transactions globally.
The KYC authentication process is carried out for both individuals and organizations. This authentication technique is based on verification of identity and place of residence. There are various documents required for the KYC process for individuals, such as the driver’s license, social security card/number, passport and documents issued by the state or the federal government.
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