Ongoing AML Check - Customer Identification and Screening in Financial Sectors

Parts of Identity Verification:

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The United Kingdom (UK), around the world, is considered the world's seventh-largest economy providing huge financial services providers. According to FATF (Financial Action Task Force), the UK is a global leader that is supporting corporate transparency.

This is the reason that the UK has robust regulations as well as procedures to comply with Know Your Customer ( KYC ) and Anti-money Laundering (AML). The regulations include requirements regarding identity verification of individuals as well as businesses that organisations need to perform to ensure security and legitimacy in business operations. Such businesses include:

  • Banks and financial institutions

  • Credit card service providers

  • Payment services providers

  • Gaming industry

  • Estate agents

  • Electronic money institutions

  • High-value dealers

  • Virtual currency services providers

Financial services and regulations

UK regulatory firm, FCA (Financial Conduct Authority) aims at running the financial market well. It is known to be taking innovative solutions to comply with regulations.

As the fin-tech industry is growing and digitisation has become a necessity of every financial business as per the competition, the UK now ranks among the highest in developed countries.

Performing Customer Due Diligence (CDD) practices is crucially important for businesses operating in the UK. CDD procedure in Ongoing AML Check includes the following three requirements:

  • Customer identification unless the identity proves to be honest or is verified.

  • Verify the identity of customers that are already been verified.

  • Access the customer information where it is needed, verify it with the intention to secure the business

These practices correspond to the KYC authentication of individuals by businesses operating in the online world. The need accelerates the business interests towards innovative solutions that businesses should ensure to secure platform from malevolent actors that disrupt the legitimacy.

Ongoing identity verification against the KYC and AML checklist ensures that other than one-time identity verification, a person is identified throughout the customer lifecycle.

Financial crimes like money laundering and terrorist financing target the financial industry and make regulators enforce KYC / AML regulations.

Verification of an individual by taking into account digital identity proofing techniques can help financial businesses protect the system from bad actors whose major purpose is to disguise the source of illegally earned money and conceal it by transferring it across the world.

Such actors should be pre-filtered by verifying them and screening them against global watchlists and sanction lists. These also include a list of PEP records in which politically exposed persons and their relatives are mentioned and each on boarding identity is checked against that database to prevent their entry into financial systems.

Parts of Identity Verification:

There are total of five parts of identity verification :

  • Strength - Ask the user to provide any evidence of identity person is

  • claiming to be

  • Validity - Check if the provided evidence is authentic or not

  • Activity - Check the activity of the person to ensure identity existence

  • Identity Fraud - check if identity has any risk related to identity fraud

  • Verification - verify that identity is the one who it claims to be

To adhere to all these steps, Ongoing KYC and AML solutions can be taken into account. Identity authentication and verification are crucially important to let an entity participate in the financial system.

Not only individuals but business verification, as per UK regulators are crucially important for businesses. Business verification ensures that you develop a secure business relationship with corporate entities you are dealing with.

Any discrepancy or non-compliance can lead to cybersecurity threats as well as financial crimes that could ultimately lead to regulatory penalties and fines.

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1 комментарий
По порядку

Отличный пост, полезный. От себя хочу добавить, что входящие транзакции нужно проверять на соответсвие с АМЛ (AML) требованиям. Например через, либо chain analysis. И если бот определит риск, нужно дополнительные меры предпринимать.


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