KYC, Know Your Customer, is the process a company follows to identify and verify the identity of its customers. This practice is oriented to issues such as identifying the customer's level of risk, preventing money laundering, and avoiding fraud, among others.
The importance of Kow Your Customer in Financial Institutions
Preventing money laundering, internal fraud and the use of the institution to finance terrorist groups or drug trafficking is a priority for financial institutions. Criminal networks make use of banking institutions to carry out their economic activities. That is why the number of KYC policies to verify the identity of customers is growing every year.
Today this goes even further. Sectors such as telecommunications or online gambling are becoming increasingly interested in this type of verification. In this type of market, knowing the user and avoiding impersonation is a key element. Maintaining high security standards is one of the claims with which they differentiate themselves from their competitors.
European KYC Regulation
In Europe there are specific regulations against money laundering and terrorist financing. The most current is AML6, which fills in some of the gaps left by AML5, which came into force in July 2018, and is effective at national level (Spain) from 10 January 2020. It tightens definitions of offences and sanctions, as well as evolving corporate responsibility.
In addition to AML6 , in Europe we also have eIDAS. This regulation came to replace Directives such as 1999/93/EC, or the e-commerce Directive. These, although they had begun to provide a legal framework, left some freedom of interpretation for member countries. The eIDAS is responsible for establishing the necessary guidelines for trust services relating to electronic transactions (common to the member countries). In addition, it is also responsible for regulating electronic identification.
FutureSpace tools
Processes such as electronic signatures, digital certificates or facial recognition are really effective in the first steps of verification. However, as we have seen, the concept of KYC goes beyond mere verification. Institutions need to ensure that their customers are who they say they are, not only to comply with the regulatory policies of each country, but also for their own benefit. The damage caused by such actions to a brand, and the impact it may have on profits, are also two major pillars to consider.
At Future Space, we have developed tools that go a step beyond user identification. These tools not only verify the identity, but also seek to understand it and offer a 360-degree view of the user.
- Open Source Intelligence Solutions (OSINT)Open Source Intelligence Solutions (OSINT): These are responsible for extracting a user's digital fingerprint. These types of solutions have helped many of our clients to stay one step ahead of fraud, speeding up verification processes, and extracting information from their network profiles to avoid cases of fraud, money laundering, etc.
- SmartGraphSmartGraph: Platform where the institution's data converges and allows the use of advanced analytics to detect patterns. The tool interconnects the institution's information in a single graph database to find patterns and detect fraud. SmartGraph also allows the application of SNA (Social Network Analytics) algorithms, business rules and Artificial Intelligence models that help detect cases of fraud, and allow the investigator to verify and deepen the user's information.
