KYC compliance can be quite a hassle. But they are a necessary step for businesses to perform more secure and personalized transactions. This is most especially important for financial institutions like banks. KYC compliance ensures that you know the person you are dealing with and have assessed their risk before doing business with them.
A bank that doesn’t do KYC checks will be liable to penalties and fines. It may also ruin the banks reputation and possibly imprison the stakeholders. This is why KYC compliance should be strictly adhered to. It not only protects the customers but the people working for the institution as well.
Here are the steps to take to make KYC compliance less difficult for banks.
- Employ e-KYC
Normally we let customers fill out a KYC form inside the bank. But most of them don’t have the time to do it. It’s a hassle and because they’re often in a hurry, they might commit errors that will take even more time for the bank to correct.
To solve this problem, consider using e-KYC. This is the process of using a digital system to authenticate a customer. It takes out the tedious paper-based procedure and record-keeping, and condenses it all into one place.
This is especially great for low-income customers who may not have the time to keep going back to the bank to fill out the necessary forms.
- Sharing KYC Results
At the moment, there is little cooperation among banks when it comes to KYC. That means a customer would need to perform KYC every time he is dealing with a new bank. Rather than doing the same steps repeatedly, banks can have a centralized KYC system where a customer only has to comply once and then proceed to make different transactions with different banks. This is convenient for both parties and it’s more effective in reducing crime.
- Ask Personal Data Based on Transaction Risk
Another way to make KYC compliance less of a burden is by only asking information based on the type of transaction they are making. For example, if a customer just wants to open an account and put in $100 dollars, you can ask for basic information such as name, address, and valid ID. And that’s it.
Follow up information can be later asked when they are about to make a bigger, possibly riskier transactions like depositing a large amount of wiring money internationally.