KYC Process: A Helping Hand Against Money Laundering and Identity Theft

KYC Process


In the 21st century companies have been moved toward technological advancements. The COVID-19 pandemic provided a practical ground to experience an unexceptional rate of digitalization. Although the offboards were shut during the pandemic, businesses got a high success rate for onboarding. Moreover, the remote capabilities continue post-pandemic as per the facilities. 

These technological advancements also made hackers more active in using online systems to execute their illicit plans. Thus, every business is required to follow the KYC process to filter authentic customers to deal with. Financial institutions need to be more conscious ] to prevent money laundering and illicit activities. Therefore, it is essential to have Know Your Customer verification to secure an organization. 

Essential  Steps in the KYC Verification Process

Mainly 3 steps are essential as the main components of the KYC process. 

  1. CIP(Customer Identification Process)
  2. CDD(Customer Due Diligence)
  3. Monitoring

Customer Identification Process (CIP)

It is the very first step to be followed in the KYC process, Various documents such as ID cards, licences, utility bills, and certificates, are collected. These documents give access to many personal details such as name, address, date of birth, gender, and identification number, This information is used in verification processes. It doesn’t ensure only that information is real but verifies that the information provider is also real. Ai-based methods are used in this process to give more quick and authentic results. Optical character recognition is used as a data extractor from scanned documents.  OCR can detect if there is any minor variation, therefore it is responsible for giving access to the client’s risk profile. 

Customer Due Diligence

Once customers’ information is identified, a company can determine the level of risk posed by them. Afterward, businesses need to ensure that the client is trustworthy and out of any suspicious risk. Thus a customer due diligence process is required to execute. CDD enables businesses to become safe from financial terrorism and money laundering. 

As per the client’s risk profile, further simplified due diligence (CDD) or enhanced due diligence (EDD)is executed to make an organization safe. 


After the successful processing of CIP and CDD, a customer is continuously monitored in transactions to prevent every kind of risk. It provides an insight into their activities. 

Following are the some factors that require continuous monitoring. 

  • Exceptional international activities 
  • Dealing with people on a sanctions list
  • Rash spikes in transaction values 

Whenever a client seems to possess the above factors, an organization is required to file a Suspicious Activity Report (SAR). 

Top 5 Key Benefits of KYC Banking

  • Minimize Monetary Crimes Banking

Financial institutions, which verify their customers with KYC procedures can detect unusual behaviour of their clients Thus they can access their risk profile which makes them safe regarding every kind of financial crime such as money laundering, illegal transactions, and fraud. 

  • Anti-Money Laundering

KYC contributes to the strategies for anti-money laundering. By verifying a customer’s identity and executing a thorough customer due diligence process, financial institutions can identify money launders and scammers. Thus they make them unable to have any illegal way to obtain finds that can be posed as legitimate. KYC banking particularly provides a safety measure to fight any financial terrorism.   

  • Prevent Identity Theft 

While having customers on board, there is a great risk of an identity crisis. Hackers use other’s credentials to have a fake identity. KYC processes ensure that clients are real who they claim to be. It helps the banking sector to have an authentic person in account opening. It reduces the risk of any unauthorized account.

  • Trust and Reputation

Sometimes, banks are suspected of being involved in illegal actions just for having unauthentic clients. They have to suffer heavy penalties and reputation losses. KYC banks are secure as they don’t have to deal with any unauthentic clients.  After KYC verifications, banks can filter scammers and people with fake IDs. 

  • Efficient Transactions

KYC information enables authentic and legitimate clients to be on board. It allows only legal transactions by authentic clients who are not enrolled in any kind of suspicious activity. Thus KYC in banking works as a miracle. 

How Can an Organization Have KYC Verification?

Companies can contact identity verification providers. Different documents are provided such as  ID cards, Utility bills, driving licenses, educational documents, etc. These documents are processed by KYC measures and clients are confirmed for authenticity. 


The KYC process made this digital era able to address authentic and authorized clients on board. Particularly financial sectors are very secure as KYC verification eliminates the risk of money laundering and financial terrorism.  The KYC process involves the proper identification and verification of individuals to access their risk profiles. Digitization has suffered a lot at the hands of scammers thus  KYC service providers are helping hand in this regard.

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