Customer identification is a routine yet surprisingly complex component of modern businesses. Financial service regulations require robust customer identification procedures that come with many challenges. Companies need the best tools at their disposal to meet these compliance requirements. 

Central Aspects of Customer Identification

Customer identification, known as knowing your customer (KYC), is critical to financial services. For decades, regulators have required financial institutions and companies to conduct robust customer identification to verify customer identity and prevent fraudulent or risky users from accessing sensitive financial information. 

In addition to initially verifying a customer's identity, companies must consistently monitor customer information. This ensures that customers are not fraudulent or that bad actors have taken the customer's information. KYC regulations are closely tied to anti-money laundering laws, and violations can result in significant fines. 

Financial service companies must collect various information from their clients to conduct KYC. These include multiple government-issued IDs, addresses, phone numbers, and account information. Financial institutions and companies must review all of this data before they can onboard a new customer. 

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KYC Process 

Firstly, it is necessary to understand which businesses and institutions must follow KYC regulations. Lending platforms, fintech companies, banks, and credit unions must follow robust KYC regulations. Additionally, many companies and institutions require partners to use their services to implement these KYC requirements when onboarding new customers. 

The KYC process has several steps. It begins with the Customer Identification Program, which conducts initial verification of customer identity. Then comes the Customer Due Diligence Program, which assesses customers' potential risks. Finally, there is the Monitoring stage, which updates customer information and identifies suspicious activity or transactions. 

KYC re-verification can occur if there are changes in client information or unusual activity to ensure no data breaches or KYC violations. It is essential to know that companies can implement various levels of KYC. Some meet the legal minimum requirements, and others implement more stringent KYC protocols to provide extra protection from fraud.

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KYC Challenges

Energy Intensive

Substantial information and identification are required for each client to comply with KYC. This requires substantial time to complete manually and is prone to human error. Not only does this add additional time and costs for businesses, but it also adds significant friction for clients waiting for manual KYC. Companies also cannot have compliance officers work on more complicated tasks as they have to focus on the day-to-day operations of KYC. 

False Positives

While it is essential that your KYC process catches potential fraudsters, false positives can cause additional customer friction. Legitimate clients may encounter errors when they submit their identifying information. This can prevent customers from being onboarded quickly and can negatively impact a company's reputation.  

Ongoing Monitoring

As discussed earlier, KYC is not a one-time thing, as companies need to conduct due diligence throughout their business relationship with customers. This requires companies to constantly update their customer information database, which requires a substantial investment of time and resources. Failing to do so can also result in significant fines from regulatory authorities. 

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KYC with Under.io

Identity Verification

With Under, we empower your business to verify customer data in real time without doing all the work yourself. Our system automates the process, enabling your team to focus on more important matters than data entry. Additionally, your customers are given a streamlined KYC experience. 

Under automatically verifies customers' data such as date of birth, address, email address, name, and social security number. We accomplish this by automatically verifying customer information with a wide range of databases. This ensures you can onboard customers with peace of mind. 

KYC with Under is designed to be customizable and scalable so your business has the right KYC solution. We accomplish this with a variety of integrations and partnerships that ensure our customers have access to cutting-edge KYC technology. 

Risk Assessment

In addition to verifying customer identity, Under allows companies to conduct robust risk assessments. We ensure that your customers are not on any watchlists or associated with any parties on those watchlists. This protects your business from volatile actors that can disrupt or derail your business. 

We also have tools to assess the activity of devices clients use to open accounts. This allows you to determine if your prospective customer's device has been associated with any suspicious activity. We also have features that allow you to conduct soft pulls of a customer's credit score, enabling you to get a picture of their financial health. 

Our system also enables you to provide low-risk customers with a more streamlined onboarding process. This reduces customer friction and these customers being flagged as false positives. Higher-risk customers can be directed to more stringent verification procedures that provide additional protection. 

Monitoring

This is one of KYC's most complex challenges, as you must constantly be vigilant for changes in customer behavior and information to meet KYC regulatory requirements. Fortunately, with Under, this is straightforward, as our system makes it easy for customers to update their information if their business moves to a new location. 

With constant database updates, our system can flag customers for suspicious changes in their information or activity. Any unusual change in name, address, email, social security number, and date of birth is recorded and reported to your compliance team. Like the rest of our KYC toolset, our monitoring tools enable your compliance officers to run monitoring automatically without constantly micromanaging it. 

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Going Above and Beyond

Under's strength is that we provide tools for every aspect of the onboarding process. KYC is one of the many unique tools and features we offer to our customers. We offer customizable digital applications that enable you to collect customer data and narrow it down to only qualified leads. We also conduct business checks that give you a great picture of your customer's business. 

We provide a wide variety of underwriting and KYC solutions, allowing you to add layers to your security and compliance to ensure only legitimate customers access your services. Additionally, we provide other valuable features, such as PDF mapping, to dramatically reduce the time spent filling out complex legal and financial documents. With Under, a customer onboarding system handles every process step, from initial customer identification to final underwriting. 

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