KYC Management in Online Remittance

KYC Management is an end-to-end strategic process that equips an organisation with the right tools to develop and optimise its Know Your Customer (KYC) operations.

KYC Management, at its core, is a set of processes that allows financial services and money transfer platforms to confirm the identity of the organisations or individuals who opt for their service. KYC checks follow a series of mandates put forth by various financial bodies to ensure that the transaction is legal.

KYC acts as a fail-safe for a money transfer business to ensure that the customers they have extended their services to are utilising their platform in a legal and compliant manner.

What is the significance of KYC?

The primary focus on extended KYC management is due to the rapid increase in financial crimes worldwide. Adding to the financial crime rate spike is the increased monetary value being passed daily. The number of cross-border transactions being made daily is always on the rise; this leaves vast scope for illegal activities.

KYC is the systemic approach to recognising and validating customer data through internal and external means. An efficient KYC Management system helps a business to:

• perform risk assessment through validation of previous financial history and verification of the assets owned
• exercise integrity checks to limit identity thefts
• assure clients of the legitimacy of the platform
• prevents money laundering and other illegal activities

KYC Management is a fundamental approach to protect any online remittance business from fraud and potential losses resulting from illegal funds or malpractices.

An efficient KYC Management System should have the following features:

• Customer Identification Program (CIP)

Recent polls have revealed that over 16.7 million consumers are directly affected by identity thefts in the US alone; the worldwide figure is close to 98.7 million per year.

CIP should not be only treated as a strategy; it should be considered a mandate, given its significance in the remittance market. The most crucial element to successfully implementing CIP is risk assessment.

Risk assessment is an evaluation done on the both - micro and macro levels keeping the entire organisation in mind. The level of implementation is up to organisational demands. The minimum requirements for CIP are stipulated below:

• Name
• Date of Birth
• Address
• Identification Number

Most money transfer platforms fulfil this promise; only a select few delve deeper. Evaluating all the gathered customer data is vital, and payments are enabled after the client or the consumer ticks all the required boxes.

• Customer Due Diligence

Any money transfer platform has to check the legitimacy of the customer before transferring the money overseas. The money should not go towards any illegal cause and should be clean. The customer should pass all the checks and should not have any links to any criminal or terrorist enterprise.

Due Diligence can be broadly divided into three segments:

1. Simplified Due Diligence (SDD):

   This pertains to low-risk individuals who transfer relatively low sums overseas and do not require thorough invigilation.

2. Basic Due Diligence (BDD):

   This is targeted toward individuals who transfer more considerable sums overseas and pose a higher risk.

3. Enhanced Due Diligence (EDD):

   These are designed for businesses that regularly send cross-border remittances to ensure that funds are not going towards any illegal cause.

• Ongoing Monitoring

Several international money transfer platforms have started offering monitoring services to money transfer businesses. Monitoring services include oversight of financial transactions and accounts based on thresholds.

KYC Management is a crucial aspect in enabling a cross-border remittance business. Many software platforms worldwide have started implementing these systems as part of their package.

RemitAll Software focuses extensively on intensive identity verification by ensuring complete customer validation, including Proof of Identification, Proof of Address and Source of Funds, depending on the regulatory requirements.

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