What Is KYC in Banking and How Is it Applied?
When real-time, cross-border money transfers are part of your routine, you need a credible service that never falters. Transaction issues could mean family members have to wait a while for lifesaving funds or your business partners overseas may have to put time-sensitive plans on hold.
Whether you need to transfer funds or send money online from the UAE, you need to be certain that the remittance is received on time and without a glitch.
How does KYC factor into these financial transactions?
What Is KYC?
“KYC” is “Know Your Customer.” It is a standard in financial institutions, including banks and investment companies. Banks use this standard in the same way investment services use it: to identify and verify a customer’s (or client’s) identity.
The components to KYC usage are also the same in both financial institutions:
- Customer identification – involves data collection (e.g., name, birthdate, address, etc.) and identification.
- Customer due diligence – verifies customer’s identity through required documents and evaluates their risk profile by checking the legitimacy of the source of funds and the purpose of transactions.
- Ongoing monitoring or enhanced due diligence – provides higher identity assurance and implements the bank’s risk management program.
This standard of verification is mandatory when a customer opens an account in a bank. The first two components apply in this instance. You may have recalled, upon opening your account, that the bank requested a few documents to confirm your identity – among them an ID card with your photo and a utility bill as proof of address.
Other banks will also likely implement biometric and face verification as part of their enhanced due diligence.
Although KYC is a fundamental standard, cumbersome approaches have presented challenges. In an effort to meet compliance, onboarding or transactions at some banks may take longer and require complex steps to complete. These inefficient and slow processes have delayed transactions and dismayed customers.
We understand how poor KYC practices can burden clients, which is why our money transfer app lets you verify your profile in seconds. Onboarding is also quick but compliant. Through Al Ansari’s electronic KYC, you can send money from the Emirates and get verified without having to visit one of our branches.
What Is the Importance of KYC in Banking?
On the surface, KYC guidelines allow banking institutions to assess and monitor risks by ensuring the identity of their customers. The process prevents banks from being used for illicit transactions, such as corruption schemes and money laundering.
The implementation of these guidelines further ensures the bank’s compliance with the UAE’s regulations governing KYC, which includes the Federal Decree-Law No. (20) of 2018 On Anti-Money Laundering and Combating the Financing of Terrorism.
When banks fully verify the identity of their customers, they are not only protecting their institutions from financial risks. They are also alerting customers from potential identity theft and, by extension, fraudulent transactions.
Through ongoing monitoring that has established your distinct profile as a customer, banks can determine whether a remittance in your name or from your company is legitimate.
What Are the Various Verification Methods?
Banks and other financial institutions implement Know Your Client in different ways. These multiple verification methods ensure the application of the verification process while customers make their transactions, from a corporate remittance to payment of bills.
Physical KYC
Physical verification is the original KYC method, but it’s still effective in establishing the identity of customers.
Here, you submit valid documents, including photo identification and proof of address. The bank may list your passport, driver’s license, electricity bill, and Emirates ID as acceptable documents. You need to submit these documents in-person and on-site.
eKYC
Electronic KYC or digital KYC happens online. Authentication of your identity can be through a one-time password (OTP) that’s connected to the mobile phone registered with the bank.
Your identity may also go through biometric-based verification. This form of verification may start with an in-person authentication, when you submit your documents and the bank captures them digitally. You’ll then go through biometric scanners with an authorized personnel.
Al Ansari Exchange has an easier and efficient KYC practice since onboarding is done online through our mobile app. Every new customer just needs to download the app and complete the eKYC process to create a profile. Once that’s in place and verified, sending money from the app is fast and convenient.
Video KYC
Some banks may use video KYC for remote clients. Through live video calls, new customers can submit the required documents while the bank verifies their identity.
This form of verification will start off as a live interview wherein the authorized personnel from the bank detects signs of spoofing and liveness. A second part involves a reviewer evaluating the video further for signs of tampering and authenticity.
Video KYC may be resource-intensive, requiring financial institutions to have trained specialists on staff. As such, an algorithm has been developed to capture video and audio automatically instead of facilitating a live video interview.
Balancing Compliance With Customer Experience
All financial institutions have a responsibility to ensure the safety of every transaction in an increasingly digitalized and globalized economy, Implementing the KYC is part of that practice.
Although customer identification and verification maintains compliance with regulatory requirements, it’s also about establishing trust with customers. Whether it’s the minimum amount required or a higher amount, any money you send is valuable. You expect efficiency and accuracy, rightfully so, with minimal friction at every step of the process
There is a way to balance regulatory compliance with a positive customer experience.
Send Money, Get Verified in Seconds
At Al Ansari Exchange, we are committed to ensuring secure transactions without sacrificing your need for convenience. From the Al Ansari Exchange value added services to our international prepaid card, we’ve developed services and products that are fast, reliable, and efficient.
Our strong KYC practice follows a robust identification and verification process. When you’re sending money online, it all happens in seconds. Our state-of-the-art information technology infrastructure allows us to be compliant at all times while making sure your experience is pleasant at every step of the transaction.
Send money from anytime and anywhere, and get verified in seconds. Download the Al Ansari Exchange mobile app today.
You can also reach out for further information.