ID Resolution

Exploring the Necessary Steps for KYC Compliance

All businesses want to “know” their customers, right? After all, what you don’t know about consumers can definitely hurt you in lost sales, hindered growth, and impaired customer loyalty.

But for some industries—in particular the financial services, banking, and securities businesses—the phrase “know your customer” (KYC) means more than just good business. It’s required by regulators and government entities to head off such nasty things as money laundering, terrorist funding, corruption, and fraud.

In the U.S., KYC is mandatory for all banks, required as part of the Patriot Act as well as regulations regarding the tracking of “politically exposed persons,” AKA potentially dangerous characters. Banks also must seek to verify the true identities of their customers so they’re compliant with the Bank Secrecy Act and anti-money laundering efforts.

Now, add one more lurking thorn in the side of bankers: New demands from the G20 organization of governments and central banks to impose regulations on cryptocurrency, and to acquire technology for new data-collection regulations.

The need for electronic identity verification has never been greater, with the omnipresent digital world at the root of the issue.


Consumers increasingly conduct their financial affairs online, including the opening and closing of accounts, depositing and transferring of funds, paying bills, applying for loans, and managing money. And this opens the door for the bad guys to do seriously bad stuff, all anonymously if they can get away with it.

Consider: A New York-based broker-dealer recently was charged with KYC violations and for negligently allowing illegal trading by one of its customers. Perhaps the highest profile case most recently was Morgan Stanley Smith Barney running afoul of a variety of KYC violations. The main charge: Morgan Stanley failed to properly identify an assortment of “red flags” that signaled illegal activity.

Financial services firms don’t have to accept risky customers, and they shouldn’t. But how can they manage risk and protect their businesses, all while assuring a positive, non-intrusive customer experience?

Here’s where shameless self promotion comes in:

There is one natural place to begin the process of KYC compliance: the Melissa Personator Suite, which integrates seamlessly into banking and other financial services operations to enable a 360-degree view of customers in real time.

Melissa’s Global Intelligence combines all critical identity verification tools into an integrated suite that addresses the following:

  • Who are you? It verifies a customer’s age and national identity via such documents as social security numbers or drivers licenses.
  • Are you still that person? It accurately assures that individual names and addresses are current by leveraging billions of records within a comprehensive dataset.
  • Are you a high-risk individual or entity? It provides watchlist management, sanctions and PEP screening to help organizations comply with internal requirements, and national and international regulations.
  • How come I can’t reach you then? It corrects addresses by adding street suffixes and correct state or province information, and restyles those addresses to adhere to specific country formats.
  • Your email might be phony—is it? It verifies contact data, such as valid email addresses and mobile phone numbers.
  • How do I know you are really you? It further identifies individuals via imaging and facial recognition technology (courtesy of a partnership with Scanovate) to aid both the onboarding process and later management of compliance and risk assessments.

There are other pluses, too, like finally getting rid of those overpriced legacy KYC systems, and cutting down on the need for laborious manual reviews of customer identities (those cranky sales and biz dev folks will definitely thank you for this one!).


In a financial world without borders, technology that verifies, cleans, completes and standardizes names, addresses, phone numbers and emails—and does so globally—immensely aids the process of knowing one’s customers. When financial services firms are able to combine census and area-specific details with accurate names and addresses, they’ll quickly be able to sort out the potentially good customers from the bad guys.

It’s not rocket science (although Melissa comes close). The key takeaway is this: Financial services institutions now have lots of new reasons to love fintech technology that mitigates KYC concerns, by identifying legitimate customers, and flagging the ne’er-do-wells before they can be effective.

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