The Importance Of KYC and AML Compliance in the APAC Region

Melissa AU Team | AML, KYC | , , , ,

$609 million -this is how much companies in the Asia-Pacific region were fined for not complying with KYC, AML and sanctions from 2008 to 2018. As regulators in the APAC region increase their focus on fighting financial crime, the importance of Know Your Customer (KYC) and Anti-Money Laundering (AML) compliance has risen. India, Hong Kong, Singapore, the Philippines and Australia- everyone is cleaning up their act.

However, meeting KYC and AML regulations is not free from challenges. It affects the efficiency of asset managers, slows down onboarding processes and frustrates customers.

Challenges for the Industry

As regulations become stricter, the burden of meeting compliance will only increase for companies. Some of the major challenges for them are:

Slow Onboarding Processes
Validating all the customer’s details lengthens the onboarding process. This can keep asset managers from meeting their goals and causes delays in launching mandates. It also increases the risk of customers shifting to competitors.
Never Ending Compliance
Meeting KYC and AML regulations are not limited to customer onboarding. Companies must also ensure that the information they have about their customers is up to date. Thus, it is a continuous process. For large organizations with thousands of customers, this can be a major undertaking.
Non-Standardized KYC and AML Procedures
Organizations always interpret regulations according to what suits them the most. This risk-based approach can cause issues when operating across jurisdictions. Today when the world is becoming smaller and even independent entrepreneurs offer their products and services internationally, the non-standardized KYC and AML procedures can be very challenging to overcome.
High Costs
All firms, big and small must comply with KYC and AML norms. For international firms, it isn’t enough to comply with local norms; they must comply with global regulations as well. This increases the cost of compliance. International financial institutions spend between $900 million and $1.3 billion annually on financial compliance.

At the other end of the spectrum, small firms need to comply only with domestic regulations but to do so they may need to set up a compliance department. This has a significant impact on their expenses as well. There are also a number of indirect and opportunity costs to be considered.
Non-Digitized Documentation
Even today, most of the documents used for verification are hard copies that have not yet been digitized. This makes verifying the contents of these documents difficult. There are a number of innovative solutions such as video verification that have been developed to overcome this but not all companies have the resources to adopt them. It also makes it difficult to keep track of information expiry.
Manual Workflow
Most of the industry is dependent on manual effort to collect and verify the information for KYC and AML compliance. A paper-based audit is time-consuming and has a high risk of human error. An inadvertent slip may affect compliance and put the customer’s information at risk. The manual workflow also limits the amount of information that can be processed at a time and thus could be a problem for companies scaling up.

Challenges for Customers

While the actual work of collecting and verifying information is not performed by the customers, they still face a variety of challenges.

Repetitive Documentation Requests
Every financial institution interprets KYC and AML regulations in their own way. This means that customers have to submit different types of additional documentation every time they need a new service. The inconsistencies of documentation requests along with the disparate remediation cycles can frustrate clients for no fault of theirs.
Concern About Data Protection
With incidences of identity fraud becoming more common, customers are also concerned about securing their data. They don’t want to give just about anyone access to their information and when they do share it, they need to be reassured that it is being protected.

Finding a Solution

Despite the challenges, meeting KYC and AML regulations is not negotiable. Outsourcing the task can be beneficial for everyone. Let an agency that specializes in identity verification and data quality collect, verify and maintain customer information.

By doing this, employee time is saved and can be directed towards other value-add tasks while the company can still be fully compliant with relevant KYC and AML regulations. It increases employee efficiency and reduces costs. From the client’s perspective, it increases confidence in data security.

Identity verification agencies can also improve data quality to support KYC initiatives. For example, if they were to find an inconsistency between the address submitted by a customer and the pin code, they could easily correct the same. This ensures data stays current, complies with regulations, and can be used for successful marketing and sales efforts.

It’s worth taking a second look at centralized KYC and AML regulations and processes. Today, the same customer may be using services from multiple companies. This means that he/she would have had to submit documents for validation to each company.

Each company would have had to independently verify the documents before onboarding the customer. The process is slow and unnecessarily repetitive. Centralizing regulations and letting an agency handle the verification simplifies the process to a great extent. Customers will have to submit their documents only once.

The agency can create a client record that can then be shared with different companies as and when needed. It saves time and lowers costs exponentially. It also improves the customer’s experience by making the onboarding process much faster. For this to be successful, the financial institution and asset manager community, as well as compliance regulators, must support it.

In Conclusion

As the APAC region stresses on KYC and AML regulation compliance, if things were to stay as they are, the burden on asset managers would only continue to increase. It is high time to look at adopting smarter solutions like outsourcing verification tasks and standardizing regulations. Done right, this can benefit the industry and its consumers.

Know Your Customer (KYC) Procedures For Banks In 2020

Melissa IN Team | India, KYC | , , , , , , , , ,

With more people choosing to conduct financial transactions through net banking or via a bank’s mobile app as compared to physically visiting a branch of the bank, Knowing Your Customer (KYC) has become more important than ever before. This refers to the processes followed by banks to verify the identity of a customer. KYC norms themselves have had to be updated to keep up with technology.

Why is KYC important?

KYC procedures are aimed at

  • Identifying and validating the customer’s identity
  • Assessing the nature of the customer’s activities
  • Ensuring the source of funds is legitimate
  • Assessing the risk of money laundering, financing terrorism and other illegal activities

Failure to keep KYC procedures updated doesn’t just put banks at increased risk of fraud; it also keeps them from meeting government anti-money laundering regulations and compliances. Failing to comply with these regulations can result in heavy penalties. The RBI recently fined a well-known bank Rs 1 crore for failure for non-compliance with KYC norms. Apart from this, it also damages the bank’s reputation.

KYC Procedures in 2020 – Updates You Must Know

Banks and other financial institutions conduct KYC checks on individuals as well as corporates who hold accounts with the bank. These checks are conducted at the time of opening accounts as well as on an ongoing basis while conducting transactions. The KYC policies followed by institutions can vary depending on the size of the institution, the technology available to them, the customer base, etc.

Electronic Know Your Customer or eKYC is very popular in India since a majority of the population has a digital identity. Some of the updated KYC procedures that are being followed include:

Digital Verification of Documents

Proving one’s identity through a government-approved identity card is the cornerstone of every KYC procedure. Where earlier, it was sufficient to submit a copy of one’s identity card, today, the identity can be digitally checked for authentication.

For example, banks can easily verify the validity of an individual’s Aadhaar card or Pan card by checking it against the national database. Similarly, other documents submitted for verifications such as electricity or telephone bills used as address proof can also be verified against the billing agency’s records. This allows them to conduct due diligence easily and streamline the customer’s onboarding process.

Biometric Checks

In addition to verification by documents, the use of biometrics for identity verification has also increased. Biometrics are valued mainly because they are considered very difficult to replicate and unique to every individual. Fingerprints are probably the most commonly used biometric measure for identity verification.

Other common forms of biometric identification include facial scans and iris scans. In addition to this, some banks may use additional biometric checks such as voice modulation matches and gait matches. Biometric checks may be required while conducting online transactions.

Video-Based Identification

Documents needed for KYC can be submitted online. This is convenient for customers but it carries the risk of a fraudster impersonating someone else by submitting their documents as his/ her own. Video-based identification processes can help fight this.

This involves a video call between the customer and a bank official where the customer displays their ID card while allowing the official to simultaneously see the card and the customer’s face.

The official may then capture the same as an image, timestamp it and tag it to the customer’s real-time geographical location. The customer’s face may then be compared with the photograph on the ID card for future validation. The Reserve Bank of India (RBI) recently allowed banks and other lending institutions to use this form of customer identification when onboarding customers remotely.

Incorporating Artificial Intelligence (AI)

Conducting KYC checks manually is time-consuming and frustrating for bank officials as well as customers. The introduction of AI in these processes makes the checks quicker and more reliable. AI and machine learning can be used to identify high-risk customers who need enhanced due diligence.

They can perform repetitive tasks without the fear of testing fatigue. Further, they can analyze responses through Natural Language Processing (NLP). AI can also monitor regulatory changes and identify gaps in customer information. This helps banks stay updated with KYC compliance policies.

In Conclusion

Complying with KYC norms is essential for banks and financial institutions to fight against financial fraud. At the same time, they must also ensure that the customer experience is smooth and hassle-free. The use of technology has helped to a great degree and KYC practices must be constantly updated to make maximum use of the technology available to us. The most cost-effective, secure and efficient way to do this – collaborating with an identity verification service provider!

Melissa gibt Tipps für Erfolg im E-Commerce

Melissa DE Team | 2020, Address Check, Address Correction, Address Quality, Address Standardization, Address Validation, Address Verification, Adressprüfung, Adressvalidierung, Analyzing Data Quality, Big Data, Data Management, Data Quality, Data Quality Services, Datenqualität, Ecommerce, Germany, Global Address Verification, Global Business, Global Data Quality, International Address Verification, KYC, Postal Address Standards, Whitepaper | , , , , , , , , , , , , , , , , ,

Anbieter von Datenqualitäts-, Identitätsprüfungs- und Adressmanagementlösungen veröffentlicht neues kostenloses Whitepaper

Köln. „Das Geheimnis des Erfolgs für internationalen E-Commerce“ – unter diesem Titel hat Melissa ein neues Whitepaper herausgegeben. Darin informieren die Experten für Datenqualitäts-, Identitätsprüfungs- und Adressmanagementlösungen auf 14 Seiten, wie falsche Adressen, Onlinebetrug und weitere Faktoren das E-Commerce-Geschäft beeinträchtigen. Gleichzeitig stellt es professionelle Lösungen vor, die Unternehmen helfen, solche Probleme zu vermeiden. Insbesondere aufgrund der Corona-Pandemie sind Online-Händler gefordert, effizient zu agieren und unnötige Kosten zu vermeiden.

Read more “Melissa gibt Tipps für Erfolg im E-Commerce”

Melissa Debuts Mobile KYC App and Business Portal to Simplify Identity Verification

Melissa Team | 2019, Digital Identity Verification, eIDV, EIV, Identity Resolution, Personator World, Press Release | , ,

Seamless Data Quality Toolset Includes Document Verification, Biometrics and Liveness Check

Rancho Santa Margarita, CALIF – August 14, 2019Melissa, a leading provider of global name, address, email, phone, and identity verification solutions to improve user experience and KYC (Know Your Customer) compliance, today announced Melissa KYC, a unified compliance toolset enabling businesses to verify the identity of their customers easily, securely, and conveniently. This end-to-end identity verification solution includes ID card and document authentication, biometrics, and liveness confirmation to streamline customer onboarding and customer due diligence processes so companies can confidently adhere to complex government regulations.

Because Melissa KYC is ready to use, regulated businesses can avoid the design, build, and test operations that turn compliance initiatives into costly, time-consuming projects. “Whether verifying an address or working to prevent online fraud, the business process must be easily implemented and meet customer expectations for convenience and speed,” said Greg Brown, vice president, global marketing, Melissa. “Melissa KYC ensures that compliance activities are seamless for the business and create a straightforward, friction-free experience for end-users.”

The Melissa KYC mobile app captures identity documentation, either in-person or remotely, in under three minutes. Using sophisticated facial recognition technology, this authentication process consists of three simple stages: digitally scanning documents such as passports or national ID cards and checking them by optical character recognition; verifying an individual’s “liveness” by the blinking of eyes; and biometric comparison to confirm scanned photo and live individual are the same person.

Melissa KYC’s verification feature authenticates each submission; real-time, multisourced data is used to standardize, correct, and match customer records globally, seamlessly validating customer or supplier data and identity. The company uses the business web portal to review the customer’s submission and generate and store customer due diligence reports to meet compliance requirements. These operations take place in seconds, reducing the strain of compliance on customer service and onboarding activities.

Click here to learn more about Melissa KYC. To connect with members of Melissa’s global intelligence team for support and solutions, visit or call 1-800-MELISSA.

Using Address Verification to Foil the Bad Guys

Melissa Team | Address Check, Address Correction, Address Quality, Address Validation, Address Verification, Customer Identities, Data Quality, Fraud Prevention, Global Address Verification, Global Data Quality, Global ID Verification | , , , , , ,

How an Accounts Payable Company used Data Verification Services to Ward off Transaction Fraud

Fraud prevention relies heavily on how quickly and confidently an organization can determine the customer is who they say they are – a process that’s easier said than done. In fact, 84% of businesses have fallen victim to fraud. Implementing a process to identify your customer is integral to protecting your organization, yet extremely challenging. Imagine trying to take this a step further to verify your customer’s customer. That’s the grueling task that one accounts payable company was up against. The company turned to Melissa’s Global Address Verification for help. Here is their story.

This company offers accounts payable services for other large organizations worldwide. It automates invoice collection, processing, supplier onboarding and global payments – all functions that are highly susceptible to fraud. The company recognized this early on, and determined that financial fraud prevention was a necessity for both itself and its customers.

“We wanted to know ahead of time if any suppliers are giving us invoices with addresses from known fraudsters, or from countries known to be fraud-prone,” the company told us. “We needed a system to validate addresses.”

Faulty Content Information Opens the Fraud Door

Some 20% of addresses entered online contain errors, including spelling mistakes, wrong house numbers, incorrect postal codes, and formatting errors that don’t comply with a country’s postal regulations. Verifying international addresses is even tougher, with a multitude of formats and number of fields varying from country to country. Additionally, verifying address data from around the globe means you must have a centralized reference database for hundreds of countries.

It’s easy to see that for billing and paying, faulty address verification is a critical issue in its own right, potentially resulting in mismatched billing addresses and payment mistakes and delays.

But it goes beyond that. Without adequate address verification, the true identity of fraudsters can be hidden, especially when a company is dealing with multiple addresses in unfamiliar formats. A wide variety of countries are identified by the US State Department as being prone to money laundering and tolerant of suspicious transactions. Companies must verify that addresses are not from known criminals, and need to provide extra screening of addresses from geographic areas of concern.

A Proven Authentication Technology

This accounts payable company adopted Melissa’s Global Address Verification service as a solution for these issues. Global Address Verification authenticates and corrects addresses in more than 240 countries in real-time. The service also formats and standardizes the addresses to that of a specific postal authority’s regulations (for example, the U.S. Postal Service) in a mailing label or database storage format.

By leveraging the power of data sets and the internet, companies can identify a suspicious person by linking a name with a variety of other verifying data. This can involve matching names with phone numbers, addresses and emails. If there are mismatches—and in particular if names and addresses are listed on caution lists—red flags are raised and a company can then suspend financial relations with suspicious persons until more information in acquired.

In the real world, our company under discussion avoided a large part of the fraudulent financial activity on behalf of its clients. As for ROI, how can you measure happier customers who don’t experience the problems they might have encountered otherwise? The company tells us that they’re very happy with this extra level of security, and that their customers don’t have to worry about accounts payable issues from ersatz players with shady backgrounds.