Money laundering started with the Italian mafia; it’s said it became popular because of Al Capone. As much as we’d like to venture deeper into how the mafia laundered money and the relationship between Al Capone and the Sicilian mafia, we’ll have to put a rain check on that for today.
KYC stands for ‘Know Your Client/Customer’. It was a system designed to stop money laundering; whether the bank was in on the hustle or not, it made sure that advanced risk-assessment regulations and policies were put in place. It moved from banks to almost all other forms of businesses as a way to stay up-to-date with as much relevant information as possible about customers, consultants, etc.
We’ll be giving you a brief review of how KYC managed to evolve over the years, and it’s rising benefits.
Many recent documented surveys show that almost half of all organizations have fallen victim at least once to financial crime. We’re talking about corruption, money laundering, cybercrime, and even human trafficking in some cases. Innovation in KYC protocols is making a dent in the financial crime solid body by sharing networks and information, adding more pivots for flexibility, and advancing risk and risk-assessment calculations. Complex applications make compliance with KYC protocols and policies faster and more secure.
This isn’t the age of paperwork anymore; since many transactions are already online, advanced KYC regulations have been integrated into many online platforms. Digital KYC integration is taking the world by storm; it’s become possible to validate a customer’s identity in almost no time. Artificial intelligence is becoming a game-changer. Getting a 360-degree view of potential risks and the intelligent integration on platforms filled with information makes sifting through tons of intel much easier and faster.
Blockchain was only relevant to Bitcoin; it now applies to many other types of cryptocurrencies. Blockchains are giving KYC more green fields to develop since it will allow it to venture deeper into a more unorthodox system of transactions. Blockchain can be summed as time-stamped ledgers with all transactions that ever happened in addition to the decentralizing and distributed technologies. This makes hacking almost impossible, providing a secure environment for financial transactions. Blockchain can be integrated with KYC to know the fund source and business and monitor funds’ activity. For transactions in the blockchain, due diligence information is delivered to a central digital library that can tag it to an identification number.
All these advances in KYC make it possible for large organizations to analyze their data efficiently and avoid potential risks. The best thing about integrating sophisticated KYC technologies into smaller companies is that they can now avoid paying large sums of money for compliance costs. The consistency and all-inclusive technological integration of KYC will enable organizations of any size to reduce their blind spots.