In light of the global fight against money laundering and terrorist financing, financial institutions face significant challenges. International standards imposed by organizations such as the FATF are being integrated into national legislation. The FATF includes strict regulations and preventive measures. Fintech expert, Roman Tereshchenko reports that this includes the mandatory KYC (Know Your Client) procedure to identify clients. How is this verification carried out and how does it reduce the risk of financial crime?
The KYC procedure is a mandatory stage, the main vector of which is aimed at verifying the identity and honesty of the company’s clients, especially in the financial sector. Roman Tereshchenko adds that this regulatory standard allows organizations to better know their clients and reduce the risks associated with money laundering, terrorist financing, and other illegal activities. In short, it is an important tool for ensuring the safety and legality of financial transactions.
According to the expert, the KYC process includes ID verification, facial analysis, and biometric authentication. And financial institutions are required to comply with KYC rules to minimize the risks of fraud. At the same time, keep in mind that the responsibility for compliance with KYC lies on their shoulders.
Violation of these rules may result in large monetary penalties. From 2008 to 2018, restrictions were imposed in the Americas, Europe, the Middle East, and Asia-Pacific fines totaling $26 billion for AML, KYC, and sanctions violations, not to mention reputational damage.
Considering such disappointing global practice, Roman Tereshchenko still recommends that modern financial institutions do everything possible to avoid being among the fines, minimize risks, and conduct their activities legally. To do this, he suggests considering three fundamental principles on which KYC is built.
The specialist emphasizes the importance of the KYC procedure to ensure security and compliance with legal regulations. Roman Tereshchenko explains that KYC usually includes several key stages. He suggests focusing on the:
Roman Tereshchenko believes that performing the KYC procedure helps solve some important problems:
According to an expert in the field of fintech, the KYC procedure plays a key role for companies that seek to operate legally and guarantee the safety of their activities. By collecting and verifying customer credentials and continuously monitoring their activities, businesses can reduce legal and financial risks while strengthening their business reputation. Analyzing the above, Roman Tereshchenko summarizes that KYC is a valuable tool for ensuring the integrity of the financial system and protecting the interests of clients.
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