The latest regulations in the compliance world demand stringent scrutiny of everyone and anyone having a certain amount of finances in their bank account. The banks or financial institutions are now required to be at their toes and take no chances while onboarding a shady character. The onboarding process for this purpose has become even more tedious and for better or worse it might be deemed as the need of the hour. The unprecedented increase in identity frauds requires banks to have in place a JYC process not affected by time zone or any other abstract scenarios.
The ominous and constant violations of the AML and KYC regulations push the regulatory bodies to tighten the gaps and introduce more strict measures. Hence adhering to these stringent policies many banks incorporated the video KYC for banks. Although many factions of the financial world are seen criticizing this act as they feel it is “needless strictness”. However, if you look at the facts, they do call for a solution to the ever increasing amount of Id fraud and money laundering with tax havens building up firewalls to protect the data of their clients.
Why do we need Video KYC for Banks?
Video KYC is a process that requires the authority to validate or authenticate the personality of the user via video interview. However in some cases the candidate has the luxury to choose for themselves. The nationality or language of the host so that they are comfortable and do not struggle with following the instructions. The identity is proven by asking a few questions that are designed to prove if the person is real or not. Banks and financial institutions followed the suite during the peak of COVID because there were restrictions on contact so the industry moved contactless. The digitization of the world made it easy, many verification processes were being completed out of remote offices. For customer safety, mitigation of the virus, and running detailed background checks the KYC process was being done remotely.
The rise of ID frauds
As the pandemic struck, the world economic activity went into a shell shock. And paralysis that favored the criminal aspect of the society. The rise in ID fraud took the financial authorities by storm. And a need to curb the disastrous first few months of pandemic called for a stringent policy. This is where Video Identity Verification came in with the solution, as remote work being the cornerstone of the pandemic year a verification method that could help the onboarding process was a sight for eyes. Several facets of KYC came into the scene to help the financial community. KYC via video call, online id verification, and much more. The consent verification process of the customer to keep their identity. And data secure also came into being in this process.
The curious case of Bank security
The year 2020 is the most notorious when it comes to banking compliance and banking data safety. Financial complaints in the US jumped. Over 104% in the year 2020 only in the first quarter as reported by Atlas. This clearly shows the vulnerability of the system and how it is far from secure. Stats dictate that the US in the year 2020 was one of the most insecure in terms of financial security. As many frauds originated and consumers lost a huge amount owing to inadequate security measures in various scams. Hence this data pushes us in the direction of adhering to stringent KYC/AML directives regarding financial and monetary services.
These directives involve strict scrutiny of potential risk elements. Involving individuals and organizations, hefty fines, and closures in case if the directives are not being followed.
As we move ahead leaving the pandemic behind us owing to mass vaccination and quarantine. There is no arguing the fact that: already prevalent ways of security. And scrutiny can no longer cope up with the new threats of data privacy and data breaches. No organization is safe, if US voting can be hacked then no platform is safe from fraudsters. The omission of KYC and video KYC from the banking sector. Will only mean that we are helping the fraudsters to have their way with the customers. So for some, it might be tedious but the truth is it is absolutely necessary to video KYC for banks is essential for safe financial operations.