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 now must be at their toes and take no chances while onboarding a shady character. The onboarding process for this purpose has become even more tedious. For better or worse, it might be deemed as the need of the hour. The unprecedented increase in identity frauds requires banks to have a KYC process in place. The time zone or any other abstract scenarios should not affect this.
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 criticize 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 the nationality or language of the host for themselves. This ensures candidates are comfortable and do not struggle with following the instructions. One can prove their identity by answering a few questions. The design exists to prove if the person is real or not. Banks and financial institutions followed suit during the peak of COVID. That is because there were restrictions on contact, so the industry moved contactless. The digitization of the world made it easy. Many verification processes became 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. As well, a need to curb the disastrous first few months of the pandemic called for a stringent policy. This is where Video Identity Verification came in with the solution, as remote work is 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. It begins with 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. This was 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 followed.
Video KYC: Conclusion
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 they can hack US voting, 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.