What is KYC and why are online KYC checks good for small businesses

By Tony Machin | March 8, 2021 | KYC/AML, Online identity checks

If you operate in regulated markets, including financial services and related sectors such as insurance, legal services, or estate agency, you are required to perform Know Your Customer checks (KYC) as part of Anti-Money Laundering (AML) compliance. Of course, the requirement to comply doesn’t change, no matter what size your organisation, although the depth of the processes which you introduce may vary depending on the nature of your business and your likely risk profile.

With identity and financial fraud risks growing in an increasingly online, remote world, no business is safe from financial fraud. A recent poll from major accountancy firm BDO found that six in ten mid-sized businesses in the UK were hit by fraud in 2020, with an average loss totalling £245,000.

The challenge of KYC checks for SMEs

99.9% of all private  enterprises in the United Kingdom are considered as small or medium enterprises (SMEs) by the UK government. The impact of adhering to any UK regulation is keenly felt by SMEs and maintaining compliance can be a costly and uncertain process. Most major banks spend over 15% of their budget to support regulatory compliance and governance, but most SMEs don’t have large teams or sizable budgets to do this. So, how can they ensure straightforward AML compliance, without the resources of larger organisations?

How can technology help?

Many SMEs may traditionally rely on manual AML processes which can be time-consuming, inconsistent, and even based on outdated information. The good news is that modern technology is no longer reserved for large businesses and can offer a straightforward and affordable way to carry out KYC checks online, no matter what size your organisation. Introducing automated AML services can keep you compliant with the latest legislation, introduce more robust identity verification and even improve the on-boarding experience for your customers. Here are just some of the benefits that technology could bring to your SME:

• Makes compliance easier

An automated system with a straightforward way to capture customer information such as ours makes AML compliance simpler and gives you a consistent, robust process, no matter who performs your KYC checks. Clear, downloadable reports also make results easy to understand and give you a straightforward way to demonstrate your AML compliance for an internal audit or visit from your regulator.

• Saves time

Online AML platforms can carry out KYC checks in minutes. What’s more, with electronic identity verification, you no longer need to manually check, or store paper documents and automated KYC services can check and monitor your customers against Politically Exposed Persons (PEPs) or Sanctions lists. Many providers, including TrustID, offer the same service level agreement to all businesses, to ensure AML compliance is quick and easy no matter what size you are.

• More robust checks

Industry-leading technology can give you greater confidence against fraudsters. TrustID’s online KYC checks start with industry-leading identity verification. We assess the authenticity of global identity documents using a combination of AI, biometrics, and human expertise. This means there’s no need to train your staff to be identity document experts and you are far more likely to identify suspicious documents and prevent customers using fraudulent identity from accessing your services.

• Make checks from anywhere

TrustID’s online KYC check services are accessible on any smart device or PC. This makes capturing and uploading an image of a client’s ID quick and easy, wherever you meet them. Some KYC providers also offer additional features, for example, a remote-upload option for customers to submit copies of their documents over a secure link, or higher-level security checks, such as biometric facial recognition software, which checks a candidate’s selfie against the photograph in their identity document to verify that they match.

• A service to scale with your business

If investing in a new process when you’re small or during uncertain times feels risky, look for a service which offers a low minimum order or no long-term contract. Some online KYC check services, including our KYC service, include flexible, modular features which you can add over time as your requirements change and a pay-per-check pricing model which can scale up or down with your customer demands.

Although the challenges of effective AML compliance remain, new affordable technology has opened up alternative options to meet KYC requirements which are robust and effective, no matter what size your business. In fact, SMEs who may be time and resource-poor, often feel greater benefit from an automated KYC process which give them a quick and easy way to comply, leaving them more time to focus on their business.

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Want to find out more?

If you’d like to discuss how remote identity checks could support your AML compliance, please get in touch. We’d be happy to arrange an online demo.

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