KYC and AML

What is the Difference Between KYC and AML

How are they different and how do they work together?

KYC and AML are both necessary for many companies to comply with governmental regulations. These can be asked of banking institutions, casinos, financial management, and investment trading just to name a few. While they can work in tandem to accomplish similar goals, they are both different concepts and require different levels of information.

What are they?

KYC stands for know your customer. This is a process required to verify the identity of their customers. This has become an ever-growing need given the current digital landscape and how much easier it can be to commit fraud. KYC is commonly asked of industries such as banking, trading, blockchain, payments, telecom, and financial management.

AML stands for anti-money laundering. This is a process that prevents criminals from depositing or transferring money that comes from illegal activity such as terrorism and criminal financing. AML will check for known fraudsters, terrorists, politically exposed persons, and more. This measure is specifically meant to target market manipulation, trade of illegal goods, corruption of funds, and tax evasion. AML checks are commonly asked of banking, casinos, currency exchanges, payment and investment industries, real estate, and the insurance industry.

These are both different concepts, as each of their goals are different. KYC is for a business to be aware of who the customer is, while AML is a longer and ongoing process of monitoring their transactions to ensure legality.

How do they interact?

The two processes work hand in hand. KYC would be the first in the process to ensure that the customer is who they say they are. The second part of the process is AML to monitor their transactions and ensure legal activity.

The difference between AML and KYC is that AML (anti-money laundering) is an umbrella term for the range of regulatory processes firms must have in place, whereas KYC (Know Your Customer) is a component part of AML that consists of firms verifying their customers’ identity.

How can KYC be integrated into an existing platform?

Verifying and re-verifying identity is an integral part of KYC and maintaining cybersecurity and IDScan.net has the solution to make it happen. Our mobile ID validation system can quickly and simply verify identity, leaving your customers with a streamlined and headache-free experience on your site or app. It’s also easily integrated into your current systems so you don’t have to stress about rehauling your setup.
To use our KYC software, the customer simply takes 3 images with their smartphone:

  1. Front of the ID
  2. Back of the ID and
  3. A selfie

The automation performs mobile ID verification by checking that the ID is formatted correctly on the front and back. It also checks that the information in the barcode matches what is displayed on the front of the ID. It then queries the USPS database to confirm that the address on the ID exists. Lastly, it moves to the pictures, calculating a confidence percentage in facial match between the photo on the ID and the selfie supplied by the customer. The selfie is run through anti-spoofing processes to assure it is legitimate.

The customer’s picture is first compared to a database of known faces to ensure that a human face is indeed pictured. A complex algorithm then maps the customer’s face and compares the unique layout of the pictured face to the face on the ID provided. The mobile ID verification automation can then see more definitively whether or not the faces match and provides a percentage to represent the confidence it has in the faces being the same. Additionally, our Document Verification System can verify most identification documents including driver’s licenses, passports, passport cards, green cards, and international documents with an MRZ (Machine Readable Zone).

FAQ:

What businesses need KYC and AML?

KYC is something that is commonly asked of industries such as banking, trading, blockchain, payments, telecom, and fund management. AML is commonly asked of banking, casino’s, currency exchanges, payment and investment industries, real estate, and the insurance industry.

Who requires these for compliance?

The Bank Secrecy Act and FINRA require these in order to prevent illegal activity. If these regulations are not followed an institution can receive fines in the millions and billions.

Another blog you may like: https://idscan.net/kyc-checks-in-ico/