By Katerina Michael
The level of information technology conquered in the 21st century has caused rapid developments in communicating, behaving, working, and living.
As with all modern achievements, there is always a risk.
With information being the food of new technologies, the need for data protection and security is more necessary than ever.
Transition to the information age creates many risks for the private, public and private sectors.
There is constant demand and commercialisation of personal data and leakage or theft of sensitive data from public and private companies.
With new technologies dominating and the constant rise of the Internet of Things (IoT), the value of information is constantly increasing along with demand and acquisition.
Everyone’s personal preferences and habits can become a profit opportunity.
With individual data moved and stored on multiple interconnected devices – such as mobile devices, wearables, and sensors – information becomes vulnerable to possible interceptions and breaches.
Opening an online account might seem interesting because of the ease of its creation. It offers one the ability to open it from wherever they are.
However, people usually question why an electronic money institution asks for the collection of personal and sensitive information.
The physical presence of the individual interested in opening an online account is unnecessary.
The electronic money institution needs to collect a government-issued ID and a utility bill less than three months old.
The verification is done either via email or through their phone number.
Know Your Customer
This is also known as KYC or Know Your Customer, and it is the bare minimum that a financial institution requires to ascertain an individual’s identity.
Despite that, individuals can create as many accounts as they want.
The KYB or Know Your Business process is not much different from Know Your Customer.
The difference is that KYB initially focuses on companies, then processes that focus down to the company’s stakeholders (including shareholders).
The company must provide several documents that will be requested from the Customer Support Officer.
The main purpose of KYB is the complete elimination of any uncertainties in the global financial infrastructure of the business that criminal entities can exploit.
The Know Your Customer (KYC) and Customer Due Diligence (CDD) processes are imposed by a rather complicated regulatory framework.
Until recently, the customer’s physical presence was necessary at any bank branch, along with the necessary documents needed to open an account at that bank.
Since KYC is a topmost concern for industries, maintaining customer files while getting rid of inaccurate and outdated information is also becoming a priority.
Therefore, KYC remediation is a process of updating customer KYC files to meet regulatory compliance.
Moreover, KYC remediation allows businesses to conduct a risk assessment to minimise business risks and to understand customers better.
The procedures you need to follow to open an account with an electronic money institution (EMI) are becoming less burdensome than bureaucratic, creating a flexible, standardised and secure process since security is everything.
This should be done following a clearly defined regulatory framework.
Businesses and individuals are evolving in a digital era, and the use of the internet for financial transactions is becoming the new status quo.
Inevitably, online crime is also trying to find ways to infiltrate businesses and personal data.
Controlling such actions to minimise the risks of financial fraud, money laundering, and online criminal activity, all financial institutions and FinTech solutions must comply with regulatory laws set by regulatory authorities.
Compliance departments of every online financial institution must remotely, securely, and thoroughly process and review the identification documents of individuals and businesses and verify their authenticity.
This is done through the KYC and KYB process.
The ultimate aim of KYC/KYB is to confirm, with a high level of assurance, that customers are who they say they are and that there is no risk of illegal activity, thus protecting both the provider of the online financial services and its clients.
The presence of thorough and unbiased KYC and KYB procedures indicates that the business is an authorised and trustworthy entity that highly values its customers’ protection.
Katerina Michael is Head of Content at www.ecredo.com