Regulations to Follow
Identity theft is a growing problem in the United States, and it can end up costing your business millions upon millions of dollars in lost assets and future business. The United States federal government adopted the USA PATRIOT Act in October 2001 to combat money laundering and terrorism financing. It requires all financial service providers to establish anti-money laundering programs and detail steps that will be taken to establish the true identity of potential customers. Organizations are also accountable for ongoing KYC processes to verify customers before finalizing transactions.
The Financial Industry Regulatory Authority, or FINRA, is an independent self-regulatory agency that oversees the securities industry in the United States. As such, it is an excellent resource for information related to specific compliance measures and KYC rules.
For a KYC solution to be successful, it needs to be quick, thorough, and efficient. It must also include detailed steps for customer verification and fraud prevention in order to maintain compliance and protect valuable business and customer data.
- Detailed Verification Procedure – The identity verification steps you will take need to be clear, and the process you use must ensure that customers are using their true identity during account setup and access.
- Customer Identification – Verification should take place every step of the way. Even after an account has been set up, you want to ensure you are working with a legitimate customer for transactions, account questions, etc.
- Monitoring Transactions – By monitoring the transaction activity of customers, you will be able to identify high-risk transactions and take the necessary steps to eliminate that risk. When high-risk transactions come up, your verification platform will help with authentication.
Understanding KYC rules and how they apply to your business will keep you from inadvertently disobeying the law and causing harm to your organization. Analyzing your current fraud prevention system and making improvements will protect your consumers, increase security, and give your business the tools it needs to be successful.
IDology, Inc. is a private business-to-business provider of age and identity verification solutions for clients in the financial services, retail, security, and telecommunications industries, and more. Based in Atlanta, GA, IDology has offered clients a solution-driven approach to identity verification and fraud prevention for over 10 years.
1. “Know Your Customer: Quick Reference Guide,” PricewaterhouseCoopers (PwC), January 2013, pp. 1, Web, 26 August 2014.