Last Updated on Sep 22, 2021 by James W
KYC (Know Your Customer) and AML (Anti-Money Laundering) regulations are not limited to financial institutions anymore. Businesses large and small worldwide will be held liable if they are not compliant with KYC/AML. Due to the resources (money, time, and labuor) companies need to adhere to the requirements, KYC/AML can be tricky and demanding. If you are a smaller Asian business, how can you respond to these challenges? Asian-Pacific countries, especially China, are attempting to learn from past KYC/AML violations and cyber security issues by improving KYC methods.
Validate a Chinese ID with CIP
The first step, the customer identification programme or CIP, is crucial in KYC for verifying customer identification documents. CIP requires banks and businesses to use an individual’s government-issued ID cards to check their name, address, date of birth, and Chinese citizen identity number. You can validate a Chinese ID using the following documents:
- Chinese passport
- Chinese national identity card
- Chinese driver’s licence
Financial institutions usually cross-check this information with national digital databases, but face-to-face transactions and visual inspection of the documents require businesses to spend valuable time.
Conduct Customer Due Diligence (CDD)
After a Chinese bank or business can approve valid IDs, they are responsible for conducting customer due diligence (CDD) as the second step of the KYC process. CDD involves an added layer to research a customer’s background and purchasing habits. For CDD, your company will likely need to check the customer’s:
- Employment
- Types of accounts and payment methods
- Payment history for schedules and patterns
In China and other nations, there is screening for previous criminal activity through global watchlists in order to assign a risk category (low or high). Based on the risk category, your institution can assign each client a specific level of monitoring. Or, you can decide that the person’s risk level is too high, and deny the use of your services.
Monitor and Keep Records
Industries are also required to keep records of screenings and perform ongoing monitoring on their clients. Experts recommend companies establish a programme dedicated to this process. When monitoring, your employees will need to:
- Review lists of people convicted of money-laundering
- Check international travel locations
- Spot unusual account activity
Get Help for KYC/AML Compliance
If your company needs assistance with KYC, you have options. To relieve banks and businesses from the burdens of KYC/AML compliance, cybersecurity companies are offering helpful technical solutions. Instead of relying on employees, you can outsource your KYC/AML tasks to save money, time and labour.
One method of verification that is gaining popularity in Hong Kong and Malaysia is eKYC. New technologies such as face recognition and “liveness” detection (e.g., “I am not a robot” verification feature) have helped companies speed up enrollment processes. Another reason eKYC may become standard is that it can be done remotely. So far, these electronic options have been very accurate for checking IDs. Since smartphone use is almost standard in Asian-Pacific nations now, eKYC might also provide customers with a convenient, user-friendly experience. Although eKYC is still an investment, you might consider adding these new security and verification methods to your compliance arsenal.
Although eKYC has provided efficiency in the KYC process, there are still concerns regarding fraud and vague regulation laws that eKYC tech experts must address. Despite the ongoing development of security features, hackers still find ways to invade and corrupt identification systems. Despite the challenges, your business must commit to following the KYC/AML laws in your country, or else you could suffer major consequences. Hopefully, with the constant dedication to cybersecurity improvement, KYC solution companies will offer effective and affordable services to businesses of all sizes.
