Performing document verification is increasingly important amid the current surge in fraud. Facing a 244% increase in digital document fraud, an effective KYC (Know-Your-Customer) checklist plays a crucial role as the first gate in evaluating customers. This guideline enables businesses to truly know their customers— their identity, their financial standing, and whether all of that is true.
What Is The KYC Checklist For?
KYC checklist is a set of procedures that helps businesses ensure the completeness and validity of the applicant’s submitted information. As can be seen, creating an efficient KYC checklist is crucial to ensure business security against fraud. KYC is a multi-layered process, where each step requires continuous compliance. By incorporating the use of technology into the KYC checklist, businesses can screen out potentially risky applicants more accurately and efficiently.
List of Documents Needed for KYC
In the KYC process, businesses need to gather evidence of the customer’s identity through multiple relevant documents. Although it may be varying across industries, the most common documents required are:
- National ID Card is a government-issued document that contains personal details and a photo of a specific individual. Additional documents related to this: passport, driver’s license, or birth certificate
- Proof of Address is a type of document used to confirm an individual’s current residential address. Additional documents related to this: utility bills, bank statements, credit card statements, pay stubs.
- Business Registration Certificate is an official document granting permission for business to legally operate. Additional documents related to this: TIN (Taxpayer Identification Number), business bank account, property documents.
Stay Alert to These 3 Types of Document Fraud
Scams and fraud are becoming more sophisticated following the fast-growing technology these past years. Depending on how it is made, document fraud can be differentiated into three types that each need a unique approach to detect. Here’s a look at document fraud you should watch out for.
- Identity theft
This illegal act refers to taking advantage of another person’s identity, including name, ID number, and address for their own benefit. The information is genuine, but it is being used by someone other than the rightful owners. Both the company and the victim whose identity has been stolen can face serious consequences from this fraud.
- Altered documents
Another fraud to be aware of is the document modification, where several parts of the information have been intentionally altered from the original. The changes are typically made to distort factual information or condition. Faking signatures, changing numbers, and adjusting dates on official records are some of the examples.
- Fabricated documents
One more type of fraud is creating a new document that completely uses false information. Written in the same layout and on nearly identical paper, this document is fabricated to closely resemble the authentic one.
The Step-by-Step KYC Checklist
1. Customer Identification
This first step focuses on gathering all the required information from customers to assess further.
– Collect identification documents, from their ID card, residential proof, and business license if needed
– Cross check all the information validity through reliable sources or database
2. Customer Due Diligence
The information wil go into the next assessment to determine the customer’s risk profile.
– Evaluate and categorize customers based on their risk level (low -> high)
– Verify their financial condition and transaction patterns
– Conduct a background check for any involvement in illegal activities
3. Ongoing Monitoring
This process is not just a one-time action, but continuous oversight of customer activity.
– Update the latest customer data on regular basis
– Keep track of transactions that may indicate unusual or suspicious behavior
– Maintain compliance with changing regulations and policies
– Automate the monitoring process in real time
Advancing KYC & Fraud Prevention with Technology
KYC is all about ensuring security, protecting businesses from deceptive practices by onboarding only reliable customers. Given its crucial role, it often involves extensive documentation and multiple steps of screening. Fintelite AI technology introduces a way to make this complex process more streamlined. From automating data extraction to verification with various trusted sources, all while staying sharp to fraud. Fintelite filters out documents against signs of fraud that human eye hard to catch. Besides improving business protection, a smarter document verification also build trust with customers. Book a demo with Fintelite experts to see how AI can enhance your KYC verification and fraud detection.