KYT Verification – The Key to Combating Financial Fraud

The financial sector still faces integration issues, outdated IDV services, and inadequate security features. The Regtech industry has introduced innovative digital solutions such as KYT verification to address the issues. Applying cutting-edge services can help the financial industry deal with the above issues while ensuring compliance with KYC and AML regulations. Corporations can easily streamline the customer onboarding experience and cross-check customer credentials against global watchlists.

The following article discusses the application of the KYT compliance procedure and other IDV solutions to discourage identity theft and money laundering. 

KYT Verification – A Quick Insight

Transaction screening systems facilitate financial businesses to validate and keep track of customer monetary exchanges. Several notable transactions that a customer can make are below:

  • Cash & card transactions
  • Cross-border exchanges
  • Inward & outward remittances
  • Trade finance transactions

According to the latest KYC and AML regulations, it becomes essential for firms to maintain their customer’s financial data, especially when doing business with the third party. The information can help determine monetary transactions’ nature and purpose, eventually facilitating fraud prevention. 

For this reason, several financial institutions are implementing KYT verification to extract the following information:

  • Customer name
  • Transactions patterns
  • Country of origin
  • Type of monetary exchange
  • Originating banks

Know your customer transaction procedure is a data model that can support banks to monitor financial exchanges and discourage fraudulent activities. This way, banking firms can deter both internal and external scams. The results from the data model can help experts fight fraud and ensure compliance with KYC & AML regulations. 

  • Market Potential of the KYT Industry

Markets & Markets Research predicts that the transaction monitoring market will reach $16.8 billion by 2023, expanding at a CAGR of 15.1% from 2018 to 2023. 

Important factors that are playing an important role in the company’s growth are the following:

  • Introducing advanced products & services
  • Entering into Partnerships

Applying KYT verification solutions can help industries secure payment networks from financial crimes. This way, corporations worldwide can ensure compliance with international regulatory obligations to avoid hefty fines or bans. The report also discusses the leading market players in various world regions. 

  • Growth in Europe & North America

In this way, applying innovative digital solutions is facilitating the exponential growth of the aforementioned firms. Moreover, North America (USA & Canada), followed by Europe (UK, Germany, France), will become the biggest revenue-producing jurisdiction in the world. Following are some factors that will contribute to the growth of the North American region:

  • Managing KYC compliance
  • Combating money laundering & terrorism financing cases
  • Using advanced analytics to get risk alerts

Applying KYT Verification Procedure To Financial Crime

According to international regulatory agencies, all businesses must fulfill the KYC & AML requirements to actively fight fraud, and financial institutions are no exception. In the Know Your Customer (KYC) & Anti-Money Laundering (AML) standards, there is some uniformity regarding the procedure of customers’ data collection, but some loopholes do not let the guidelines become an international norm. Because of this, some areas have developed clear guidelines for meeting the standards, while others have delegated responsibility for compliance to local firms.

  • Overcoming Challenges in the Industry

Unfortunately, some financial firms still operate on outdated validation procedures that are time-consuming & cumbersome. After one KYC & due diligence procedure session, there is usually no follow-up session to collect new information. This negatively impacts the ability of an enterprise to examine the risk associated with customer profiles.

In this way, banks and financial firms face challenges conducting ongoing due diligence procedures because experts also want to extend a positive user experience. 

In the modern digital world, ensuring compliance with KYC & AML requirements has become a top priority for organizations. Considering the market trends and the rising need for transparency, lawmakers are coming up with stringent regulations. This is essential to safeguard investors and help firms discourage money laundering and terrorist financing cases. In this light, applying the KYC procedure is insufficient, and businesses must apply the KYT verification procedure to discourage fraud. 

Final Thoughts

Having multi-channel accessibility, customers can easily connect with financial firms and benefit from products & services worldwide. Undoubtedly, fraud is bound to be in a pool of legitimate transactions. Only applying KYT verification solutions can help industry experts discourage money laundering & terrorism financing cases. 

Teaming with third-party vendors can help specialists implement GDPR & PCI DSS-compliant KYT verification procedures. In this way, enterprises communicate care & responsibility to all the stakeholders. Hence, the implementation of KYT solutions can detect suspicious activities instantly. 

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