What is KYC verification? Steps to know about your customer

KYC verification

KYC If you are a new business owner or have just been informed about regulatory compliances that you need to follow, then “What is KYC verification” is a purely logical question.

KYC basically stands for “Know Your Customer” and a KYC verification normally entails that you not only collect necessary personal information about your customer but also ensure authentication of that user information.

This is not only beneficial for your business interests but it is also mandatory in several territories by law. What kind of information you need to collect for the KYC verification varies from territory to territory and from each business category to other.

Not to mention that regulatory guidelines also dictate the terms for data collection in order to perform a KYC verification. Normally, the following steps are taken to Know about your customer.

Facial Verification

This is the first and foremost item in almost every kind of KYC verification performed in every part of the world.

Having a facial evidence of a customer is necessary not only to identify a customer but it also enables businesses to provide a personalized service.

Just like in the normal world, the face of a person is their most unique identity feature and it is really hard to imagine a KYC process performed without facial verification.

Document Verification

An identity document is a next step in collecting verifiable customer information to perform KYC. In fact, it also serves as a primary source of a customer’s identity and helps prove different aspects of it.

For example, an Identity document with a photo is instrumental in facial verification. Name printed on the official document can be cross-matched with the one provided by the end-user. But even before any such crossmatch verification is performed (facial or Name verification), the validity of such a document is verified.

Different checks are performed to authenticate an identity document provided by the end-user to ascertain their personal credentials. Pattern recognition, depth perception analysis, hologram detection & verification are few that can be named to give you an idea that how a document is verified for a KYC verification

Proof of Address Verification

This kind of verification is performed by eCommerce websites mostly in order to reduce requests of refunds just because customers did not receive their ordered items at their provided addresses.

Shipping industry and courier services prefer to have a verified address of a customer in order to eradicate supply chain bottlenecks.

Most of the times, identity documents are used to validate the personal addresses of customers. Some companies even allow bank statements and utility bills as ideal proof of address but there is a limit to the term of these documents e.g. no older than 3 months or 6 months.

Apart from these primary steps to collect information for KYC verification, there are other important aspects that are performed in large portions of the world to validate a person’s identity. These include but are not limited to

  • Phone Verification
  • Consent Verification
  • Age Verification
  • Name Verification
  • Date of Birth Verification
  • Nationality Verification

So, you must pick wisely what kind of information you require to perform KYC verification of your future customers. Also, keep in mind the cost incurred on each such verification to make the KYC process viable financially for your business.