Роман Терещенко, бізнес-аналітик

Roman Tereshchenko on KYC: how to conduct client verification to minimize risks

In light of the global fight against money laundering and terrorist financing, financial institutions face significant challenges. International standards imposed by organizations such as the FATF are being integrated into national legislation. The FATF includes strict regulations and preventive measures. Fintech expert, Roman Tereshchenko reports that this includes the mandatory KYC (Know Your Client) procedure to identify clients. How is this verification carried out and how does it reduce the risk of financial crime?

What is KYC and what principles is it based on?

The KYC procedure is a mandatory stage, the main vector of which is aimed at verifying the identity and honesty of the company’s clients, especially in the financial sector. Roman Tereshchenko adds that this regulatory standard allows organizations to better know their clients and reduce the risks associated with money laundering, terrorist financing, and other illegal activities. In short, it is an important tool for ensuring the safety and legality of financial transactions.

According to the expert, the KYC process includes ID verification, facial analysis, and biometric authentication. And financial institutions are required to comply with KYC rules to minimize the risks of fraud. At the same time, keep in mind that the responsibility for compliance with KYC lies on their shoulders.

Roman Tereshchenko on KYC: how to conduct client verification to minimize risks

Violation of these rules may result in large monetary penalties. From 2008 to 2018, restrictions were imposed in the Americas, Europe, the Middle East, and Asia-Pacific fines totaling $26 billion for AML, KYC, and sanctions violations, not to mention reputational damage.

Considering such disappointing global practice, Roman Tereshchenko still recommends that modern financial institutions do everything possible to avoid being among the fines, minimize risks, and conduct their activities legally. To do this, he suggests considering three fundamental principles on which KYC is built.

  1. Financial institutions need to obtain accurate information from their customers, such as full name, address, social security number, etc. for personal identification.
  2. After collecting credentials, you need to check their authenticity. This can be done by requesting official documents. You can also use verified databases to confirm the information provided.
  3. The KYC process is not completed after the initial verification. According to the expert, companies or banks must continuously monitor the activity of their clients. This helps prevent risks associated with illegal activities and provides financial security.

The KYC process: how it works and why it is so important – Roman Tereshchenko knows

The specialist emphasizes the importance of the KYC procedure to ensure security and compliance with legal regulations. Roman Tereshchenko explains that KYC usually includes several key stages. He suggests focusing on the:

  • Information integration. Customers are required to provide accurate information about their identity as a basis for further verification.
  • Verification of the information provided. To ensure the authenticity of the information provided by customers, official documents or databases are used to verify authenticity.
  • Risk assessment. Each client undergoes a risk assessment, including the origin of funds and other factors.
  • Current monitoring to identify suspicious transactions on the part of the client that may violate regulatory standards. This stage ensures continued compliance with regulations and protection against financial fraud.

Roman Tereshchenko believes that performing the KYC procedure helps solve some important problems:

  • Regulatory Compliance.
  • Preventing fraud, money laundering, and terrorist financing.
  • Reputation protection.
  • Improved security.

According to an expert in the field of fintech, the KYC procedure plays a key role for companies that seek to operate legally and guarantee the safety of their activities. By collecting and verifying customer credentials and continuously monitoring their activities, businesses can reduce legal and financial risks while strengthening their business reputation. Analyzing the above, Roman Tereshchenko summarizes that KYC is a valuable tool for ensuring the integrity of the financial system and protecting the interests of clients.