Video KYC

 KYC is an integral part of the customer onboarding process and it has evolved with time. Do you know Video KYC is now the latest way to carry out the KYC process in real-time?


This blog post covers the basic information about Video KYC, including the process and use cases. Here’s the summary of the blog:


The year 2020 has brought some major shifts in the business world, digitisation being the significant change. With COVID-19 situation in question, organisations have actively shifted their operations online to capture the consumer market and reap the benefits. Among all the industries, banks and financial institutions are the ones to take a major leap in their customer onboarding process.


While consumers go digital, enterprises face a major challenge to strike the balance between security and customer experience. Which method to adopt to successfully comply with KYC/ AML regulations and provide the user with enhanced experience? Video KYC is one such solution that not only offers real-time customer onboarding but also caters to changing regulatory landscape.


What is Video KYC?

Video KYC or video identification is an online method of face-to-face identity verification in which organisations carry out their customer verification process through a video call assisted by a KYC agent. During the video call, the customer is required to digitally submit the identity documents for proof.


How is Video KYC different from traditional KYC?

Know your customer (KYC) is generally defined as the process to confirm the identity of the customer and identify any possible associated risk with the customer. To comply with KYC/AML regulations is obligatory for banks, financial institutions and every other business dealing with money. Traditionally organisations have manual customer identification program (CIP) in place to verify customer identity at the time of onboarding. This process could take up to weeks, enforcing customers to abandon the process in the middle.


Exploer Video Kyc

Video customer identification process is the digital version of the traditional KYC process, just more secure, quick and cost-effective. Video KYC eliminates the paperwork streamlining the whole verification process with real-time results. Customers don’t need to physically visit the company and submit their identity documents to open their accounts. From registration to onboarding everything is done remotely.


Video Kyc

The growing need for video verification

Video identification is the trending phenomenon nowadays and calling it the force behind the changing identity verification industry won’t be an overstatement. Apart from making the verification process time and cost-effective, the growing identity frauds are driving the need for a secure verification process in the form of video verification. Security is one of the key concerns of industries in this digital era and Video KYC solution is quite efficient to combat fraudster’s sophisticated tricks.


Video-based customer identification serves as a shield against various identity frauds that include:


Spoof attacks

With the advent in technology, fraudsters are becoming more sophisticated in carrying out frauds to fulfil their malicious intents in the form of spoof attacks. Using AI tools and technologies, imposters are tricking and surpassing verification systems with fake or stolen identities. This type of document and facial spoof attacks are hard to detect and is not recommended to rely on the system’s decision only. Video KYC incorporates both human and artificial intelligence to detect spoof attacks in real-time.


Synthetic identities

Synthetic identity theft is one of the most difficult fraud to detect because of its nature. What fraudsters do is they combine real pieces of information, for instance, social security numbers (SSN), with fake information to create real-looking identity. Such identity is hard to detect at initial stages of fraud but with video verification services synthetics identities can be detected easily, hence preventing potential

synthetic identity fraud.


Deep fakes

Deep fakes are generally known as the falsified videos made using deep learning technology. They are made to fool the system and gain unauthorised access to the system. For instance, using deepfakes in face verifications systems, fraudsters can surpass the identity checks. Such videos are really close to real videos and not detected easily driving the need for more secure Video KYC solution.


Read more: Video-KYC – The ‘New Normal’ for Digital Customer Verification


How video KYC works?

Video KYC is similar to traditional KYC that refers to face-to-face video call as a channel for conducting the KYC verification process. This process requires users to confirm their identities by presenting valid ID document proofs during the video call. Instead of relying on various channels to complete the KYC process, video-CIP allows omnichannel customer engagement where face verification and document verification is conducted while staying on the video call.


Video Kyc

What are the Requirements for Video KYC?

There are different requirements for countries around the globe regarding video KYC procedures and practices. Central banking authorities issue guidelines which are necessary for customer onboarding and identification. These obligations are issued in light of Anti Money Laundering and Know Your Customer standards which are significant for protecting financial entities and business alike.


Video KYC in India

In the early 2020, the RBI issued guidelines on performing remote verification of customers through Video-Based identification Process (VBIP). Due to the COVID-19 in full effect, this step was necessary to ensure social distancing and mitigate the spread of the virus. With the amendment in KYC rules, banks can now leverage digital technology to aid their Customer Identification Process (CIP).


The Securities and Exchange Board of India (SEBI) in April 2020 allowed investors to perform digital KYC procedures using Video In-Person Verification (VIPV). The verification process entails submission of identity documents through an online form or with an in-person video session with the verification expert. SEBI requirements issued on the VIPV process are listed below:


The VIPV process is initiated by the authorized Registered Intermediary (RI) official upon the consent of the investor/user.

The environment must be free from interruption, and the user should be easily recognizable on the camera.

The process should include random questions and the responses are recorded to analyse the overall liveness.

The user should display their signature, Officially Valid Documents (OVDs), and the KYC form. These details can also be validated through an OTP.

The verification expert should run a series of tests to ensure the Aadhaar card photo resembles the person in the video.

At the end of the session, the video recordings must be kept at a safe and secure place with date and time records.

Video KYC in Other Countries

Customer onboarding procedures using Video KYC have certain implications when it comes to different regions and countries. Below are listed some countries where video verification is used to conduct banking operations:


Spain

The financial intelligence unit in Spain, SEPBLAC (Servicio Ejecutivo de Prevención de Blanqueo de Capitales), requires banks to perform video-conferencing online ID verification of their customers during onboarding. According to the regulation on non-presence identification of February 2016, banks in Spain are obligated to practice video KYC guidelines when enrolling customers to their platforms.


Germany

In a circular issued by Germany’s supervisory authority BAFIN (Bundesanstalt für Finanzdienstleistungsaufsicht) in 2017, video identification procedures are necessary for banks to reduce money laundering activities. For this purpose, employees need to be trained to perform video KYC of prospects in real-time over a live video call to verify their identity documents. Video verification of banking customers ensures that anti-money laundering policies are carried out to the fullest.


Portugal

In Portugal, there are several authorities which take relevant measures to ensure safe and secure onboarding of customers. Some of them are listed below:


Portuguese Securities Market Commission

Bank of Portugal, which is the central bank authority of the state

The Bank of Portuguese

Although video KYC requirements are not mandatory in the country, financial entities and online businesses are allowed to perform video-based verification of their customers. It helps in complying with the recommendations of the Financial Action Task Force (FATF) and guarantees the safety of customers.


Some other regulatory authorities that allow organizations to perform video KYC verification of their users which are listed below:


In Latvia, FKTK (Financial and Capital Markets Commission) is a public institution which carries out its operations autonomously.

FINMA is a supervisory authority for the financial market in Switzerland.

The CSSF (Commission de Surveillance du Secteur Financier) is the entity responsible for financial regulation in Luxembourg

CNBV (Comisión Nacional de Bienes y Valores) also known as the National Banking and Securities Commission charters requirements to regulate financial systems in Mexico.

Which industries can benefit from Video KYC?

There has been a significant shift in consumer behaviour due to trending digitisation. Industries are looking for better online solutions to meet changing consumer demands and survive this digital era. Video KYC solution is one of the technologies that will soon be integrated into various sectors, in fact, some industries have already started incorporating video identification for customer onboarding.


Following industries can benefit from AI-powered video KYC solutions.


Video KYC for Banks and Financial institutions

Banks and financial institutions have always been under the tight scrutiny of regulatory authorities. With stringent KYC and AML regulations in place, customer verification during the onboarding process is mandatory for all financial institutions. Manual verification is no longer an option, digital onboarding is what every bank needs. Video KYC can prove to be an effective way to verify customers in real-time and comply with KYC/AML requirements.


This article is originally published by ShuftiPro

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