Real-Time Reporting at the Forefront of KYC Innovation

For any online business onboarding new customers, juggling the ever-growing stack of authentication tools required to remain compliant with the relevant know your customer (KYC) and anti-money laundering (AML) laws can lead to all kinds of complications and inefficiencies.

Moreover, what businesses and consumers see when they jump through the various KYC hoops that are required when creating an account or signing up for a service is only half the picture.

According to Liudas Kanapienis, co-founder and CEO at Lithuanian compliance tech firm Ondato, the familiar user-facing aspect of KYC that includes document scanning, biometric authentication and liveness checks are complemented by a host of “back-office activities.”

These include processes for screening against politically exposed persons lists, validating risk scores and eliminating false positives that take up the time of KYC departments — all of which require the use of advanced technology.

Related: Biometrics Offers MENA Customers Frictionless, Secure Online Authentication

“If we’re talking about a business customer, for example, you have to understand that there are lots of the data points — the CEO, ultimate beneficial owners […] — managing all of that, cross-matching and validating the data and the risk behind that, that’s where we are using lots of those technologies,” Kanapienis told PYMNTS in an interview.

Identifying and Mitigating Risk in Finance and Beyond

To address the increasingly complex KYC tech stack, Ondato has built a KYC operating system that helps compliance teams manage all their due diligence, customer authentication, intelligence and reporting requirements from a single unified platform while automating many of the back-end processes that Kanapienis highlighted.

Read more: East-West Commerce Gets Biometrics Boost and Automated Compliance

Describing how the company has evolved, he said that although initially, its clients were mostly financial institutions, as the company has grown it has picked up a more diverse client base, an indication of rising concern with identity fraud and security threats in other industries.

But whether in the finance sector or elsewhere, he said that the biggest fraud risk is not the growing sophistication of malicious actors. “The problem is when people don’t think that there is [a] risk or they are not aware of it,” he remarked.

Learn more: PYMNTS Intelligence: Leveraging Technology to Combat Identity Fraud

He added that security technologies are “just the tools” and the real challenge is to identify threats in the first place and choose the right solutions based on that.

That said, KYC and AML go beyond just identifying and blocking suspicious users. For firms to remain compliant, companies need to prove to regulators that they have sufficient procedures in place.

“In terms of the regulatory environment […] the biggest challenge, especially for the institutions that work in more than one country, is the differences [between KYC rules],” Kanapienis said.

When it comes to trends shaping the KYC and AML space, he said that regulators are increasingly demanding faster reporting of findings. “Now the biggest focus or interest [is] real-time reporting,” he stated, adding that related advances in transaction monitoring are bringing further automation to the field and accelerating the pace at which suspicious activity can be identified, logged and details shared.

Going forward, he said that the focus will turn to predictive analysis, which can help reduce fraud and speed up identity verification.

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