E-KYC Legislation Framing New Pathway of Success For FinTech Sector

Technology-oriented revolution is almost reshaping all the global institutions, and the financial sector is on the top of the list. Today, almost 70% of financial institutions operate on digital platforms based on machine learning and AI-based algorithms. Know Your Customer KYC is the most important component of the financial industry to overcome money laundering and other illegal financial crimes. Every financial industry defines different KYC regulations for compliance. Various top revenue-generating financial companies are installing KYC system software to timely detect criminal activity. This is one of the reasons various organizations have been penalized for KYC legislation non-compliance. 

Brookings paper reveals that banks receive almost 65 billion data pieces per annum, and AI systems are launched to control the flow of data into their systems. It is understood from the above-shared reference that KYC compliance is mandatory to ensure data security and seamless financing. 

Brief Overview of KYC in the Financial World 

Gone are the days when outdated paperwork schemes was considered ample to keep a record of the customers. Digitization has changed the priorities of all the financial sectors on a global level. KYC is approved as an indispensable process to keep criminals at bay, but the point is to first understand what KYC is actually? KYC is about to Know Your Customer each and every detail starting from customer identity proof to business transactions record. If it is said that KYC laws are revamping financial set up, then it would not be an exaggeration. Businesses are shifting to intelligent software and legislation processes for standardized KYC legislation in an effective way. 

Why Shift from KYC to e-KYC? 

This is the digital era, and digitization has revolutionized financial processing with robust data fetching and controlling in the required manner. Without digital incorporation, KYC is manual and quite a tedious and error-prone process. Electronic KYC replaces laborious manual data entries and data fetching with automated software. The various domains of fintech including digital banking systems, NFT payment processes, crypto coins, and all the virtual assets, etc. are required to follow KYC legislation compliance procedures to fight against digital money laundering and terror financing schemes. Bloomberg reveals that Deutsche Bank is fined $41 Million by the Federal Reserve for money laundering activities. It reflects ineffective KYC or weak id photo screening KYC process. It requires practical and robust KYC legislation to uproot corrupt and illicit financial activities. 

Significance of Resubale KYC Solutions

KYC solutions are effective in business regulations to combat financial challenges and meet end-to-end KYC requirements. Customers are not ready to compromise on data insecurity because data is the new oil for the modern world. With the required changes in KYC legislation for anti-money laundering and counter-terror financing, companies can safely launch new features for customer services. The finTech industry is not immune to allowing criminal penetration, and the latest AI techniques for vetting data, identity verification, and financial secrecy records maintenance are reusable in different services industries. European Banks are modifying KYC legislation using reusable solutions for the banking sector and the FinTech industry to combat illicit financial intrusions by digital criminals. 

Global Regulatory Bodies on KYC Legislation 

Global authorities are handling the global market as a master with a big stick to reinforce financial safety measures. Global bodies impose strict regulations to ensure AML and CFT compliance at any cost. Atlantic Council confirms FATF blacklists Iran for not signing AML/CFT regulations. The perpetual criminal offenses are most likely the output of weak KYC legislation where international watchdogs come into action to control fraudulent activities. Banking channels are mostly involved in such financial corruption. Similarly, IMF and World Bank etc. are tightening KYC legislation policies to spread the web net of sanctions and penalties around the law-breakers. 

Loopholes in KYC Legislation Process

Crime doesn’t exist by default. It is the outcome of the criminal mind that commits the crime and digital financial systems provide room for scamming counterfeit activities. There are a number of gaps in the KYC legislation system, briefly discussed below.

• Incapable and Incoherent AI-models

AI models exhibit flaws which are later incorporated into automated programs. Software incapacities are further witnessed in incoherent KYC processings which digitally violate compliance structure. For an instance, the forged identity verification process is easily passed through electronic KYC software. It shows weak AI models. 

• Influence of Global Powers on KYC Legislation

US, UK, and other G5 countries control the major global financial institutions for their interests. It highly impacts the KYC legislation process which is utilized by bad actors for their illicit gains. 

Final Thoughts

The FinTech sector is flourishing day by day as digital currency takes over the global stock market and global GDP is under the profound influence of digital coins where bitcoin ranks on the top. NFT payments digitally exploit global currency and criminals utilize it for different illegal purposes. Cyber security is also in danger but effective services guarantee the best identity verification solutions for effective KYC procedures and regular compliance. Furthermore, a consistent monitoring policy can help to control global money laundering and terror financing crises to a significant extent.