Artificial Intelligence in KYC

 What is AI in KYC?

AI in KYC can facilitate customer onboarding with optical character recognition. Businesses have digitalized their KYC Compliance to prevent fraudulent transactions. The increasing digital network has increased the need for closely monitoring deep connections among accounts, alerts, and rogue beneficiaries.

Before we dive into AI customer onboarding through AI in KYC and AML AI Solution, let us first understand what AI is.

What is Artificial Intelligence?

Artificial intelligence is a buzzword on the web. However, not many have a clear understanding of what artificial intelligence is. A technical definition of artificial intelligence from John McCarthy is, “It is the science and engineering of making intelligent machines, brilliant computer programs. It is related to the similar task of using computers to recognize human intelligence, but AI does not have to confine itself to biologically observable methods".

Automated KYC and AML AI Solutions

The modernization of anti-money laundering policies and the implementation of Know Your Customer as part of customer onboarding solutions meant identity verification had to be automated to meet customers’ and brokerages’ expectations. Global anti-money laundering solutions are required to be capable of performing ID card verification on any device from across the globe. Online ID verification solutions need to include more than simply ID validation.

With more manageable APIs, artificial intelligence can improve communication, security, growth, and even monetization of systems. APIs can be applied to logins, bookings, and third-party payment processors and work with larger platforms like Twitter and Google Maps. As a result of different API protocols, AI can have almost limitless creative capabilities and implementations that allow institutions and citizens enhanced online protection and freedom.

Biometric Identity Verification of UBO’s

Document verification is the essential requirement of standard customer due diligence and identity verification solutions. For business entities like large corporations, ID card verification of the owner alone cannot suffice, especially when ownership is undefined with solo entrepreneurs. For proxy-sold shares and beneficiaries, Seeking out the Ultimate Beneficial Ownership (UBO) can be complicated.

UBO is the person who owns, manages, and benefits from any transaction conducted by a representative of the institution. UBOs can be categorized into three categories according to the European Union’s AMLD4 (Fourth Directive of Anti-Money Laundering):

At least 25% legal stakeholder in the capital

At least 25% of voting right in the general assembly

At least 25% of legal beneficiaries of the capital entity

Ownership should be transparent to the necessary bodies while updating it periodically. Charges of facilitating terrorism and

AML Compliance breaches could be held against companies without UBO identity verification.

For UBO verification, your first task must be to set up customer due diligence. After company document verification, legal ownership validation is represented using share percentages to determine direct or indirect ownership claims. Later, the identity of each individual can be verified. UBO verification can be done using our identity verification API in IDMscan via mobile ID verification. Automated KYC solutions help reduce friction in onboarding your corporate clients.

Enhanced Due Diligence for AML Compliance

Identifying your UBOs is the first step with a thorough review of the key decision-makers to assess risk. Enhanced due diligence, as a part of your AI for AML solution, can perform configurable risk scoring for AML compliance to identify existing high or low-risk customers and their ability to influence the system and its surrounding ecosystems. Risk category evaluation can be performed using: -

Risk Scoring – using high-quality behavioral and demographic data and predictive analytics to create an effective risk-scoring model.

Ongoing Transaction Monitoring – identifying processes, user behavior, and system functionality red flags.

Adverse Media Watchlist – by setting an API to identify negative media reports and flag persons of interest involved.

Customer monitoring – using behavioral biometrics as part of ongoing customer screening.

Digital Identity Management – to help maintain records and risk strategy development. It also helps with keeping the regulators updated and reduces the risk of non-disclosure fines.

Adaptable Monitoring Strategy – develop an ongoing risk-based monitoring strategy that changes as the subject’s behavior changes.

AI-enhanced EDD delivers a much more comprehensive and holistic view of a new customer’s business relationships and financial activities. As part of KYC AML solutions, AI-supported EDD enables businesses to make more informed choices about whom they prefer to do business with. Offering due diligence should not be an option when onboarding a high or low-risk client. Occasionally, there may be ‘trustworthy’ actors who can synthesize an identity well enough to get past at least one stage of the onboarding process. That is why using more than one AI-enhanced tool in your KYC solution is the best way to strengthen your ID validation systems.

IDMERIT

With a streamlined, flexible, and accurate approach to identity validation, the IDMkyX platform serves as a highly intuitive, automated solution for your AML or KYC compliance procedures. A fully automated task management app that utilizes innovative artificial intelligence technologies, the IDMkyX platform automatically scans and monitors daily transactions to provide enhanced customer management with real-time analysis and reports.

We have the most technologically advanced fraud prevention solutions through KYC machine learning that handle identity verification through mobile, online KYC verification, and global anti-money laundering.

Our IDMKyX platform perfectly suits any identification needs, like, smooth customer onboarding to UBO verification. Our Identity Verification Services are renowned by Fortune 500 companies, IDMERIT is a member of the Fortune Technology Council. A planned digital identity management strategy is responsible for good AI. IDMERIT has APIs for each stage of the onboarding process while enhancing your digital identity management strategy.