Digital KYC verification is the process of carrying out the ‘Know your customer’ procedure digitally. It forms an integral part of the overall company verification process and is a foolproof way to validate the customer’s authenticity before onboarding them. Any company that can be at a financial threat from its customers are mandated to carry out the customer KYC. Crimes like money laundering, account takeover frauds, terrorist financing, identity theft, data breaches and bad debts have become very common. Digital KYC verification is imperative to safeguard the interest of the company, its employees, and its customer. This process weeds out any unscrupulous and fraudulent persons from being onboarded as customers.
While everyone may feel only banks and financial industries such as NBFCs, digital wallets, e-payments industries etc need to carry out KYC verification, it is, in fact, key to many more sectors such as telecom online gaming, travel etc.
Due to the sophisticated and technologically advanced methods adopted by fraudsters to commit fraudulent and destructive actions, numerous sectors become susceptible to financial fraud. Ideally, every industry should undergo digital KYC verification checks, but a few industries need it more than the rest. This is because they are more lucrative targets for criminal activity deeming their protection critical.
Young gamers, teens, and pre-teens constitute a significant chunk of the gaming space. This group is especially susceptible to social engineering attacks because they are relatively less knowledgeable about cybersecurity and highly exposed to the risks of social media. Fraudsters can deploy numerous sophisticated tactics to deceive players by impersonating other gamers, game administrators and friends and gain unauthorized access to the players’ personal data. Through phishing tactics, they dupe players into sharing credentials and misuse this. Digital KYC verification can be added to online gaming platforms to keep criminals out and ensure that only authentic players are part of the community.
Digital KYC verification checks are also essential in the betting industry to assure the genuineness of all the players and clients. The key reason that scammers target this industry is money laundering. Betting creates an environment where everyone is rolling in money, and no one really is verified before participation. This makes it easier to get unlawfully gained money. The gambling business can definitely use digital KYC verification techniques to segregate the money launderers from the legitimate gamers.
According to RBI, banks, NBFCs, insurance firms and financial institutions are mandated to verify their customers before onboarding them digitally. They have also started performing re-KYC using V-CIP, which makes life easy for financial institutions and clients alike. The objective of KYC is to avert banks from being used calculatedly or inadvertently by criminal elements in terrorist financing activities or money laundering. KYC refers to customer screening and identification that helps you understand if they are risky for your business. Digital KYC compliance helps prevent numerous financial frauds such as money laundering.
Digital KYC solutions help telecom companies validate the customers and safeguard the telecom operators from risky customers. The Telecom industry is susceptible to high fraud, and SIM card fraud is becoming increasingly problematic among mobile users across the world.