KYC Check

Know Your Customer (KYC) check is an obligatory identification process for financial services. This verification procedure ensures that a customer’s identity matches the one they are claiming, thereby averting fraud and money laundering.

These KYC checks have become increasingly significant due to the rise in financial fraud, particularly in the digital space. For example, in 2020, cybercriminals stole approximately $1.9 billion through various forms of digital financial fraud, according to a report published by the FBI’s Internet Crime Complaint Center(IC3). Thus, KYC checks have been developed and reinforced to combat such crimes.

History of KYC Check

Rising from the need to combat money laundering, KYC checks were initially adopted by banks and financial institutions. IIn 2001, the USA PATRIOT Act made KYC procedures a legal requirement for all American banks. Since then, regulatory bodies worldwide, such as the Financial Conduct Authority in the UK and the Reserve Bank of India, have also adopted KYC regulations.

Functions of KYC Check

KYC checks involve verifying the identity of customers, understanding their financial dealings to ensure they are legitimate, and assessing potential risks associated with maintaining a business relationship. These functions are typically accomplished through the following steps:

• Document Verification: Checking official documents like passports or utility bills.
• Biometric Verification: Fingerprints and facial recognition are sometimes used.
• Background Checks: This may involve checking the customer’s’ details against global watchlists.

Impact on Market and Technology

The implementation of KYC checks has dramatically impacted both the market and technology. Financial institutions have had to incorporate technology that complies with KYC regulations into their systems. This has led to the emergence of several tech companies specializing in digital KYC solutions. According to Grand View Research, the global KYC market size was valued at USD 5.6 billion in 2019 and is expected to witness significant growth over the forecast period (2020-2027).

Latest Trends in KYC Checks

Technological advancements have brought about an evolution in KYC checks. The trend is shifting towards digital KYC checks, which are becoming more sophisticated:

• Real-time KYC: Directly verify the customer’s information from a trusted source in real time.
• AI and ML in KYC: Artificial Intelligence and Machine Learning are increasingly being used to facilitate data collecting and processing in KYC checks.
• Biometric Verification: The incorporation of fingerprints and facial recognition in verifying identities.

KYC Check on MEXC platform

The MEXC platform also conducts required KYC checks on its customers before they can participate in activities like trading or depositing. The platform verifies personal identification data, such as the user’s name, age, and location, and requires documents that attest to the provided information. Doing so ensures the security of transactions on the platform, and contributes to the worldwide efforts towards a transparent and secure financial ecosystem.

Conclusion

Thus, KYC checks have proved instrumental in ensuring the integrity and safety of the global financial system. With technologies like artificial intelligence and machine learning advancing the effectiveness of KYC checks, the future of financial security is set to become even sturdier.