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Fraud Prevention Through KYC Compliance

The new digital era has provided us with many benefits. Businesses are shifting online for conducting their businesses. However, fraud and scams threaten businesses and customers. KYC compliance is important for the organization from becoming a victim of fraud.

Technology has given us new opportunities to expand and reach new places. Digitalization and the spread of the internet have made our presence online and connected us through virtual mediums. Nothing is too far and nothing is unachievable. Technology has put our limit to our thinking. 

Businesses have also gained many benefits through the expansion of technology and started conducting their businesses online. Many retailers and even the banking sector have made their presence online through their online platform. 

Rise of Fraudulent Activities

Businesses have the opportunity to better connect with customers because of the expansion of technology. Customers have also moved online purchasing because of convenience. However, there is a risk of fraud associated with online payment. The online presence of customers and businesses have attracted fraudsters to steal from us and gain financial reward. Fraudsters and scammers have found the opportunity to manipulate customers and businesses to manipulate and gain financial rewards. Reports have shown that fraud and scams have caused the global economy a trillion of loss. 

Many organizations and individuals have become victims of fraud and scams. It is hard to fight fraudsters as they are taking the help of advanced technology for their harmful activities. In order to fight advanced technology, organizations are taking the help of artificial intelligence. They simply put a high technology algorithm in competition to advanced technology. AI-KYC compliance is an effective way of preventing fraudulent activities and protecting your business. 

Know Your Customer

Businesses had been using know your customer techniques to verify the identity of a customer. The expansion of technology and the spread of internet usage has connected but also made us vulnerable to fraud. Fraudsters have access to advance technology and they are willing to go to extreme lengths to steal from us.

The manual way of conducting a KYC identity check required a lot of time and cost. It was not healthy for businesses as it resulted in frustration of customers. No business wants its customer to feel unsatisfied with its services. Businesses want their customers to feel happy and satisfied with their company. The traditional methods of verifying the identity of the customer are no longer effective in the new era of artificial intelligence. 

Artificial intelligence is a complex machine learning algorithm that is capable of performing complex tasks without human support. The technology has many uses and it is expanding itself in other sectors. Know Your Customer verification is also taking the help of artificial intelligence for accurate results and better performance. 

Know Your Customer verification is a process of verifying the identity of an individual to conclude his authentication. Online fraud activities have produced a major concern in the mind of businesses. KYC compliance is one way for businesses to prevent fraud and protect their business. Other businesses like banks and financial sectors also use KYC compliance for customer verification. KYC compliance procedures for verification are as follows.

Document Verification

Verification of an individual is easily achievable through verifying the documents. Many businesses like banks, e-commerce, financial institutes, and crypto platforms ask for personal documents. These documents can vary from business to business.

The common types of documents gathered by the business for verification are following


  • ID Card
  • Social Security Number
  • Credit/Debit Card
  • Driving Licence
  • Utility Bills and Others

The information collected from documents to verify is name, address, date of birth, date of issue, document number, etc. Type of information can have different importance to different businesses. For Example, for online businesses, verification of address is important because of the purpose of delivery. 

The document verification process is simple and easy for businesses. It requires customers to present their documents for verification. Documents are scanned and uploaded into the system. A highly designed AI-based algorithm runs it through the system to verify its authentication. The process takes 30 to 60 seconds to give results. 

Face Verification

Face verification is a technology of which many people are aware because of its uses in smartphone devices. Biometric facial confirmation is normally performed by organizations that run a higher danger of drawing in misrepresentation and monetary violations like illegal tax avoidance, pay-off, and tax avoidance. This might incorporate yet isn’t restricted to, banks, protection suppliers, venture companies, crypto trades, ICOs, and forex organizations. All such organizations are profoundly managed and require extra insurance from fraudsters and crooks.

Performing facial verification is more straightforward than record verification and just requires the end client to show their face before the web camera. On the other hand, they can likewise transfer an image to confirm their personality. The decision to check the client through pictures or videos of the two lies with the organization profiting from KYC administrations. An end-user is verified in the following way in the face verification feature

  • The end-client comes in for facial verification
  • They show a phony or photoshopped picture for verification
  • Fake images are decline by the face verification

For another situation,

  • The end-client comes in for verification
  • He/She will show their genuine face or picture for verification
  • The software detects any photoshop and if it does not consist of photoshop then it will approve it.

Address Verification

Clients’ addresses are habitually checked by internet business destinations, online retail organizations, and banks to guarantee that they are utilizing legitimate qualifications to get to administrations. Address verification administrations make it more straightforward and more agreeable for individuals from one side of the planet to the other to be confirmed. It is the most fundamental strategy for forestalling data fraud in undertakings. Address verification works on the exactness of request transporting and permits organizations to convey things to clients all the more rapidly.

The process of address verification is done in a number of ways including ID card, tax bill, passport, etc. The framework might utilize various reports to confirm addresses. Subsequently, if either of the archives is fake or taken, the framework will end the verification cycle. The address verification process is performed in the following way


  • The client chooses the report utilizing which he/she needs to check their address. It is up to the organization to assume they need to furnish their clients or clients with different archive choices with which they need to confirm their address.
  • Check or transfer the archive for address verification.
  • The framework will utilize information extraction conventions to check the address of the client.


The above mentioned are some of the ways by which a business can protect its organization and customers from fraud. We all face a great threat of fraud and losing finance in the digital era of technology. No one likes to be another statistic on the list of victims. We need artificial intelligence to fight advanced tech that can pose a threat to us. KYC compliance is a need of the new online world to verify customers and prevent fraud.   

Author Bio

I’m James Watson and I am a contributor and technical content writer. I have written a lot of articles for my readers which include Artificial Intelligence, Machine Learning, Cyber Security, Fintech, Crypto, Finance and Business, etc.


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