One of the first things a financial institution has to determine in any online transaction is if a customer can be trusted. After all, identity theft is widespread, with 21,367 reports in 2021 in Australia alone. Losses suffered by victims amounted to nearly $9.2 million the previous year, which is three times higher than in 2020.
To combat identity theft and other similar fraudulent activities, governments worldwide have required financial organisations to abide by the regulatory standards of their country. Preventive measures, like KYC verification, have been implemented to ensure that every client’s identity is 100 per cent verified and that their financial activities are periodically monitored.
Like the rest of the world, Australia has also legally mandated KYC protocols through the Australian Transaction Reports and Analysis Centre (AUSTRAC). Two tenets on which the country’s KYC legislation is built are anti-money laundering and terrorist financing. Some of the institutions that use the KC verification technology are banks, brokerages, digital payment service providers, and cryptocurrency exchanges.
But what exactly is KYC verification and why are financial organisations required to implement it?
Customer identification through KYC verification
KYC, or “Know Your Customer,” is the process of verifying a client's identity and knowing the risk they pose before giving them full access to the products and services they need. In other words, it makes certain that the person an organisation is transacting with is who they say they are.
The KYC verification process applies different methods to protect a financial institution from losses caused by illegal funds, fraud, and corruption, among many others. These include face verification, identification authentication, biometric verification, and document verification. The technology can monitor a client’s financial transactions so that an organisation can be aware of any unusual or suspicious activities. Should a customer be found with a record of fraudulent wrongdoings, they can be blocked from making a transaction. This reduces a business’ risk of being exploited for illegal corruption schemes.
The use of biometric KYC verification
The KYC verification process can be carried out both in-person and online. Since the early 2000s, it has been a mandatory framework for banks and financial institutions for customer identification. Back then, however, it was performed manually, requiring clients to submit their identification to be reviewed and authenticated by employees.
Today, onboarding processes through KYC verification have improved, thanks to advanced artificial intelligence technologies. Through biometric KYC verification, clients can be verified within minutes, if not, in seconds. Everything is digitised, making it faster and easier for a customer to access an organisation’s full products and services remotely.
So what is biometric KYC verification? It is a digital process that verifies the identity of a customer through biometric checks including fingerprints, facial recognition, hand and earlobe geometries, voice prints, written signatures, and retina patterns. With this process, a financial organisation can automatically capture a client’s data, allowing the former to conduct further risk assessment and due diligence.
Going beyond the financial sector
While especially widespread in the banking and financial industries, fraudulent criminal activities affect all sectors, including real estate, insurance, and trading. This is why many companies have implemented the KYC process into their systems. Among these businesses are Sydney-based PetsForHomes which announced the use of biometric KYC verification technology for its breeders last July.
PetsForHomes is a pet site where you can get anything from a Moodle dog to a Friesian Gelding horse. Its purpose for implementing the biometric KYC verification process is to ensure that unscrupulous scammers do not dupe potential pet buyers into depositing money to them or stealing a legitimate breeder’s information.
According to Kate Teng, PetsForHomes PR Manager, the site aims to increase transparency within the pet community. With the use of KYC verification, the site hopes to put an end to puppy farming and identity theft. After all, the platform’s goal is to be the country’s safest place to buy a pet, and by implementing the KYC verification process, it can check the identities of all its breeders carefully and make sure they can be trusted.
True enough, scammers are everywhere. Worse, their number rises every year. With the biometric KYC verification tool, a pet buyer’s confidence is increased and a legit animal breeder’s reputation is protected.
How the PetsForHomes biometric KYC verification tool works
When joining the PetsForHomes online pet marketplace, breeders will be asked to upload their identification to the site for $29. Their photo and details will then be verified using the site’s new KYC verification tool. Once a new breeder’s identity has been checked, they will be instantly connected to pet lovers throughout Australia. They will also receive a special Breeder Verification Badge that they can display on their advertisements for authenticity. This badge is important, as it serves as proof that the breeder has been verified and can be held accountable should they engage in any fraudulent transactions.
