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What is KYC and how does it work?

KYC software assists companies in meeting Know Your Customer (KYC) legal requirements. These requirements are clearly defined for certain industries such as banking or financial products. 

These companies must rely on KYC software to learn more about their users. This is to prevent fraud and criminal activity, including money laundering and assisting terrorism, among others. 

KYC software will therefore help you learn a user’s first and last name, as well as an address and an ID document.

Blue Arrow Management Consultants is a team of professionals experienced in regulatory, as well as technological implementation of rules and regulations. The firm’s stakeholders have more than 2 decades of combined experience in the field of compliance and AML, technology, and finance.

Know Your Client (KYC) is a set of internationally accepted requirements and standards, that ensure that Compliance Staff, and the team performing Due Diligence on the potential client, have enough information to confirm and verify a potential customer’s identification.

Conducting this verification manually, requires time, effort, and is prone to errors, as human eye may not be able to spot subtle deviations in personal and official details of a potential client. Additionally, continuous monitoring also is not possible, which makes the exercise difficult to maintain.

The lifecycle of an account includes 3 main components.

1. Customer Due Diligence (CDD)
Investigation that is done prior to opening an account, is referred to as Customer Due Diligence. This includes verification of identity, documents, source of wealth, and past history.

2. Ongoing Monitoring
This is investigation or monitoring that is done on a regular basis on clients, where their activities are monitored for any major variations in trading habits, financial expenses, fund transfers, of in relation to the parties that they deal with.

3. Enhanced Due Diligence (EDD)
Any client that is flagged for any reason in ongoing monitoring, must be set aside for Enhanced Due Diligence. This is a sensitive process, and needs to be done in a way which does not offend the client, and at the same time, provides the compliance staff with all the extra information they need to ensure that the client is not engaged in any activity that may contravene local or international laws.

Managing the KYC lifecycle can be extremely tedious, specially when dealing with hundreds of clients. It is important to note that each and every stakeholder of every company needs to be vetted in detail, and all links must be thoroughly investigated, both for the safety of the firm, as well as for the satisfaction of the regulator.

It is understandable that this process cannot be done in justifiable manner when working manually. Blue Arrow provides all the assistance, and tools to manage KYC, CDD, and EDD, and ensures that the client firm has a comfort zone where they can conduct company operations without fear of being flagged in any way.

There are heavy penalties for non compliance , and it makes sense to invest in proper regulatory solutions before hand, instead of risking heavy financial, and reputational risks.

Contact us in order to guide you further, and assist you in a managed KYC solution, suited to your industry.