Imagine having to submit the same set of documents (Driving Licence, Proof of Age card, Passport) each time you open a bank account, buy a term insurance plan or even trade in bitcoin. You go through a tedious, time-consuming and manual process that often involves several departments. Frustrating delays may sometimes lead to an ugly exchange of words or emails, affecting business relationships. There is also the possibility of human error when hundreds of such KYC documentation is processed.

Every country has its own government-issued identity cards, whether for exercising voting rights or authorisation to drive a car. Submission of these documents for verification is called Know Your Customer (KYC) documentation. It enables validation of your identity to ensure that you are who you say you are. Your photograph on the ID documents is matched with your face. In some countries this would involve biometric authentication, usually your thumb impression. The information submitted is verified against secure sources to establish that your documents are authentic and you have no pending financial fraud or criminal cases against you. This can get very tedious if you have shifted to a new State where you need to take gas and electricity connections. If you have just become an adult and want to buy a car, you will be faced with similar KYC compliance when you take a car loan and insurance. In other words, each time you approach an agency or bank for a service, you will go through KYC compliance at each touchpoint.

Whew! What a time-wasting and inconvenient practice! Yet, if you want to get things done, there is no way but to get in there and grit it out.


What the KYC aims to establish

Before you get all worked up with the KYC approach, take some time out to understand the reasons for KYC compliance.

KYC documentation not only authenticates your credentials but also helps maintain a verified record of customers. A permanent KYC framework is built with unlimited potential. Most importantly, a verified customer database fulfils the institutional requirement of regulatory compliance. Potential fraud by serial scamsters, fraudsters and loan defaulters can be averted. Individuals with dubious links or criminal records can also be identified to meet Anti Money Laundering (AML) and Counter Terrorism Financing (CTF) requirements. Banks all over the world face billions of losses every year on account of non-compliance of KYC of a legal or a business entity. Such situations can be avoided if you could tap a centralised KYC repository of verified entities.

Can repeated KYC touchpoints be aborted?

Well, no one really forces you to submit your KYC documents, but if you want the services, you have to fulfil the requirements. So if you want to take a loan, KYC compliance is a necessary process you cannot do without. Regardless of the time and fuss involved.

However, what if the multiple KYC touchpoints were done away with? What if you had a centralised database where your verified KYC details were stored securely, for retrieval at each touchpoint? What if the institution you approach, reaches out to a verified KYC registry for access each time you approach for a loan, file a legal suit or take a new phone? Whew, what a game-changer this could be in the world of KYC submissions and registrations!

As we move towards a more digitised society, it makes sense to revisit working models in regulatory compliance. This begins with digitisation of KYC and moves on to put together a centralised KYC registry that does away with repeated touchpoints of documentation and authentication.

This robust model is fast being adopted by many companies and financial institutions.  Using a consensus based approach to KYC where the customer gives permission, the unified KYC registry offers its members and government agencies access to the verified registry. Thus, saving on valuable time and cutting down operational expenses. The complexity of the process and operational load of customer onboarding is minimised, enabling the business relationship to flourish.


Who benefits from a centralised KYC registry?

A KYC registry with a standard protocol on its implementation – how to seamlessly unify the verification, contribute towards it and query it – can transform the way businesses and banks operate.

A centralised KYC database eliminates duplication for consistency and reliability. It offers internationally standardised solutions serving the collective interests of governments and institutions. As the multiple touchpoints are done away with, compliance workload is reduced for cost and time savings to all the stakeholders. More the number of agencies linked to the global KYC registry, more the ‘ease of business’, an important index of ranking world economies.

A. Banks

A centralised KYC registry offers banks and financial institutions a platform to collect and share information for vetting their risks, especially in the context of AML.

Uses also go beyond KYC compliance.  Banks have access to information across the world with respect to business interests of their clients or payments processed, building high standards of regulatory monitoring. Banks can also better navigate international regulations, like the Foreign Account Tax Compliance Act, to filter tax dodgers.

By offloading the process of KYC compliance, banks are able to reduce their operational costs as well as risks. They are happy to have instant access to client verification and screening and speed-up operations for customer satisfaction.

B. Agencies

While most countries require KYC compliance while taking insurance policies and listing at trading platforms, many others make KYC mandatory while taking a new phone connection or buying property. So insurance companies, trading exchanges or phone companies also become beneficiaries of access to a global KYC registry.

C. Customers

Customer onboarding is streamlined and made simpler with a one-time process of KYC documentation and verification. Once the mandatory screening and monitoring is done, a customer has access to the KYC database. Updates or remediation is possible on the interactive platform of the registry. This offers enhanced customer experience with savings in both, time and efforts.

As the KYC is synonymous with a digital identity the customer is in charge of his data. Whereas previously the customer was obliged to the KYC administrator at each agency he approached, with a centralised KYC registry he can control which agency shall have access.


A global KYC registry revolutionises compliance and creates opportunities

In today’s digital landscape where bots are capable of powering social media activity, it is important to authenticate an individual’s real-life identity. It calls for expertise and standardised methods of verification, which individual stakeholders like banks and insurers may not have.

The standardised norms of KYC collection and validation create a valuable mine of high quality customer data. Such rigorous process of verification adds authenticity, while removal of duplicate requests provides validity to the data. Thus, a centralised robust KYC data management service helps banks and multiple agencies benefit from a high quality of client data that has already undergone verification. As customer entity data is centrally collected and administered, banks are able to comply with KYC and AML regulations, for end-to-end regulatory compliance.

A centralised KYC registry also synergises all industry stakeholders with seamless sharing and validation. The unique automated monitoring detects changes in KYC profiles, to set high standards in KYC compliance solutions. Legal entity data can be sourced from legitimate sources, and screened for identification of risk flags.

A global framework for KYC registry can be further strengthened with third party advisories on global regulations, changes, benchmarking and information security. The registry can build a robust risk-based KYC policy that is stress tested with regulators and financial institutions globally for more consistency.

In areas like transactional banking where customers look at reliability, a number of providers, each focused on a different market segment can bring distinctive value.

Seamless KYC onboarding and one-time compliance provides customer satisfaction

While we have spoken lots about the benefits to the banking and financial system, we cannot diminish the relevance of a global KYC model for customers.

The main objective behind KYC regulations is to prevent identity theft and financial fraud. However, the current practice is that of submitting the KYC documents at each touchpoint, as KYC policies differ for institutions and agencies, as well as for different countries. While the verification is conducted, the customer has to make himself available and cooperate with the verifying executives. This long-drawn process is repeated at each bank or agency where he seeks a loan or other significant facility. With a global KYC registry, the process of both, document submission as well as verification, would be one-time. Time and effort is saved by a one-time frictionless customer onboarding. All a customer needs to do when he takes a mortgage or a car loan, is allow the agency access to the global KYC registry.

Challenges of a single global KYC registry

Countries have different systems and formats of government issued ID. You also have third party vendors contributing towards the data. This makes the case for an updated certified KYC registry that moves on from being a national data bank to an international or global record. What’s more, with trade, transactions and insurance extending beyond borders, this KYC as a service can “streamline KYC compliance and the distribution of due diligence documentation”.


As the benefits become tangible, private companies have begun working on shared KYC solutions, with different target markets. However, to maintain data consistency and reliability, all customer data submitted needs to comply by a standard format.

Another challenge faced is that of security. This can be solved to some extent using blockchain technology and two-factor authentication for access. Storage in distributed database is another solution.

The ideal situation is that of having a limited number of global KYC registries that strengthen their data quality through collaboration for international cross-border regulatory compliance.

NameScan offers PEP and sanction screening, making KYC and due diligence check easy. Try out NameScan’s free PEP check tool here and see what other solutions they have to offer.


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