Shielding Your Investments: How KYC Stops Cybercriminals in Their Tracks

The introduction of user-friendly online investment platforms made investing more accessible to the general public, especially beginners. But with so much sensitive data being processed online, cybercriminals love these platforms, too. 

Fortunately, there’s something you can do to stop them. Learn how Know-Your-Customer software stops criminals in their tracks, shielding your investments and maintaining a reputation for data safety.

What is KYC?

How well do you know your customers? Know Your Customer (KYC) is the process that other regulated entities, particularly financial organizations and investment firms, use to verify the identity of their customers. 

But specialized  KYC software can do so much more than that. It also allows businesses to assess their customers’ risk profiles, and monitor their online transactions, thus enhancing financial responsibility and safety. KYC is now required in the US as a part of financial regulation compliance and AML efforts. 

Businesses must verify that their customers are who they say they are, and check that their documents are authentic, and issued by the relevant authorities. These documents include social security cards, passports, and driver’s licenses. Even credit and debit card information must be checked and verified.

The Growing Threat of Cybercrime

Why are businesses focusing so much on identity verification and risk management? It’s all due to the growing worldwide threat of cybercrime. This type of crime is estimated to reach $15.63 trillion by 2029. And the financial impact of cyberattacks is not the only problem.

Financial fraud brings with it other implications for investment businesses, such as harm to their reputations and decreased investor trust. Even the International Monetary Fund (IMF) has noted that cyber threats pose serious concerns to global financial stability.  

How KYC Helps Prevent Fraud and Cybercrime

KYC software is the first line of defense in the fight against financial fraud and other cybercrime. It helps prevent identity theft and financial fraud in the following ways:

• Does the new customers’; identity appear inauthentic? KYC software offers identity verification that stops cyber criminals from impersonating other individuals and making unauthorized transactions under their names.
• Unsure about a new customer, even though they are who they say they are? KYC software can screen your new customers against industry blacklists and may use innovative technologies to employ fraud detection.
• Does a recent transaction seem inconsistent with the customer’s reported income and financial or employment status? KYC software identifies suspicious transactional activities and can assist with tracing funds for AML purposes.

Protecting Your Investments: KYC’s Role

Financial fraud criminals either steal identities or fabricate fake identities, to go through verification forms on financial platforms. Organizations must ensure financial crime compliance to detect and prevent such threats. Our guide on how to mitigate risk in digital transactions will help you to understand this better.

KYC software stops these types of fraud by ensuring individuals are accurately identified. It can highlight suspicious behavior, such as repeated tries to verify an identity or submit fake or altered documents. That means the clients’ sensitive data stays safe, and the investment platforms’ reputations remain intact. 

Therefore, KYC software reduces risks right at the initial verification stage, for both investment platforms and their clients.

The Technology Behind KYC: Automated Systems & Real-time Monitoring

Using reliable KYC software allows you to stay compliant with industry regulations. It monitors and flags suspicious activity in real-time, and in various ways. This is supported by automated technologies along with artificial intelligence (AI), machine learning (ML), and data analytics.

These technologies are particularly useful in identifying typical customer behavior patterns to detect anomalies. 

KYC Software: A Smart Investment

From buying shares in listed corporations to real estate investing, clients need to know that their sensitive data is always protected. And KYC software is the smartest investment you can make. KYC solutions offer investment firms several long-term benefits:

1. Robust risk management, even while scaling operations and growing your business.
2. Increased compliance with AML regulations for your industry.
3. Prevention of financial loss due to financial fraud crimes. 
4. Greater operational efficiency, without extra admin.
5. Enhanced reputation management and improved client relationships. 

Just compare the small cost of implementing KYC vs. the potential total losses your business could suffer due to cybercrime. Just one fraudulent or criminal transaction could exceed the cost of implementing the software. You’ll quickly see why so many businesses are investing in KYC software. 

Conclusion

KYC software will effectively prevent financial fraud to give your business’ efficiency, customer experience, and reputation a boost. And it will support your regulatory compliance in a world plagued by the rising threat of cybercrime. 

Do you own an investment firm or manage an online investment platform? We recommend that you implement KYC protocols today. You’ll be shielding your investments, protecting your customers, and stopping cybercriminals in their tracks.