E-KYC – Banking, Finance, Insurance, NBFC Sector

E-KYC – Banking, Finance, Insurance, NBFC Sector

Executive Summary:

• • • Know Your Customer (KYC) is the process of verifying identity of customers. E-KYC is verifying identity of customers electronically.
    • KYC process broadly involves customer identification and due diligence.
    • E-KYC is an Application Programming Interface (API) based solution and is completely electronic, paperless, secure and facilitates speedier transactions.

Introduction:

Know Your Customer (KYC) is the process of verifying identity of customers within the ambit of the prevention of money laundering laws. The objective of KYC is to protect businesses from being used for criminal activities. KYC processes are employed by companies, banks, insurers, export creditors, telecom and other financial institutions to ascertain the true identity of customers. Initially, this requirement was more applicable to financial industry dealing with money but now the requirement is expanded to include almost all the industries and sectors. E-KYC is verifying identity of customers electronically.

KYC Process:

KYC process broadly involves:

• Know Your Business (KYB): focusing on verifying the legitimacy of businesses you work with rather than individuals.
• Customer Identification Program (CIP): involves verifying identity of customers.
• Customer Due Diligence (CDD): involves collecting relevant information about the customer and evaluating for any potential risk for the organization or money laundering/terrorist financing activities.

Companies/financial institutions formulate KYC policies with the key elements of:

• Customer acceptance policy;
• Customer identification procedures;
• Monitoring of transactions; and Risk management.

Earlier, banks, telecom, and other financial services providers were seeking photocopies of the customer’s original identity proof for performing KYC verification. In an attempt to reduce the ever-increasing regulatory burden and compliance cost, financial service providers have started using Aadhaar e-KYC to verify Indian consumers. There are various advantages to financial institutions in using e-KYC:

• Paperless verification
• Cost-effective
• Prevents fraud
• Real-time identity verification
• Transparent
• Consent based to protect user privacy

The e-KYC is an API-based solution where KYC is done electronically permitting service providers to identify customers electronically. E-KYC service is completely electronic, paperless, and secure and facilitates speedier transactions. E-KYC is also expected to lower the threat of identity misuse while eliminating document forgery. Moreover, the use of digital signatures and encryption mitigates chances of tampering with the customer’s information and customers can also avoid the endless paperwork, and both the service providers and customers can save on paper costs. Further, the information is stored electronically and can be used for audit also. E-KYC process is error free due to lack of human intervention.

Conclusion:

At ProInd, we are constantly in the pursuit to make business tasks easier and simpler for our customers by providing IT enabled services for business needs by designing tools and software. We understand that KYC Services is a core component all corporate as well as service providers. As such our organization also provides E-KYC assistance to customers, ensuring entity data, document collection, tax profile validation, regulatory protocols and self-declarations etc. and is the right partner to ensure that the data is complete, accurate and up-to-date.

Regards,
Legal Team

Proind Business Solutions Private Limited
306, Tower B, I-thum, Plot No A-40, Sector 62, Noida, UP, India- 201301
No.: +91 120 4224203
Email: info@proind.in, website: www.proind.in