Best KYC Practices for Businesses in 2024

Key takeaways

KYC and AML regulations are crucial for protecting companies and ensuring financial system integrity.

Advanced technologies like AI and biometrics are revolutionizing identity verification processes.

Best practices for KYC include implementing advanced solutions, decentralizing data management, and conducting regular audits.

Didit offers a free, unlimited KYC solution with document verification, facial recognition, and optional AML screening.

Identity verification processes (KYC) are now fundamental for companies that need to comply with regulations and end fraud. According to the United Nations (UN), money laundering moves between 2% and 5% of global GDP. In numbers, we're talking about between $800 billion and $2 trillion. A figure that reflects that no organization, regardless of its size, is safe from financial threats.

KYC (Know Your Customer) and anti-money laundering (AML) regulations are the fundamental shield to protect companies and ensure the integrity of the financial system. Technology becomes the best ally for companies, such as banks and neobanks, to revolutionize these processes: a robust verification system helps you create more lasting relationships and protect your reputation.

That's why, in this post, we'll tell you about the best KYC practices to shield your company against fraud and show you how Didit can become your strategic partner to comply with regulations and close the door to fraud.

Latest KYC Trends and Requirements in 2024

Regulations related to identity verification and money laundering prevention are becoming increasingly strict. To combat money laundering and generate environments of trust, regulatory frameworks are becoming more rigorous. This is something to keep in mind when talking about KYC and best practices.

For example, the eIDAS regulation and the subsequent eIDAS 2 establish a common legal framework for trust services and means of identification within the European Union. The MiCA regulation, for its part, aims to establish international regulations for the management of crypto assets, while AML directives propose regulatory frameworks to prevent money laundering and terrorist financing.

Therefore, identity verification systems must be able to adapt quickly to this changing regulatory environment, as well as promote a brilliant user experience.

From Digital Identity Management to the Rise of AI for Identity Verification

More and more identity verification (KYC) services are taking into account respect for people's digital identity. The latest in the sector is the implementation of reusable verified credentials. This means that users will not be forced to repeat the identity verification process and already have their credentials correctly verified. In this way, companies can allow users to enjoy their services with their verified identities in just one click.

Artificial intelligence, biometrics, and advanced algorithms are becoming increasingly relevant throughout the KYC process. Through these developments, providers of identity verification-related services can detect inconsistencies or forgeries in the documentation used during the registration process, as well as avoid deepfakes in the facial recognition phase.

Artificial intelligence and biometrics are key technologies in identity verification, as they allow for the detection of document forgeries and secure and accurate authentication of users.

5 Tips for Choosing the Best KYC Software

If you're looking for the best KYC and AML software, here are five tips to help you choose the right solution for your identity verification process. All of this will help you offer effective and secure onboarding to your visitors.

1. Implement solutions with advanced technologies. Technology can become your great ally in the fight against fraud. When choosing KYC software, make sure it incorporates cutting-edge technologies such as biometrics or artificial intelligence.
2. Decentralize the management of identity data and documents. The market tends towards decentralization. Not only for privacy and information security but also for the ease it provides when working with different entities. Look for KYC software that allows decentralized management of identity data and documents. This way, you can request only the information necessary to validate your users' identity, without them feeling that you're invading their privacy. 
3. Conduct periodic audits and optimize processes. Analyzing your KYC and AML processes from time to time will help you ensure the proper functioning of your business and comply with regulations. This will allow you to locate possible bottlenecks and opportunities for improvement.
4. Bet on automation to optimize efficiency and user experience. Manual identity verification processes are obsolete and open the door to fraud. Automatic KYC and AML solutions will allow you to improve your business efficiency and exponentially enhance the user experience.
5. Outsource processes with industry specialists. While many companies have in-house departments specialized in verification, more and more are deciding to outsource this service. In this way, organizations ensure regulatory compliance through a process adapted to the unique needs of their business.

Didit Helps Companies with Free Identity Verifications (KYC)

If your business needs to verify the identities of its users to comply with current regulations, our KYC solution is the best option in the market. Our identity verification software is free, unlimited, and forever. It also has three pillars:

• Document verification. We work with documentation from more than 220 countries. Our technology is capable of looking for inconsistencies, ensuring the legality of the documentation, and extracting information efficiently.
• Facial recognition. Through biometrics, we compare the face of the person seeking to identify themselves with that of the documentation. In addition, thanks to the liveness test, we protect businesses against deepfakes and ensure that the documentation belongs to the person who initiated the process.
• AML Screening (optional). Once identity verification is completed, we analyze the data against international lists to search for PEPs (Politically Exposed Persons) or sanctions.

In this way, thanks to our solution, compliance-related operational costs are exponentially reduced, allowing companies to comply with regulations without burdening their bottom line. Want to know why we offer a free identity verification service? We explain it in this article.

Conclusion: Find a Reliable Partner to Stay Up-to-Date Technologically and Regulatorily

In summary, the best KYC practices for companies in 2024 involve staying up-to-date with the latest technological and regulatory trends, adopting advanced solutions such as biometrics and AI, decentralizing identity data management, conducting periodic audits, betting on automation, and considering outsourcing processes with industry specialists.

Thus, implementing a solid KYC process helps comply with industry best practices while also meeting the strictest regulations.

Want to know more about Didit or our free, unlimited, and forever identity verification solution? Click on the banner below and our team will answer any questions you may have.