Last update: 12/05/21
The September 11 incident that happened on American soil marked the need to radically change the banking system and data verification of account holders and openers.
And although technology has dramatically advanced over the years, the avoidable circumstance happened.
Such tragedy also paved the way for innovations in the banking and financial systems in most countries, including Australia. New laws and enactments were put in place, including the identity verification of potential bank and commercial applicants.
During its investigation, the 9/11 Commission uncovered several pieces of clues indicating how money was laundered from bank to bank. New Jersey's Hudson United Bank was pinpointed as one of the many banks where the hijackers deposited a massive amount of money to do their harrowing deeds.
During those times, early detection and banking safeguards for laundered amounts were not intricately designed to halt deposits and transfers. Such inadequacy and leniency from financial institutions facilitated the WTC, Pentagon, and Washington attacks.
The Know Your Customer (KYC) Guidelines Safeguard Financial Institutions
Fraudulent transactions, money laundering, bribery, and corruption are some of the issues being addressed by the KYC guidelines. The process enables your business and empowers your team to go after and disrupt possible deposits that are dubious.
And because launderers and criminals tend to hide behind fictitious and deceitful identities, getting to know your customers is imperative. This unmasks their true identities and helps your business understand their full capacities and confirms their authenticity.
Australia's financial laws have been astringent over the years, incorporating a rigid stance on dubious activities in the financial industry. The KYC law creates the highest possible assurance, not just for the banks and financial institutions, but also the general public. It removes customer doubts and elevates a bank's name in good faith.
The AML/CTF program duly identifies all the procedures needed to create a sturdy identification backing of every customer intending to open an account. The focus of identity verification lies in its capacity to identify different customers based on their financial capabilities and identification authenticity.
Australia’s Rigid Banking Laws and the Due Diligence Process
Answering the heed of the financial industry has always been on top of every country’s position. It is to prohibit the circulation of money, which would otherwise be used to put the world at risk and the company's name in a bad light. Also, avoiding the exploitation of laundered cash for various reasons, including terroristic acts, is something the KYC tries to address.
As far as Australia’s banking laws and regulations are concerned, the KYC guidelines are in place to help solidify a financial institution’s name. Third-party identity verification providers and customer identity tools will provide you with the right information to either accord or withhold bank account opening rights.
The only primary consideration is getting all the required documents, including government-issued IDs, proof of billing, and various other documents proving the authenticity of a person's identity.
What to look for in a Stand-out KYC Service Provider
Data coverage is one of the best ways to judge whether a third-party service provider offers you comprehensive data gathering. The ability to source from various independent platforms, including credit institutions, commercial and government facilities, and phone datasets, help mark your service reach.
In addition, you should also look for some other features, including AML and GDPR compliance documents verification tools, fraud detection and a due diligence process, and biometric verification's.
About the Author: Alison Lurie
Alison is a copywriter and content strategist. She helps businesses stop playing around with content marketing and start seeing the tangible ROI. She loves writing as much as she loves the cake.