The focus on KYC compliance is often about preventing financial crime and money laundering, but there’s a sinister back story to where a criminal got those funds that may be about to touch your business.
The predicate offences…
Money laundering is only ever a downstream crime, meaning that it only ever takes place after another more serious crime has been committed.
The Financial Action Task Force (FATF) has collated these crimes into 22 predicate offences, for money laundering to occur, the criminal must have committed one of the following:
- Racketeering
- Drug trafficking
- Human trafficking
- Insider trading
- Cybercrime
- Piracy
- Forgery
- Extortion
- Tax crime
- Smuggling
- Robbery & theft
- Kidnapping & hostage taking
- Environmental crime
- Counterfeiting and piracy of products
- Counterfeiting of currency
- Murder and GBH
- Corruption
- Trafficking in stolen goods
- Illegal arms trafficking
- Sex trafficking
- Terrorism
- Fraud
A quick scan of these crimes helps us all realise that by looking at KYC as more than a tick in the compliance box, together we’re all making it difficult for criminals to launder money, and in turn preventing serious crimes.
Your business, fraud and financial crime
One of these offences should remain top-of-mind for any CEO and practically every business in the world…fraud. This crime doesn’t just mean your customers are cheated out of money, but your business loses significant amounts of money to this crime every year.
Fraud lives on your balance sheet. Call your CFO and they’ll likely be able to tell you exactly how much your company has lost to determined fraudsters in the past quarter, if not the last financial year.
Anti-money laundering (AML) issues are a significant concern and failures come with painful fines, but it can be difficult to envision what a fine comes to when taking into account your current AML program. After all compliance costs are soaring, and you’ve spent thousands to prevent fraud and financial crime already this year.
You can reduce that expense by a significant margin if your business is managing to identify and eliminate bad actors before they ever enter your company’s ecosystem. The only way to do that is with more effective KYC checks.
Remove the threat at point of entry
KYC checks are one of the most powerful security features you can implement into your customer journey. With the right KYC provider for your customer onboarding journey, you’re able to quickly identify fraudulent activity and reject deceitful applicants before they ever use your products.
There are two ways your business can deal with fraud and financial crime before criminals manage to access your business under the guise of customers. The first is to identify them.
Identifying potential criminals and fraudulent applications is no easy task. HooYu creates a bespoke identity scoring profile for every applicant.
The score gathers together all the various data points of identity provided and cross-references them against each other to provide a score that weighs the validity of the applicant’s identity. If it’s below a certain threshold or HooYu uncovers a document that has been fraudulently manipulated, then it is flagged and allows your business to process the customer according to its fraud prevention procedures.
Having the tools in place to cross-reference identity documents which may be stolen with an active 10-year-old social media digital footprint, which is far harder to steal or fake, can increase your confidence as to the veracity of the identity.
A criminal is unlikely to have an active 10-year-old social media profile to hand that matches with the fake identity document that they supply. When they hit this stumbling block, they’re far more likely to self-select out of the process and be prevented from interacting with your company. In contrast, your legitimate new customers will have an easy smooth onboarding experience. It’s just one way of many that you can maximise security without having to create friction for your customers.
