KYC: Verifying Data in Financial Services
Less than a week after the United States retired its primary armed support forces from Afghanistan, the country is undergoing tumultuous change of political order.
The current political change is creating a strong ripple in the financial services space. These changes are sure to be felt by many companies. This is especially true for those that finance Afghan citizens or businesses and facilitate transfers into Afghan territory.
KYC in Afghanistan
A key consideration for financial services companies is potentially financing a terrorist entity or organization. Banks and money-handling platforms are already rethinking their policies that allow inflow to the Afghan economy.
This is motivated by Office of Foreign Assets Control (OFAC) sanctions, their obligations to understand their client through Know Your Customer (KYC) data, and the requirement to be compliant with pre-existing anti-money laundering (AML) regulations.
In this dynamic, any regulated entity must ensure it has completed due diligence to effectively identify the party sending and receiving money. If this cannot be done, technically, the currency should not change hands.
In fact, as recently as last week, both MoneyGram and Western Union issued policy updates specific to transfers into the beleaguered nation. They are wary of an uptick in transfers that could end up in the wrong hands.
Verifying KYC Data
One challenge almost all banks and money handlers face is being compliant with OFAC. They must accommodate as many legitimate transactions as possible.
Of course, this is good for all parties. Banks make profit facilitating these transactions. And for legitimate parties, the money ends up with those that are fairly awaiting it.
The verification of KYC data becomes key.
In almost all cases, there is a balance between processing verification artifacts—such as IDs, articles of incorporation, deeds, trusts, or other—into English and the speed required to decide whether or not to authorize a client operation. Money handlers have an obligation for due diligence so that their compliance can verify data points before making a decision.
Importance of KYC
If recent history is anything to learn from, banks are better off funding a multilingual process protocol instead of risking fines. A single violation carries a $90,000 penalty within the US framework and potentially larger fines elsewhere. In fact, there are over six global entities that have been served with over $1 billion in fines.
For high-frequency, high-volume transfer activity, prudence is the name of the game as banks and transfer shops improve their ability to showcase true multilingual authentication.
TransPerfect has shaped 24/7/365 multilingual authentication operations for leading financial services organizations around the world. This includes bespoke data identification workflows, encrypted technology, and a network of globally trained resources that support more than 170 languages working around the clock.
To find out how we could help your finance-related organization, contact us today.
