Mar 2019 | Fraud Prevention
By Posted by Charlie Connor

Verify existing customer and business owner identities

Know your customer checks (KYC) support companies in ensuring that their customers are not involved in financial crime or fraud by verifying the individual and business they’re doing business with. KYC remediation is essential when protecting your business and customers from money laundering.

It is important to ensure you remain confident in who your customers are and the level of risk they pose to your business over the course of the customer relationship. In businesses, money laundering and fraud are committed by individuals, but complicated business structures introduce opportunity for criminals to hide behind those structures. This increased focus on existing customer portfolios is being driven by new regulation and changes in fraud trends.

Identifying and verifying Ultimate Beneficial Owners (UBOs) is also a requirement of the AML directives. Complex business structures can make it difficult for you to confirm who owns a company and the process to try and identify these individuals can be long winded and require much manual intervention. It’s important that you are sure of the majority shareholders or owners behind a business you’re working with as criminals could use the business to hide their true identities or where the money invested in the company has come from.

Fraud risk

Fraudsters are increasingly exploiting weaknesses in fraud controls on existing accounts as fraud checks during new account openings are becoming stronger. Our latest fraud research has found that third party fraud is nearly twice as likely than in 2014* pointing to a trend of fraudsters moving to using another person’s details to infiltrate existing accounts or create new profiles. The rise of account takeover fraud highlights the weakness of traditional security measures, and notably password access which is particularly vulnerable for younger generations who rarely have more than five unique passwords.

Customer remediation and monitoring

Some businesses are yet to recognise the importance of KYC remediation. Businesses need to hold the most up to date and accurate data on their customers before a suitable risk assessment can be completed. The first step of the process is to understand your data landscape, by conducting a KYC data quality assessment on your existing customer portfolios. The benefit of this is understanding if remediation activity is required at all. Depending on these results, you are then likely to enter into a multi-phase activity to re-authenticate customers against your latest AML and Fraud Risk policies, before cleansing and filling in the gaps in data that was identified through steps one and two. This process will help you create an up to date and accurate record of the customer which helps work towards compliance, as well as segmenting the fraud risk of your portfolio.

How can Experian help?

Experian can help you meet KYC requirements with our KYC data quality assessment and remediation coverage across both customer and business portfolios.

Our solutions help you:

  • Carry out initial KYC health checks on your existing customer base, to assess data quality.
  • Work towards your Regulatory commitments for the 4/5th AML directives.
  • Protect honest customers from attack and identify fraudsters on your open book, minimising revenue losses through effective fraud management.
  • Deliver flexible solutions to suit your specific interpretation of the regulatory requirements and fraud risk, by utilising our combined breadth of data assets and specialised analytics expertise.
  • Deliver one off remediation exercises and ongoing monitoring requirements.
  • Re-authenticate customer by using a combination of multiple identity verification and fraud tools, including new data-sets.
  • Reconcile gaps and inconsistencies against the UK’s largest consumer and business information bureau.
  • Set and maintain consistent standards across account opening and existing customer checks.

*based on data from 2017 – UK&I Fraud Report 2018