What is KYC?
The path to know your customer (KYC) is what companies do with the ultimate goal of verifying the identity of their customers before or during the time they start doing business with them.
Banks and organizations of all sizes have turned out to be big supporters of KYC. KYC policies have been spreading for quite some time and have become a must everywhere. With issues related to corruption, terrorist financing and illegal tax evasion ending up being so prevalent.
Even KYC allows organizations to protect themselves by ensuring that they are legally working together, and additionally, it reassures people that one way or another may be harmed by financial crimes.
What is the LMA?
Subtracting from “Anti-Money Laundering”, it is an arrangement of methods, laws or directives intended to stop the act of producing income through illicit activities. It is clear that current AML solutions cannot keep pace with the developing volume and complexity of financial transactions that must be watched for money laundering activities.
For now, tax criminals are always finding more imaginative approaches to illegal financial trades, while institutions scramble to catch up with these undoubtedly sophisticated criminals.
How can Blockchain be used for KYC and AML?
As exceptionally compelling as Blockchain is in helping cryptocurrencies work effectively, that is not the only thing it can be used for.
Blockchain innovation is currently being used for different use cases that cut across different areas and businesses. Trade anything of significant value online in an anchored and verified way. One such used case is KYC and AML.
This is why Blockchain could theoretically function as an incredibly secure and accurate approach to storing individual information that is used for KYC and AML consistency.
Along with these, if Blockchain is used in some way for KYC and AML compliance, a customer could make a “block” by entering most of their own data, which is required for KYC and AML compliance.
This information would then be encrypted and stored on the Blockchain. The person would be given a password mostly called a passphrase or private key that must be entered in order to view the data.
What are the benefits of Blockchain technology for KYC and AML?
There are several advantages to using Blockchain technology for KYC and AML. The first is that a typical KYC and AML Blockchain registry could be made that could be used by a wide range of banks and financial institutions.
This could speed up the onboarding procedure and dramatically reduce KYC compliance expenses. Every time a bank is signing on a new customer, a bank representative may be given a password to access the customer’s KYC data instead of walking the customer through most of this data each time.
Another key advantage is that KYC and AML registration could be performed for intra-bank use. This means that when customers use exclusive services provided by the bank, the bank can rely on the Blockchain registry to complete KYC and AML consistency.
Instead of dealing with most of the fulfillment over and over again each time the customer needs to use another service or purchase another banking product. This could dramatically speed up and minimize costs for KYC and AML compliance, which would be a boon for banks.
Blockchain has officially proven its worth in the field of cryptocurrencies, but it has been used in other cases like supply chain finance, trade finance, and insurance industry, etc. The banking industry spends a lot of dollars on KYC costs every year, which could be reduced significantly, helping banks. to improve your core concern and give your clients a smoother onboarding process.
If banks and other financial organizations begin to use Blockchain technology for KYC and AML purposes, then it could trigger rapid change and could soon become the business standard. In case you need to revive ideas or want to peruse the latest news related to Blockchain Services or Cryptocurrency Development Service, stay connected with us.