Why KYC Verification Process Is Common In USA


Know Your Customer Verification, also known as KYC verification, is something that has become mandatory for businesses across the spectrum in the USA. There are various reasons that have led to this business practice ranging from regulatory compliance to better transparency for tax audits. But the fact of the matter is that US businesses have come to realize that a robust system for online identity verification is more reliable than a manual review of a person’s credentials. Businesses stand to profit a lot from a client base that does not pose any financial risk to it in the form of online frauds or identity theft cases.

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KYC Verification process & regulatory compliance

KYC verification process started out formally in the USA- and with a legal cover – in the wake of findings published by 9/11 commission. US government made it mandatory for businesses to collect personal information about their customers before any services are provided or a product is sold to them. Although, nature of service rendered and kind of product sold also decides the nature of KYC that is permitted to be performed but overall KYC verification have a solid legal ground in the USA.

Transparent business practices

KYC verification process allows for transparent business practices that can help businesses to present a more responsible outlook to the regulators in general and IRS in particular. A verified source of customer information is used as a counter-check for a business transaction by companies in the USA. Not to mention that a comprehensive list of such clients will help a business to earn legitimacy and respectability.

Perfect risk mitigation

Businesses in the USA might have adapted to new standards and technological advancements but they are still at risk of losing money in the hands of online scams, identity thefts and frauds perpetrated by financial criminals. KYC verification cuts down the risk to bare minimum by ensuring that the identity of a future customer is validated through official documents. Sophisticated systems of verifications have been put in place by businesses in the USA to reduce the risk of encountering customers with fake or doctored identities.

Multichain based business model

It is astonishing that how many businesses in the USA follow a multichain based business model in which similar services are offered in similarly designed stores and outlets, across multiple states. A unified KYC verification system makes sure that a customer that has once proven their identity at an outlet, does not have to perform the similar process on any of its other outlets. In short, customer satisfaction is merged into regulatory compliance with the help of a sophisticated and centralized KYC software.

Efficient KYC verification systems

With the passage of time, identity verification systems have improved significantly both in scope and scalability. Modern age technologies have been incorporated to support businesses across the USA to effectively perform KYC verifications with minimum time spent and with better accuracy. Some online identity verification services are available that are using Artificial Intelligence to produce real time results for business across America. This reason alone is bringing a large chunk of USA based businesses onboard for KYC verification.

There is no doubt that KYC verification process in the USA has come a long way but there is still a lot that can be done to secure user rights without compromising on business interests of the companies that are performing those KYC’s procedures.

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About the Author: Jonathan Miller

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