Artificial Intelligence Carrying the AML/KYC Industry on its Back

Technology is a two-edged sword. On one side, you are assisted by a mammoth amount of applications introduced by a particular technology or a service. While on the other side, you are dealt with the abuse of the same technology.

Be it the advent of artificial intelligence, machine learning, the internet of things or the applications of these technologies like online ID verification, digital banking, biometric verification – the ball always falls on both sides of the court. 

Moreover, any emerging need always ends up being addressed but also exploited by fraudsters at the same time. For instance, the COVID-19 pandemic resulted in a paradigm shift as far as customer onboarding and identity verification are concerned. The businesses started conducting their operations over the internet, and the customers acted accordingly.

“As online shopping and digital banking activity increased, online identity theft also surged. To ameliorate the situation, the governments revised the AML/KYC procedures and other regulatory measures.” 

Like the travel industry now needs to verify the customer’s identity along with their COVID-19 negative test report. Thus, the onus is on the organizations to comply with these rules, the failure of which can result in punitive measures.

What Do the Terms AML and KYC Refer To?

KYC or know your customer compliance is a term used for ensuring customer due diligence. Organizations including, but not limited to, banks, travel companies, hotels, retail stores, e-commerce businesses, etc. verify the identity of customers prior to their on boarding. Moreover, it involves correct identification of customers as well as on-going authorization checks.

AML or anti-money laundering compliance is a term used for a set of regulatory measures and procedures to screen customers before customer on-boarding. AML compliance program basically refers to curbing the menace of money laundering. But, it would be an understatement to say it is limited to only that. Actually, KYC is an initial step of a comprehensive AML program. Moreover, it is not necessary to perform AML checks along with KYC.

What Necessitates a Digital AML/KYC Solution?

The short answer would be: curbing identity theft, avoiding chargebacks, impeding money laundering, and terror financing. To expand the meaning of these terms, we need to look at their effects. Well, if an organization does not verify the identities of their customers, they risk the associated transactions being fraudulent. In this scenario, a crime is always committed at the expense of some victim. 

So, if a person makes a fraudulent transaction, the organization then has to issue a forced refund, known as chargeback, to the victim of the fraud. On top of this, the business will also be in violation of KYC and AML laws due to not properly identifying its consumers. Moreover, if your business is somehow related to money laundering, human trafficking, or terrorist financing, you will face penalties from the regulatory authorities, the nature of which will depend on the severity of the crime.

Thus, it is crucial to employ an AI-assisted KYC/AML solution that can safeguard your business against these potential risks.

Scaling AI is the Most Important, Why?

Scaled AI and ML models are used to perform ID verification checks quickly and accurately. First of all, the scaling of AI and ML models involves a set of relevant, specific, complex, and accurate data. The more efficient the data is, the more robust the AI model will be then scaled. When the training of the model on a particular set of data is done, then you can be sure of fast and accurate identity verification results.  

AI-Based Verification Checks in Face Recognition

The AI-powered AML/KYC solution verifies the documents along with the facial biometric information of a user, remotely. Following are verification checks performed by the solution while scanning the face of the user.

• Quality assessment and distortion analysis are performed to detect any copying, editing, and tampering attempts made with the image or the video. They have the ability to detect all known kinds of facial spoof attacks. 
• Artificial intelligence and machine learning’s range of applications don’t stop there. Differentiating between real and printed images requires skin texture analysis. The AI-based face recognition technology can efficiently perform this task by recognizing different facial patterns.
• Through the 3D Recognition and Sensing application of artificial intelligence, the 3D geometric patterns on the human face can be recognized and analysed. You can say goodbye to the verification hindrances and errors due to changed facial hair or makeup. Together with this, AI can also differ between a two-dimensional photo or a three-dimensional one.
• 3D depth detection is a verification check that involves various AI algorithms to analyse and compare the depth of digitized pictures.

Can We Really Rely on Artificial Technology?

It goes without saying that the evolution of technology is always on an upward trend. Some top-of-the-line AML/KYC solutions in the market provide accuracy rates up to 98% which is a big number. But, skepticism circulates around the remaining two percent of the incorrect verification results. 

People can let slide a human-made error but expect perfection when it comes to technology. The false-positive results only occur in rare cases, but they still need to be addressed. Identifying different skin tones is one of the issues faced by AI-based face recognition technology. Moreover, scanning documents that are quite old and damaged can sometimes produce incorrect results. However, we can be sure of the fact that over time these potential problems will be taken care of.

The Final Analysis

The AML/KYC services drawing from artificial technology hit the nail on the head when it comes to on-boarding customers in a contactless world. Organizations can now focus on their growth when they don’t have to worry about charge backs and fines. Together with this, the increased pace of data processing results in faster customer on-boarding. It ultimately results in enhanced user experience and customer retention.

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