KYC Compliance MSBs 2024

KYC Compliance MSBs

KYC Compliance MSBs


In this remittance article, we will explore the significance of KYC (know your customer) compliance. Like other industries, KYC compliance is paramount in the remittance industry. This article highlights the best practices for effective KYC compliance for money transfer organizations (MTOs).

To retain a money service business (MSB) license, a money service provider must adhere to the compliance rules and regulations laid out by their respective Government’s anti-money laundering (AML) policies. One prominent policy is to ascertain their customers’ identity using KYC due diligence procedures. To prevent fraudulent activity and money laundering, KYC compliance is what safeguards from potential threats.

Below, we’ll walk you through the up-to-date KYC best practices so you can understand better about its importance and benefits.


What is KYC?

KYC stands for Know Your Customer. This was a method developed by several nations when they put down the foundations of the Finance Action Task Force (FATF), and its primary purpose is to stop criminal activities such as money laundering and terrorist financing.


Future of KYC

1. Artificial Intelligence (AI) 

Within the past few years, AI has made tremendous progress and has already been implemented in several industries including remittance and digital marketing industry. AI is making machines smarter and processes more streamlined. With its ability to process and create extensive algorithms and analyze data; in remittance industry AI is a crucial component in the future of KYC. It can examine customer behaviors, inconsistencies, transaction patterns, and risk factors. With the implementation of AI, not only can current compliances of KYC be met, but it can also be used to jump-start the concept of Perpetual KYC for any organization.

2. Perpetual KYC

In today’s constantly evolving world, more than one-and-done KYC method is needed. Banks and money service providers need to evaluate the lurk risks continually. Perpetual KYC is the method of keeping a constant vigil on customers depending on their risk level. This combined with AI, ensures that the institute remains safe against any potential threats and gives it some ability to analyze, predict, and identify any criminal activity before it happens. Artificial Intelligence is essential for implementing PKYC; however, even though there is always a chance and capacity for human error, a human element must remain in the evaluation.


Electronic KYC Process

A typical e-KYC (Electronic Know Your Customer) onboarding flow involves several steps to verify a customer’s identity electronically. At a fundamental level, the MSB must ascertain their customer’s Name, Address, and Date of Birth from at least 1-2 sources, such as a Photo ID and Bank Statements /Utility Bills. These KYC steps are designed to ensure the customer’s legitimacy and prevent fraudulent activities. For cross-border money transfer onboarding, the main components of the electronic KYC are as follows:

1. Digital ID Verification:

This step requires the customer to submit scanned copies of their identity documents, such as a passport, driver’s license, or national ID card, to ensure legitimacy.

2. Device Fingerprinting & Liveness Testing:

The device fingerprinting or facial recognition liveness testing verifies and authenticates the customer’s identity and prevents any suspicious activities.

3. Address Verification:

The customer’s address is verified through various methods, such as utility bills, credit bureau data, and Bank Statements.

4. Mobile Number & Email Verification:

This is verified through one-time passwords (OTPs) or verification links sent to the mobile number and email address.

5. Social Security Number (SSN) Verification:

This step is used to verify the customer’s identity and to comply with regulatory requirements.

6. Watchlist KYC Compliance Verification:

This step scans the customer identity against various lists, such as the Politically Exposed Person (PEP) list, Denied Person List (DPL), and Office of Foreign Assets Control (OFAC) lists. These lists identify and raise flags for the individuals and entities prohibited or restricted from doing business due to sanctions or other legal reasons.

7. Bank Account Verification for Automated Clearing House (ACH):

This step involves the verification of customer’s bank account details to facilitate ACH transactions. Furthermore, this step may involve micro-deposits or other methods to confirm account ownership.

Combining these KYC compliance verification steps helps an MSB comply with regulatory requirements, prevent identity theft and fraud, money laundering, and other lurk activities, and ensure a secure onboarding process.


Enhanced Due Diligence & KYC in Remittance Software

In Remit Anywhere software, the due diligence and KYC is a built-in process along with other integrated tools that fulfill FinCEN, FINTRAC, AUSTRAC and FCA/HMRC requirements and controls. This is achieved through built-in enterprise-class compliance and enhanced due diligence system. These functions provide multiple filtration levels to scrutinize suspicious activity by utilizing a powerful rule engine, customer profiling technique, structuring algorithms, risk assessment variables, enhanced due diligence for KYC and customer ID programs as required by the USA Patriot Act and Proceeds of Crime (Money Laundering) and Terrorist Financing Act of Canada.


Compliance & Governance 
Remit Anywhere is partnered with – Experian and LexisNexis

Enterprise-class Compliance is built into Remit Anywhere software to mitigate compliance risks. Our System does complete transaction tracking, including government-mandated compliance. We have categorized compliance into two independent components:

1. Watchlist Compliance is in which the System scans sender and receiver names against various lists such as PEP (Politically Exposed Person) List, DPL (Denied Person List), OFAC list, and FATF list (Anti Money Laundering). Remit Anywhere software is integrated in real-time with world-renowned service providers like Experian and LexisNexis, who maintain these lists and keep them up to date. As per SLA (Service Level Agreement), Experian updates any changes in the list within 24 hours. To combat Money Laundering, this is how the system safeguards and detects financial crimes or fraud risks.

2. Corporate Compliance is a built-in feature in the Software, a Compliance component in which the System configures customized rules to monitor and validate senders’ daily limits and review and manage customer and beneficiary documents. Transactions created by branches & agents are automatically OFAC filtered in real-time, duly verified by the compliance officer for possible OFAC violations, and marked either Waived or Blocked as suspicious for further review and checks.


At Remit Anywhere, we automate your onboarding processes with innovative technology, API (application programming interface) integrations, powerful remittance software and seamless KYC processes.

For a money service business, partnering with Remit Anywhere ensures robust remittance software to automate and streamline your daily operations!


Contact Us Today!

Article Written By ~

H. A. Tepha



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