In the modern regulated financial environment, banks face significant responsibilities when it comes to Know Your Customer (KYC) processes, Anti-Money Laundering (AML) protocols, Counter-Terrorism Financing (CTF) regulations, and Customer Due Diligence (CDD) requirements.
As the backbone of compliance, these processes are designed to detect, prevent, and mitigate risks associated with financial crime and fraud, ensuring that banks and other financial institutions uphold the integrity of the global financial system.
Breaking it down
KYC requirements primarily focus on identity verification, confirming that customers are who they claim to be. This is crucial for both onboarding new customers and managing ongoing relationships, as it protects banks from fraud and helps regulators track potentially suspicious activity.
AML and CTF laws build on KYC by mandating that financial institutions implement systems to identify, monitor, and report activities related to money laundering and terrorism financing.
These activities are enforced in Australia by AUSTRAC, which has outlined detailed AML/CTF requirements that banks must follow, including regular updates and compliance checks to keep customer data accurate.
Customer Due Diligence is a broader aspect of compliance, where banks must assess and monitor a customer’s risk profile. Depending on a customer’s risk level, CDD may involve enhanced due diligence, such as deeper identity and activity verification.
Then & now
Traditionally, KYC, AML, and CDD checks were conducted periodically (e.g. every one, three, or five years depending on an individual risk profile), which created time gaps where risks could emerge.
The landscape today is moving toward Perpetual KYC (pKYC), which monitors customer identities and profiles continuously to detect and address risks in real time.
Implementing pKYC requires sophisticated data integration, real-time identity verification, and seamless interaction with both transactional and behavioural monitoring systems.
Understanding perpetual KYC (pKYC)
Perpetual KYC represents a shift from periodic to continuous monitoring of customer identities and risk profiles, creating an agile and responsive approach to compliance. In a pKYC model, customer data is constantly updated, allowing institutions to address risks as they emerge rather than waiting for the next scheduled review.
The benefits of pKYC include:
Immediate risk mitigation
By continuously assessing changes in customer identity or activity, banks can immediately respond to potential risks, meeting AML/CTF compliance requirements.
Operational efficiency
Automated data monitoring reduces manual processes, allowing compliance teams to focus on high-risk cases and enabling cost-efficient compliance.
Enhanced customer experience
With real-time data monitoring, pKYC eliminates the need for periodic re-verification requests, streamlining the customer experience while ensuring compliance
A successful pKYC framework relies on identity verification and fraud detection as foundational elements, with transactional and behavioural monitoring systems building on these secure, verified customer profiles.
Enabling pKYC with IDVerse
IDVerse’s solutions—Identity Verification Platform (IDV), Face Access™, and FraudHub™—play an essential role in establishing a pKYC framework.
These solutions provide the foundational identity verification and fraud detection necessary for ongoing compliance, allowing transactional and behavioural monitoring systems to operate with high confidence in the accuracy of customer identity data.
Identity Verification Platform (IDV)
IDVerse’s IDV Platform is crucial for building a strong pKYC foundation. By combining Optical Character Recognition (OCR), Document Fraud Analysis, and Biometric Face Matching, IDV ensures that each customer’s identity is accurately verified from onboarding through the entire customer relationship.
- Automated identity updates: IDV continuously verifies and updates identity information, allowing transactional and behavioural monitoring systems to build on verified, accurate data.
- Enhanced compliance: IDV’s real-time data integration provides ongoing validation, supporting pKYC by ensuring that identity data is accurate and consistent for downstream monitoring systems
Face Access™ for secure & continuous authentication
Face Access™ provides secure biometric authentication, which is essential for the continuous identity verification required in a pKYC environment.
- Real-time customer authentication: With Face Access™, banks can ensure that the individual interacting with the system matches the verified identity, creating a high-confidence foundation for transaction monitoring.
- Frictionless compliance: By enabling routine, non-intrusive biometric authentication, Face Access™ enhances customer experience while maintaining regulatory compliance
FraudHub™ for continuous attribute verification
FraudHub enhances the pKYC framework by verifying the authenticity of identity attributes in government-issued documents, a vital step in preventing synthetic identities or compromised profiles from entering the system.
- Real-time attribute verification: FraudHub™ ensures ongoing verification of identity attributes, creating a trustworthy foundation that supports continuous transactional and behavioural monitoring.
- Advanced fraud detection: With AI-powered attribute validation, FraudHub™ enhances identity accuracy, allowing other monitoring systems to operate on verified and secure data
Strengthening pKYC with transactional & behavioural monitoring
IDVerse’s solutions enable the implementation of a robust pKYC framework, providing verified and up-to-date identity data that strengthens transactional and behavioural monitoring systems.
These additional systems can leverage the continuously validated identity information from IDVerse to assess customer behaviour and flag anomalies more accurately and confidently. Specifically:
- Transactional monitoring: By tracking and analysing transaction patterns, banks can detect anomalies and suspicious activity that could indicate financial crime. With IDVerse’s accurate identity verification in place, transactional monitoring can operate with reduced false positives.
- Behavioural analysis: Behavioural monitoring systems rely on consistent identity data to accurately detect deviations in customer behaviour, such as unusual login locations or transaction patterns. The accuracy provided by IDVerse solutions enhances these systems, allowing for precise, real-time alerts.
Putting it all back together
IDVerse’s identity verification and fraud prevention solutions are essential enablers of a pKYC framework, providing the high-confidence identity data required for continuous monitoring.
With these foundational tools, banks can implement transaction and behavioural monitoring with greater accuracy, maintaining regulatory compliance and safeguarding the customer experience in an increasingly complex regulatory environment.
About the post:
Images and videos are generative AI-created. Image prompt: Googie style cityscape, very mid century, retrofuturistic vibes. Tools: Midjourney, Luma.
About the author:
Josh Read is Chief Operating Officer at IDVerse. He has over 25 years of leadership experience in technology organisations including Equifax, KPMG Australia, Telstra Enterprise and Government, and Yellowfin Business Intelligence International. As COO, Josh supports and directs the global expansion of the company, building optimised business processes for IDVerse to become the global partner of choice for IDV and compliance.
