Biometric authentication has revolutionized the traditional customer identity authentication system. For instance, mobile devices now have the ability to authorize monetary transactions being made through banks, all thanks to facial identification or fingerprint scans. Overall, it has not only enhanced customer experiences but allows numerous other benefits that businesses are increasingly gaining interest in. But what is the impact of biometric authentication on KYC and AML guidelines? In this article, we will be discussing this in much detail.
Biometrics refers to the statistical analysis and measurements of physical or behavioral human characteristics. As it analyzes the unique features of each individual, it is commonly used as a form of the identity verification system. Today, biometric authentication has the ability to perform verification for countless purposes, ranging from transactions and surveillance to access control and security.
Understanding Biometric Authentication
A biometric authentication software has the ability to identify an individual based on their behavioral or physical attributes. For instance, criminal investigations require the use of biometric fingerprint scanning and DNA sample tests, while high-tech companies require iris recognition to enhance security. Biometric facial recognition has also increased in popularity, particularly due to the ease of use and convenience it offers. Unlike fingerprint scanning, it does not require end-users to be present in person or any form of physical contact.
The Demand for Biometric Authentication
In today’s digital-first world, digital hacks and financial frauds are on the rise. This makes it more important than ever to verify the true identity of customers. Fortunately, advancements in the field of artificial intelligence have now streamlined the authentication process. As a result, businesses are more empowered than ever before to stay compliant with international Know Your Customer (KYC) and Anti-money Laundering (AML) standards.
Biometric Authentication and KYC/AML Compliance
How can you verify that an individual is actually who they claim to be? More importantly, now that the world has shifted indoors and contact has been minimized, how can you answer that question without being present face-to-face?
For the financial services industry, compliance with KYC and AML guidelines has a major impact on the way they verify a customer’s true identity. Banks today have a major challenge to overcome as they need to provide services remotely, maintain AML and KYC compliance online, and also keep fraudsters at bay.
To help this situation, banks have now adapted to verifying their customer base online through AI-powered identity verification software. Biometric authentication, in particular, has proven to be of utmost importance in this COVID-ridden world. This is because biometric authentication technology uses the facial features of a customer to verify them through online platforms, thus making it impossible for criminals to fake their identity simply through paper-based documents.
- How Does it Work?
To meet AML and KYC obligations, the following steps are taken in the biometric authentication process:
- An end-user that wishes to open a new bank account opens the bank’s website.
- To be onboarded, the customer is first asked to prove their identity. This is done by providing an image of their ID document, along with a selfie.
- The customer can also opt for a video-based KYC process instead, during which a KYC expert has a short video chat with the customer to have them verified.
- A biometric facial recognition software extracts the features of the individual, and stores them in the form of a facial signature or face print.
- Once the selfie has been verified against the biometric data, or the video details match the information present on the ID document, the user is verified. The customer can simply have themselves verified through their selfie the next time proof of identity has to be provided.
Biometric Authentication for Fraud Prevention
As more and more companies shift towards online business models, numerous threats have come to the surface. From phishing attempts and malware to major data breaches and money laundering, financial crimes will continue to exist. Therefore, it has become highly critical for companies to build robust identity management infrastructure. With the help of advanced technologies, such as biometric authentication software, companies can not only stay compliant with AML/KYC standards but also enhance security measures.
Safeguarding computer networks, online portals and transactions, emails, and numerous other digital business processes is the main priority for companies. As cybercrime such as identity thefts and account takeovers is accelerating, picking out legitimate users from a sea of criminals is becoming considerably challenging.
Biometric authentication using biological characteristics lowers the risk associated with online operations, simply because physical attributes cannot be faked or forged, unlike traditional passwords and PIN codes. Imposters are particularly discouraged to try to deceive face-based authentication systems. This makes fraud detection and fake log-in attempts easy to spot.
The future of biometric authentication is evidently promising and offers tremendous value for businesses. Not only does it weed out criminals and enhance security, but also improves productivity and customer experiences. As a robust technology that paves the way for a wide array of industrial use-cases, the need to regulate this technology and manage its growth is ever-increasing.