The world is racing towards digital transformation and the modern financial system can no longer afford to stay out of it. The growing consumer market is putting pressure on all the institutions to pay due attention to just “Know Your Customer”’ KYC. There are a number of critical challenges being face by the financial industry. And the perpetual digital explosion is adding more to it. There is a greater transition in the screening process that signifies. The role of ‘Know Your Transaction’ KYT is to regulate the KYT compliance mechanism. Various transaction models are on the path to concluding new problems. With the best possible solutions on ‘Know Your Transaction’ KYT at an advance level.
All the financial institutions are yet not fully prepar to launch super mechanisms to detect high-risk transactions before financial fraud. With the passing time and growing digital needs to streamline online transactions. The financial industry is evolving with more sophisticated solutions to meet the emerging perils. A complete financial transactions audit is essential to monitor financial scams and money laundering activities.
KYT and all Significant Attributes
The greater shift is witnessed in the financial sphere to ensure transparency and compliance. After ‘Know Your Customer KYC, there is a pressing need to ensure a real-time transaction reporting system to reduce fraud risks.
KYT defines complete transactions record of customers including relevant regulatory documents. The transaction invoices, debit cards, cash, and credit card transactions, financial clearance updates, and cross-border transactions activity. And trade transactions, remittances records, etc. Data mining is the relevant methodology to retrieve all require data. And to deep delve into customers’ transactions history. Forbes reveals an upward trend of up to 50% in usage of digital banking and online transactions within a year.
KYT _ Next Way Forward to Deter Money Laundering
With the pace at which digital transactions conduct by all kinds of customers, KYT compliance is mandatory to ensure bank transaction monitoring for smooth financial activities. Crimes are not new to the world and money laundering is no exception in this regard, but digital insurrection is unfolding new ways to hide black money. Fraudsters comfortably rely on the digital medium, considering it the safest medium to use for laundering dirty money to other parts of the world.
Bloomberg forecasts the maximum use of the software market worth USD 5.77 Billion in 2030 to restrict money laundering. Illicit money transfer is a posing threat to the global economy and financial systems are taking it on a serious level. Chinese banking and insurance sector are framing stringent regulations to not only reduce money laundering practices but also obstruct all digital channels to facilitate illegal money transfers. Various other global countries are showing similar concern to ensure fraud transaction monitoring without imperiling customers’ private data.
KYC Not Enough. Why?
Financial regulatory bodies are set to tighten the guidelines for customers and their transactions. Stakeholders including financers, traders, retailers, suppliers, etc are requir to show compliance with international regulations. It is not possible to know your customer transaction without having a complete record of customer details. Similar is the case with KYT compliance but considering merely KYC is sufficient to control money laundering is a wrong perception.
KYC records the client’s preliminary data set like identity details but transactions record provides further information. That is required to detect terror financing and money laundering. KYT compliance procedures are not fully operational in all parts of the world. Third-world countries are more prone to sophisticated criminal transactions. Atlantic Council shares about the suspicious and organize money laundering activity in a famous banking channel ABLV Bank of Latvia. That is why KYT compliance is requisite to ensure transparent financing and reduction in high-risk transactions.
Types of Transaction Frauds & Benefits of KYT Compliance
Technology boost is proving sensitive for digital transactions. As it offers a number of digital ways of financial crimes. There is a brief sight into various types of transaction fraud.
Phishing attacks for financial frauds
In this technique, criminals send scam texts to victims that end in sensitive information breaches for illicit purposes and financial scams. KYT compliance procedures with technology assimilation play a key role in reducing such attacks.
Credit Card Frauds
This is a type of financial fraud where the credit card is use to do financial transactions to another account that is held by a criminal. Credit card transactions seem seamless but organized financial scams are recorded through credit cards. To ensure KYT compliance and deter money laundering in a meaningful way, lawmakers and technology experts are collectively require to frame strict laws and technical mechanisms.
The financial market has a number of KYT compliance benefits which are as follows:
Quick and Convenient Services
The biggest benefit of KYT compliance is to ensure speedy, reliable, and user-friendly transaction services and it is not possible when a customer follows the transaction guidelines. It allows the customer to get hassle-free financial services in every sector without any obstruction.
Reduction in Money Laundering and Financial Scams
Another important benefit is measure in form of a reduction in money laundering, terror financing, and potential financial frauds because of KYT compliance in almost every sector. Asian Development Bank submits that anti-money laundering regulations record a $1.5 Trillion gap in the global financial trade. Strict regulations put certain barriers but these are important to control terror financing, money laundering, and other transaction frauds.
A transaction record is taking the financial system to next level. There was a time when KYC (Know Your Customer) was taken enough. Still, these days ultra digitization has highlight the extensive role of ‘Know Your Transaction’ for due diligence and KYT Compliance mechanism. Best financial solutions to control money laundering and mega financial frauds are prominent and well craft under the ‘Know Your Transaction’ features. Shufti Pro is funding to ensure reliable and smooth transaction services which out stand in the financial industry.