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Keeping into consideration the number of frauds touching the greater heights, Regtech is seeing better solutions to combat problems. The evolutions in technology are helping banks and other financial institutes to reduce fraud threats and the number of fraudulent transactions to a minimum. Know Your Transaction (KYT) is one such regulation working to make financial activities convenient for both the banks and customers. 

 

Compliance processes are often tedious and require a lot of effort. Because of the weak or non-existent laws, businesses face severe consequences in the name of data breaches, identity theft, and fraudulent transactions. A report stated that the number of identity frauds in 2019 was 650,572. In the presented light, compliance professionals designed know your transaction services purely for financial institutes to reduce financial frauds to a minimum. 

 

Financial institutes are vulnerable in the wake of facing fraud. Therefore it is necessary for them to practice strategies that would give them insights on every transaction to practice investigation and Anti-Money Laundering (AML) compliance. 

 

Know Your Transaction (KYT)

The KYT solution provider is used to verifying and monitoring every single transaction made by the customers. This facilitates the bank to detect suspicious transactions made by the users and to perform further analysis. KYT verification is helpful in verifying the name of the customers, their country of origin, the nature of transactions they usually do, and originating banks, etc. 

 

KYT Is The Future For Financial Institutes 

Know Your Customer (KYC) is the process businesses incorporate in their security checks to verify their customers’ true identities. No doubt KYC is the legal requirement for companies to identify their customers in order to keep fraudsters away from their workflow. But different companies have different sorts of challenges depending upon their nature of work. Some businesses can satisfy their security protocols by just implementing KYC checks while others like financial institutes cannot just remain satisfied by verifying the true identity of their customers. Banks that are involved in the transaction of funds are required to exercise KYT verification services. Along with the KYC, financial entities are required to monitor the transactions made by the customers to check whether their customers can become a threat to the business or not. 

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Manual Verification Vs Digital Checks 

Before the modernized era, businesses used to possess verification techniques that involved human resources to complete the procedure. Manual verification means once the KYC or the customer due diligence is performed there is no follow-up on the customer activities. This expanded the number of frauds associated with the businesses. After the prevalence of frauds, regulatory authorities developed  Know Your Transaction regulations to monitor customers and their activities on a regular basis to eliminate chances of fraud threats. 

 

KYT and AML 

KYT verification as already described is the need of banks who are responsible for managing the funds of the customers. Wherever there is money involved, the number of criminals trying to get money through illegal means can not be ignored. Money laundering is a critical issue regarding financial institutions and the human intent for gaining money. Corruption, human trafficking, and drug smuggling are the biggest problems of humans these days. Money laundering serves as the root cause for all such activities which stems when the fraudulent transactions are left unchecked. 

 

The monitoring of transactions incorporates easy steps to make sure that the funds are being transferred by the legal customers and there are no illegal means attached to the process. After verifying the customers by employing know your customer services, banks and other associated financial institutes keep an eye on the customers’ activities. Regularly monitoring customer transactions using know your transaction services facilitate banks to have an insight into the usual activities of the consumers. This way the businesses can detect and analyze any transaction that is not consistent with the customers’ regular transactions and perform further investigations. 

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Merits Of KYC For Banks 

Know your transaction which saves businesses from becoming a source of money laundering, also secures the economy of countries by restricting the circulation of illegal funds into their system. Implementing the right tools at the right time can also facilitate businesses in providing frictionless customer experience by not letting their money be used by fraudsters in unauthorized ways. 

 

Know Your Transaction Limitations 

Know your transaction limitations arise when banks use inefficient KYT software that does not predict illegal transactions at the right time or also generates alarms on the non-dangerous transactions that wastes the time of the bank officials on investigating the matter. 

 

Conclusion 

Financial institutes cannot just rely on KYC services to verify their customers. Rather they have to comply with the Know Your Transaction (KYT) solution provider to make their workflow seamless and fraud-free. KYT verification is the best practice when it comes to monitoring customers’ transactions. Consequently eliminating money laundering and terrorist financing.

Shabbir Ahmad

Shabbir Ahmad is a freelance enthusiastic blogger & SEO expert. He is the founder of Shifted Magazine & Shifted News. He contributes to many authority blogs including porch, hackernoon & techcrunch.

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