Did you know, it is predicted that criminals will practise innovative AI technologies to strengthen financial fraud in the future? However, one of the main frauds among them is anticipated to be identity theft. In fact, according to a report, financial losses increased to $5.8 Billion in 2021, which rose more than 70% in a single year.
Such financial crimes are being encountered by almost every industry. Therefore to combat these frauds, many companies implement KYC compliance regulations in their firms. With these processes, the KYC regulated industries are able to monitor any suspicious activity to prevent fraud.
But, which sectors need to fulfil KYC compliance regulations? In this blog, you will know about some major industries that are obliged to meet the KYC standards to remain compliant. However, if they fail to follow these requirements, they may face huge penalties and fines in the future.
5 Major KYC Regulated Industries to Remain AML Compliant
The KYC compliance regulation is implemented in a wide range of industries. However, there are some sectors that are mandated to follow these regulations. Some of the primary KYC use cases are mentioned below:
i. Banking and Financial Industry
The banking and financial sector is one of the most rigorously KYC regulated industries when it comes to preventing financial fraud and relevant crimes. Usually, banks and other financial organisations need to execute customer due diligence before onboarding a new client. In this process, they verify the user’s identity, source of income, and other information and documents to authenticate any possible risks associated with them. The purpose of due diligence is to prevent crimes such as money laundering, terrorist financing, and other illicit financial activities that may cause reputational damage.
ii. Insurance Industry
Another KYC regulated industry is the insurance sector which is also liable to fulfil compliance requirements. These companies need KYC regulations to verify the identity and other information of their clients before delivering them insurance services. The ultimate goal of incorporating KYC in the insurance industry is to prevent any fraudulent activities that may ruin market repute.
iii. Real Estate Industry
Real estate is another sector that is subject to the KYC regulated industry. Integrating KYC compliance regulations is essential in those countries where financial crimes such as money laundering is conducted through real estate transactions. In such cases, the identities of real estate brokers and agents get verified. And, in the event of any anonymous transactions, KYC agents mitigate any possible threat.
Iv. Gaming Industry
The gaming industry includes sectors such as online gaming forums and casinos that are the KYC regulated industries. These firms are also required to run the customer due diligence process to verify their customer identity. Since casinos are more vulnerable to financial losses. Thus, these sectors implement KYC compliance standards to prevent money laundering and several illegitimate practices.
v. Healthcare Industry
Healthcare industries such as the pharmaceutical sector are also subject to KYC regulations. This is because healthcare providers need to verify and authenticate the identities of their patients whether or not they’re involved in any mysterious activities. These illicit acts may include prescription drug abuse and so on.
Presently, KYC has become the most integral part of almost every industry, especially during the customer onboarding process. KYC compliance regulations allow these sectors to approve financial transactions seamlessly and keep their businesses safe and secure from any sort of illegal activities or financial crimes. So, does your business need to be KYC regulated? Well, with the KYC AML Guide, you can learn a lot about KYC regulated industries and understand whether or not your company is subject to be compliant with the latest KYC standards and prevent your industry from fraudulent activities and reputational damage, and sustain your valuable customers.