The FinTech industry has emerged as strong support for financial institutions in the past few years. The industry is responsible for assisting banks, brokerage firms, insurance companies, mutual funding corporations, etc. to efficiently work on their financial matters. They provide software, business models, and other advanced technology for streamlining the processes. The integration of FinTech is challenging the traditional methods of financing, like Google Wallet and PayPal. Handling money matters could not have been more straightforward for organizations without FinTech. 

Since everything in the FinTech industry is about money, it has become a gold mine for fraudsters. The rising number of scams in the sector is terrifying for all companies, and there is a dire need for robust verification solutions, but what is the possible solution for FinTech firms? Well, KYC Verification is an effective way of controlling scams in this business. All organizations operating in this industry must know the prevailing frauds, and how KYC Solutions can help them. Let’s take a quick look at some frauds and the role of KYC in the FinTech industry. 

Common Frauds in FinTech Sector

None of the industries is secure in the digital era. Here is a list of common frauds reported by different FinTech companies.

Phishing Attacks

Phishing attacks are getting common in every industry and securing confidential information is becoming a problem for everyone. The FinTech industry is another easy yet sensitive target for phishing attacks. It is executed through emails sent to employees working in the organization, and scammers get illegal access to all credentials and client information. 

Money Laundering and Terrorist Financing 

Money laundering conceals the origin of illegally earned money, and people now target FinTech firms to transfer money from one account to another. Furthermore, some reports have also stated that the laundered money is also supporting terrorist activities. Hence, all firms in the sectors are obligated to comply with KYC and AML regulations. 

Account Takeover

First, account takeover or hacking was limited to a few industries and social media profiles. Over time, scammers have started targeting financial accounts, and this industry is one of the biggest aims these days. Criminals take over the accounts of legitimate customers and use their credentials for any kind of illegal transaction. 

Benefits of KYC Solutions in the FinTech Industry 

Mitigating fraud in this industry is vital to keep all information safe and prevent fraudsters from data breaches, identity theft, and money laundering. Here is how KYC checks help businesses in the FinTech industry.   

Preventing Frauds

The rising number of frauds in this industry is tough to count on fingers now. Online KYC services allow firms to verify every client before onboarding. Filtering fraudsters at the initial stage makes it convenient for organizations to prevent fraud.  

Complying with KYC/AML Regulations

Almost every state across the world has AML and KYC regulations to comply with, and adding KYC Verification makes it simpler. Businesses not only filter criminals during the onboarding process, but they can also hefty fines due to compliances in the state.

Legitimate Customer Onboarding

All businesses seek legitimate customers for efficient organizational processes. With know your customer verification service, every firm can now check whether the customers should be onboarded or not. This verification lets you identify forged or tampered documents, face detection, and also cross-checks the information with sanction lists and PEP list. 

Conclusion

The FinTech industry has been facing scams since it emerged and now, the threat has significantly increased. Money laundering, phishing attacks, and terrorist financing are some of the common frauds in this industry, leading to massive economical problems. Preventing fraudsters from scams in the future is essential, and a KYC solution is an effective method. It helps businesses filter legitimate customers from onboarding, and makes it easier for companies to comply with KYC and AML regulations.