The acronym KYC, which stands for “Know Your Customer”, is a fundamental concept in the field of finance, anti-money laundering and transaction security.

Crime has always found a way to illegally exploit the identity of individuals for certain practices. A phenomenon that governments are trying to limit with regulatory and new technological tools.

What is KYC in detail? Why is this procedure becoming increasingly important?

What is KYC?

KYC is a process that companies and financial institutions follow to collect and verify detailed information about their customers.

The main objective is to prevent the misuse of financial services for illicit purposes, such as money laundering and other criminal activities.

In addition, KYC is crucial for other reasons, including:

  • Preventing the financing of terrorism: an important tool in the fight against terrorism, helping to detect suspicious transactions or customers involved in potentially dangerous activities.
  • Protection of investors and consumers: ensures that financial products are offered only to legitimate individuals or entities, reducing the risk of fraud.
  • Regulation’s compliance: many jurisdictions require financial institutions to follow KYC procedures as part of anti-money laundering laws. Failure to comply with these regulations may result in severe penalties.

How does KYC work?

The KYC process involves several phases:

  1. Information collection: companies collect detailed customer information, including identity documents, personal information, financial data, and account opening purposes.
  2. Identity check: the information provided is verified using various sources, such as official documents, public databases and cross-checks.
  3. Continuous monitoring: companies often implement continuous monitoring of accounts and transactions to detect suspicious or inconsistent behavior.
  4. Reporting to the appropriate authorities: If suspicious activity is detected, it is imperative that it is reported for further investigation.

AI & KYC: a winning union

Artificial Intelligence is revolutionizing the way companies approach the KYC process by improving efficiency, accuracy and security.

This combination of technologies delivers significant benefits in regulatory compliance, financial crime prevention, and customer experience.

One of the most obvious applications of AI in KYC is the automation of document verifications. Machine learning algorithms can quickly examine and compare documents such as passports, ID cards, and residency documents with reference databases, spotting discrepancies and forgeries with extraordinary accuracy. This process is much faster and more efficient than manual analysis and reduces the risk of human error.

In addition, Artificial Intelligence enables the implementation of advanced biometric recognition systems. Fingerprint scanning, facial recognition, and voice verification are used to verify customer identity securely. These techniques are difficult to evade or falsify because they are based on unique characteristics of the individual.

Machine learning algorithms can constantly monitor transactions and customer behavior to detect suspicious patterns or anomalies. For example, they may report unusual transactions or behavior inconsistent with the customer’s profile, helping to prevent fraud and illegal activities.


In conclusion, KYC is an essential component in risk management and prevention of criminal activities in the financial sector and beyond. Companies must invest in KYC best practices to ensure the security of their services and compliance with current regulations. The evolution of technologies will continue to influence the way KYC is implemented, improving the efficiency and accuracy of the process.

OCR, for example, simplifies and automates the entire On-Boarding process, in order to classify identification documents and extract information in real time.


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