The modern world is technology driven; eWallet app is also one of the technological innovations that are being adopted vastly. The count of people using the eWallet is increasing constantly as the user enjoys multiple benefits like – instant and secure transactions, cashback and rewards, etc.
Even the government is supporting this cashless economy and is taking multiple initiatives to amplify the adoption of digital wallets. The mass adoption of electronic wallets has also boosted the demand for eWallet mobile app development services. Additionally, it has also notified the emergence of KYC/AML.
What are KYC and AML?
The KYC and AML are two compliances that every e-wallet firm should abide by to stay compliant with the law and regulations. KYC stands for “Know Your Customer” and AML stands for “Anti Money Laundering”.
KYC helps to verify a customer’s identity; whereas AML prevents criminal financial activities like money laundering. Therefore, digital wallet firms must ask their eWallet app development service providers to add KYC to the sign-up process.
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What KYC are the requirements for Ewallet Apps?
Customer is required to provide certain documents or proofs to verify their identity and complete their KYC and be eligible for doing financial transactions. Here is a list of the documents that an electronic wallet business generally asks from their customers.
- Document or proof of Identity
- Document or proof of Address
- Document or proof of Funds
- Additional Documents or Proof
Importance of KYC Compliance
Minimalize Financial Crime – KYC compliance for customers helps in preventing financial crimes such as laundering money, terror funding, etc.
Less operational cost – Another point justifying the importance of KYC compliance is that eWallet businesses can onboard new customers quickly and efficiently. Furthermore, the operational cost is also reduced to an extent.
Trust – Customers tend to trust digital wallet applications that follow government rules and regulations. KYC compliance makes a digital wallet appear to be reliable and legit.
What are AML requirements for Digital Wallet App?
Numerous rules and regulations have been introduced in the past couple of years to stop money laundering. It includes KYC, monitoring accounts, transactions in real-time, etc. Here is a quick glance at points that an electronic wallet business must implement.
- Let the customer do transactions only after KYC.
- Monitor the transactions of every account.
- Develop and implement robust policies to manage and secure data
- Gather and store the customer’s data
- Report doubtful transactions to the appropriate authorities
Importance of AML Compliance
With great powers comes great responsibility; that being said it becomes important to implement compliance AML to help stop financial crimes like laundering money. Not complying with AML might expose an eWallet firm to the following risks –
- The money launderers might use fake identities and VPNs to create accounts and further use them to launder money.
- A person might open up numerous accounts on the eWallet to transfer small amounts instead of a big amounts to escape from the surveillance of a financial institution.
- The transaction done using a digital wallet is instant. Therefore; the criminal might transfer the amount from multiple accounts to mask the illegal origin.
What Are the Benefits of KYC and AML Compliance?
Trust and Integrity
The most significant benefit associated with KYC and AML compliance is that it improvises the trust and integrity between the business and customers by ensuring the authenticity of the customer.
The compliance of KYC and AML also helps businesses to safeguard themselves from legal liabilities as they get to detect and report doubtful activities on any account.
Another major benefit of these compliances is that they help prevent financial fraudulent activities by maintaining the customer’s information. The risk of financial criminal activities can be reduced by ensuring the legitimacy of the customer and their transactions.
It has been studied that customers appreciate such actions taken by the eWallet applications as it gives them a sense of security. The customer also tends to stay loyal to the business and stay associated with them for a longer period of time.
Hopefully, all the benefits and risks associated with KYC and AML compliance would be crystal clear by now. Therefore, every e-wallet firm should make it mandatory for customers to complete KYC upon signing up to enable transactions. The Digital wallet app development solution provider can easily integrate the KYC section on the signing-up page for smooth onboarding of the customers.
Frequently Asked Questions
What is KYC for an eWallet?
KYC stands for “Know Your Customer” and it is a process by which a digital wallet firm confirms the customer’s identity.
Is AML mandatory?
Yes, AML is mandatory as it helps prevent money laundering, terror funding, and other financial crimes.
What are KYC and AML requirements?
KYC compliance refers to the process of verifying the customer’s identity and AML compliance is the rules and regulations to avoid financial crimes.