Know Your Transaction (KYT) – A Process To Detect Money Laundering Activities

This is true that the world is going forward and getting advanced, but with this cybercriminals are also getting efficient and smart.  They are doing financial crimes and trying their best to destroy the reputation of monetary institutions for their own benefit. According to the previous analysis by Global Industry Insights Inc, it is expected that the AML market will reach USD 5 billion by 2027. For this reason, In financial institutions, it is significant to observe the transactions and the information these transactions are carrying. That information includes regular documents, invoices, and clearances which can be traced properly by checking the previous record through the know your transaction (KYT) regulatory.

What is KYT?

KYT stands for know your transaction, this is a process that verifies the transactions performed by the end-users. It accesses the risks, detects financial crimes, and businesses relationships. The businesses which are using KYT compliance mean that they are covering the whole data of their clients for the prevention of money laundering.

KYT – Best Way to Combat Sanctions and Illicit Activities

Financial institutions are facing issues like money laundering and customer identification. These attributes are important to be observed, so that new technology like Know Your Transaction is introduced in RegTech. This is helping out all financial sectors in onboarding the clients, operating due diligence, and fighting against sanctions. The best service which is provided by KYT compliance is that it examines the previous and current transactions of end-users. Furthermore, this KYT solution is firmly dealing with more accuracy in real-time.

Significance of Know your Transaction (KYT)

An anti-money laundering (AML) monitoring system is practiced for the identification and checking of the transactions accomplished by clients. The crucial financial transactions which are related to the account of customers are trade finance transactions, cross-border dealings, card transactions, inward and outward transfers. All banks and financial institutions are interested to know about the information for these ins and outs of the money, especially in the case where a third party is involved. The only reason for these credentials is to fetch the suspicious transfers and to examine the nature of transactions.

To obtain this goal effortlessly, several organizations are developing many data models on different criteria like the name of the client, the country of origin, transaction patterns, the type of transactions, and the originating bank. A KYT solution provider is a software that provides a facility to the banks to supervise the clients’ transactions to find fraudulent transactions, which is a component of transaction analysis. The result of this customer transaction process is that it provides strong evidence regarding the scam transfers and helps the delegations to shield themselves from deceptions and forfeitures.

Why is KYC Not Enough for verification?

KYC and due diligence applied to the client is not enough because of the reason that there is no re-examination of this mechanism to confirm that the customer is not having any retreat in the future. While onboarding the customers’, the record of that company and client is kept in paper form until it is needed again. It develops a contradiction for the financial systems that how they can escort due diligence on their clients without yielding the customer’s experience. Interference of technology in the financial sectors raises a chance of financial crime which requires deep attention. For this reason, lawmakers are more attentive to the security of investors for the prevention of money laundering and financial terrorism. Hence, it is proven that Know Your Customer is not efficient for businesses that can detect financial scams. A KYT solution provider is important for upcoming regulations and businesses should be all set for it.

Analysis of Transaction Monitoring System

Everyone is facing digital transformation such as a businessman, a banker, or a manager because all are entering the fourth industrial revolution. A study shows that 5 percent of the payments universally are done through the paper which highlights the payment mix and observes the increase in transactions that are cashless. Now customers can attach easily to their financial services through omnichannel from anywhere. However, there are some suspicious transactions within these lawful transfers. In a study, it is observed that 80% of real credit card transactions are processed every day without cheating and scam deterioration is hard to find because of AML  monitoring.

Cutting A Long Story Short

Therefore, the KYT solution provider is a requirement of the contemporary age for the regular checking of scam transactions, which will help customers and systems to be aware of their current account status.  The transaction monitoring system is a vital way of raw data extraction which traces the data deep from its roots.


Related Articles

Back to top button