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KYC - Compliance In The Remittance Industry


Remittances are a boon for economic development and financial inclusion however they can pose a huge risk when it comes to money laundering and terrorism financing. Compliance is the means to ensure greater operational efficiency and better customer service is delivered. Without stringent regulations there would be no accountability to ensure money moves securely from sender to receiver or to identify transactions that are illegal. The importance of compliance lies in the fact that it ensures the remittance industry thrives successfully.


The objective of KYC guidelines is to prevent banks from being used, by criminal elements for money laundering activities. It also enables banks to understand its customers and their financial dealings to serve them better and manage its risks prudently. Importance of KYC. KYC policies have been expanding for some time and they have become very important globally. With issues pertaining to corruption, terrorist financing, and money laundering becoming so prevalent, KYC policies have now evolved into an important tool to combat illegal transactions in the international finance field. KYC allows companies to protect themselves by ensuring that they are doing business legally and with legitimate entities, and it also protects the individuals who might otherwise be harmed by financial crime.

Globally, regulators across geographies put in concerted efforts to introduce measures that would discourage the use of remittance services for illegal money transfer. For instance, to comply with regulatory guidelines, remittance service providers usually demand valid identity documents such as ID cards and utility bills. However the rise of digital remittances is gradually changing the compliance landscape. Some of the most basic compliance measures like the customer’s physical presence become irrelevant when it comes to digital remittances (both in origination and termination). Listed below are few new compliance measures which customers may be privy to in the evolving digital remittance space.


Biometrics is a powerful, reliable and frictionless mechanism that would help in verification processes of remittance transactions. In all likelihood, customers may be required to undergo a few biometric procedures in addition to the traditional ID document verification.

Facial Recognition

This technology is already at work in many new generation smartphones, which allow users to unlock their phones using the facial recognition technology. Few players in the financial services sector too have been experimenting with facial recognition technology. It may not be too long before the remittance industry looks at facial recognition for compliance measures.

Voice Recognition

With new entrants like voice based remittance services transforming the industry, it is imperative to have a strong compliance to curb security risk. Thanks to voice recognition technology, it is possible to identify and store the properties of a user’s voice, for example pitch, frequency, spectral magnitudes and other factors. Currently this technology is in its nascent stages when it comes to remittances.

Compliance in the digital remittance space strives to make the customer identification process seamless for customers. It is perhaps easier to use a fingerprint to validate a transaction than having to put down a signature. Technology has created complexity within compliance but it has also offered effective solutions to adhere to high standards of compliance. The remittance industry has expanded thanks to its technology backed foundation hence it is only natural that its regulatory and compliance framework provides enhanced security through emerging technologies.