Zoe Barber
Published on: February 23, 2022
Though lucrative, moving online can present distinct legal challenges which may be unfamiliar to many Small to Medium Enterprises (SMEs). The colloquial ‘Know Your Customer (KYC)’ refers firstly to you having a decent grasp on who you do business with – is my customer who they say they are? Catlover1966 says his name is Sebastian, how do we know this is true? Does he live where he says he lives? Is he really 55? Strong KYC checks are a vital part of any KYC solution.
And secondly, it refers to compliance with the 2019 Money Laundering and Terrorist Financing Regulations. Almost all SMEs are required to adhere to KYC and Anti-Money Laundering (AML) compliance regulations, which vary depending on your individual risk profile.
However, after two years of Covid, and a growing fraud industry, businesses have found themselves with greater risk profiles than they initially anticipated.
The pandemic has been problematic for many industries in the UK. Companies have undoubtedly struggled during covid due to work absences, lockdowns, and regulations, and many have collapsed entirely. SMEs make up 99.9% of all UK businesses and, shockingly, over half of these have been in operation for five years or less.
While most sectors were reporting major disruption, the e-commerce industry thrived, experiencing record profits.
2021 saw non-food e-commerce increase by 14.3%; online clothes sales are expected to overtake in-store sales in 2022 and 70% of surveyed Britons prefer online shopping now compared to under 50% pre-pandemic. What had once been a gradual shift online has become a landslide under Covid, forcing many SMEs to adapt or crumble.
Unlike most other countries in the world, the UK has no formal citizenship ID – this leaves the responsibility of identifying and verifying customers up to the companies themselves. Currently, businesses are required to put in place a reasonable KYC solution, with the most stringent processes left for banks and insurers, but this might change.
2021 began with the announcement of the digital identity and attributes trust framework, an attempt by the government to combat the now excessive levels of fraud. With cybercrime costing £2.5bn to UK residents and businesses in 2021 alone, an increase in legislation is a distinct likelihood.
Primarily, it is your job to make sure you are not trading with any money launderers or fraudsters – you can be held liable if you do not do your due diligence.
So, how can you stay ahead of the curve regarding government regulation and fraud, without annoying your customers with boring and laborious sign-up processes?
There has almost always been a trade-off between KYC and seamless onboarding; trade-offs which companies with greater risk profiles have borne the brunt of. But it might not be like this much longer. Many SMEs are turning away from the frustrating but traditional passport scan or credit checks, and instead are layering new digital verification methods as an equally as effective, yet unintrusive method of identifying and authenticating users.
There is never one solution to identification and fraud prevention – it is always going to be a multifaceted approach. Some modern solutions include page behaviour tracking, digital biometrics, and Mobile Network Operator (MNO) data. The latter is particularly promising because 96% of UK citizens have mobile numbers – something they are not overly reluctant to give up during the sign-up process – making them a great proxy for identity.
Numbers are usually retained from contract to contract and provide considerable information about your customer, such as the associated name, address, age and whether the number is working and active. With mobile becoming the preferred method of online shopping, MNO data can help identify indicators of fraud such as whether the phone number has been ported or forwarded, if a SIM has been swapped or whether the device has been changed. You can even check if the phone has been reported lost or stolen in real time.
This data is not only invaluable to identification and verification but to fraud prevention too. Wide-spread fraud leaves you and your customers out of pocket and can damage brand integrity long term. Fraud has been thriving under Covid, with a reported 410,000 reported incidents in the UK in 2021 alone. With SIM-Swap becoming a more prominent method of invalidating 2-factor authentication, SMEs relying on one method of protection alone are vulnerable.
Mobile data can help answer a lot of important KYC questions, so you can be more certain your customers are who they claim to be. Despite the broad applications of MNO data many companies are yet to catch up, if you would like to find out more about how TMT can help you keep your customers safe and enhance your KYC solution, you can read more or book a call.
Last updated on September 18, 2024
"Phone number verification plays a critical role in helping to detect and prevent online fraud. TMT ID’s TeleShield product provides easy access to global mobile data, enabling us to enhance the actionable results of our MaxMind minFraud® services."
"BTS (Business Telecommunications Services) is successfully using TMT’s Velocity and Live services to check the status of mobile numbers. This way we make sure we optimize the performance of the service offered to our customers and ensure the quality of terminating traffic to all countries.”
"Working with TMT’s TeleShield service has expanded our ability to detect fraud and minimise the risk to our business. TeleShield brings peace of mind and the opportunity to stop fraud before it affects our customers’ bottom line or the service."
"LATRO relies on TMT’s TeleShield to provide the most up to date and reliable numbering qualification information within our fraud reporting tools, enabling us to protect our customer’s revenues and empowering them to defend themselves against fraudulent numbers."
"TMT is a valued partner that enables us to manage our routing costs effectively. They proactively and continuously expand their operator and country coverage while delivering exceptional customer service. We can always count on them to achieve high-quality results and look forward to our continued collaboration."
"TMT provides us with the most comprehensive numbering intelligence data through their fast and reliable Velocity and Live services. TMT is a trusted partner for us, their products ensure that we continue to optimise the best performance and service to our customers."
"TeleShield from TMT gives 42com the power to detect and target telephony fraud scams internationally, thereby protecting our company from the financial and customer experience impacts of telecommunications fraud."
"It has been a pleasure to work with the team at TMT. They have become an essential provider of accurate numbering data information and Number Portability services globally."
"Deutsche Telekom Global Carrier uses TMT ID as one of their key suppliers for Mobile Number Portability Data services. Deutsche Telekom Global Carrier uses TMT ID’s Velocity MNP solution. This is an ultra-fast query service that optimises the routing of international voice calls and A2P messaging."
We provide the most comprehensive device, network and mobile numbering data available
Contact us > Chat to an expert >
