The importance of KYC checks in online reputation

Know your customer, is also known as KYC, and refers to the process that some institutions use to verify the identities of their customers and understand what, if any, risks they pose. They are becoming increasingly more used in recruitment, and HR departments are looking at the whole picture, and incorporating checks into the online reputation of potential and current employees.

Unfortunately, people can pose a reputational risk to any organisation. And with the proliferation of online reviews and social media reputation is one of the most valuable assets a company has. But in the content of due diligence checks and know your customer, reputational risk has further implications. 

Every business owner knows the importance of reputation, it is paramount to success, and a major contributor to failure. Historically, it was only financial institutions that were the focus on legislation. But this is now becoming broader, with more companies and businesses are now performing KYC due diligence checks in order to minimise any risk.

This can be down to many reasons, but any relationship can pose a risk and there is always the fear of employing an individual who has a somewhat dodgy background.

Companies want to know who they are doing business with and who they are employing in order to protect their reputation. But can basic search tools ever be enough to do a thorough check of an individual? Let’s start by looking at what a KYC check actually is.

What is a KYC check?

KYC means Know Your Customer and can also be known as Know Your Client. A KYC check is a process of identifying and verifying the identity of a client. For example, these can be used at the opening of a new bank account by banks or financial institutions.

It is a mandatory process to identify customers, or candidates and gain an understanding of their background, as part of the customer due diligence process. The KYC process requires customers to prove their authenticity this will include providing proof of identity, or other relevant documents

Why are they important? 

Know your customer checks are important because they verify the identity of an individual. They can check a person’s identity and online reputation. They are often complex and time-consuming to undertake and can be an expensive part of the due diligence process.

Who needs to perform KYC checks?

So, who needs to do KYC checks? Well, any firms that are in a regulated sector are required by law to screen customers and clients as part of the KYC checks.

The ultimate aim for screening is to make sure you know who your clients or customers are, or whether they are linked to things like money laundering, bribery or corruption, or any other financial crime. The types of business that are required to screen their customers can vary, but any that are regulated for Anti-Money Laundering (AML) purposes.

These businesses commonly include:

• Banks and credit institutions.
• Asset managers.
• Legal professionals.
• Estate agents, plus many others.

But what we’re increasingly seeing is the importance of seeing recruitment firms, consultants and internal HR teams performing more checks on their candidates. Covering everything from compliance with the ‘right to work’ rules to other online reputation checks. It is for this reason that recruitment forms need to perform effective and accurate checks in a timely fashion.

KYC Checks and Recruitment

As the rapid rise of using social media continues, HR teams and recruitment agencies are more likely than ever before to screen an online presence for information on any potential candidate or employee, as the first port of call.

With over 39 million users of social media, and this is estimated to increase to over 50 million by 2025, social media searches and an online reputation check can provide an extra layer of information that can not be obtained from a CV or interview alone.

When a KYC check is used in recruitment, it will ensure that an HR department or recruitment agency complies with all KYC regulations whilst saving both time and effort. They allow the company to monitor and check a candidate’s online presence for any suspicious behaviour, or in the case of Yoono, an automated search is performed to check for any adverse media coverages and any websites of concern.

A reputation review is part of the enhanced due diligence of KYC checks and is available for candidates and employees. Companies like Yoono provides the next-level AI to validate any reputational risks identified to ensure recruitments firms can make the right choice. This allows Yoono to provide the client with insight into a subjects background and online reputation, and to place any allegations in the proper context.