The Evolution of KYC in 2024: Anticipating Key Changes

Digital identity verification is making inroads into various industries. Know Your Customer (KYC) procedures now play a key role in security. This applies to all online financial transactions. The financial industry is trying to ensure transparency in all transactions. In this way, they are building defenses against criminals.  
 

The policies of most countries also seek to tighten the legal requirements. But now, in the era of global digitalization, all processes are moving online, biometric verification is emerging, and personal meetings are being reduced to a minimum.  
 

This is convenient, but the digital age brings new risks of fraud, money laundering and criminal financing. As a result, KYC procedures are changing.  
 

In 2024, we expect to see a number of changes that will have the greatest impact on the processes for accessing money-related transactions.  
 

Automation to Data collection

Reprinting data from documents is a thing of the past. We are witnessing a paradigm shift — all organizations are looking to fully automate data capture and extraction.  
 

The benefits are obvious:

• Instant process speed;
• Scalability: an automated solution can screen thousands of customers simultaneously;
• Greater convenience for customers, who can complete a complex process from the comfort of their own home without having to visit a branch;
• Ease of use: modern interfaces smoothly guide the customer through the verification process, prompting the necessary steps;
• Reliability and security.  
   

On average, an operator enters the data of an ordinary passport into the system in 3-5 minutes, while the rate of misprints and errors can be up to 25%. Automation does everything instantly and makes no mistakes.  
 

The financial sector and telecom operators are leading the way in implementing such technologies. For example, Verigram’s solution for document recognition based on OCR (Optical Character Recognition) is already used by the largest companies in Kazakhstan. And the demand for adoption is growing.  
 

AI to speed up Verification 

Most customers of financial organizations do not pose a high risk. They are ordinary people for whom speed, accessibility and convenience are important when using financial services.

Artificial intelligence-based process automation meets this need. You don’t need to involve security officers to verify a trusted customer. It’s enough to implement biometric verification in an app, website or even a terminal — and all the limitations of manual data entry are removed. 
 

This is a strategic shift for companies because it allows for more efficient allocation of resources. Employees' time and attention can be focused on screening higher-risk individuals. And all necessary enrollment and service access processes are moving to automated solutions. We expect this trend to accelerate in 2024 as the benefits of automation become more apparent.

The Rise of Third-Party KYC Providers

The increasing complexity of KYC regulations and the need for specialized expertise will drive the demand for third-party KYC providers. These providers offer a range of services, including customer onboarding, identity verification, and risk assessment.

Liveness as New Standard

Face-to-face customer meetings are becoming a thing of the past, but how do you ensure that the KYC process is being performed by a real, live person and not a fake image or even a bot? There is a Liveness solution for this. It is also based on artificial intelligence technologies and determines like a human being whether a real user is in front of the camera or someone is trying to use their photo to bypass the protection. 
 

This verification is becoming an integral part of KYC or biometric user verification standards as attempts to fool systems with fake photos or videos increase. 
 

What makes Liveness unique is that the application of this technology goes far beyond the financial or telecom industries. Many modern services have started to use it to protect against bots and to simplify the login process. 
 

We believe Liveness, along with facial recognition and matching technology, will become the new standard for user authentication.

Regulatory Requirements

Regulators in most countries are tightening restrictions on access to financial services, particularly with respect to blacklisted persons.

These lists typically consist of individuals who are

• Those accused of crimes and wanted;
• Those who are legally prohibited from engaging in financial transactions;
• Those on sanctions lists.  
   

The latest FATF (Intergovernmental Financial Action Task Force) resolution emphasizes the strengthening of customer due diligence procedures. The basis of FATF’s legislative initiatives for 2024-2026 determines the dynamics of the regulatory framework. We can confidently say that it will drive continuous innovation in the field of KYC. 
 

In addition, new specific lists of citizens who are subject to voluntary or mandatory restrictions on access to services are being actively implemented in various countries. For example, self-blocking the ability to obtain credit or a ban on gambling.

Impact on Crypto Space

The cryptocurrency sphere is still in the focus of lawmakers. And in 2024, most experts are talking about stricter regulatory requirements. And this, in turn, will affect KYC/AML procedures in the crypto business. 
 

However heated the debate on the transparency of cryptocurrency transactions may be, the trend towards convergence with traditional finance is obvious. 
 

We expect that international organizations (including the FATF, which has already announced a focus on digital assets in 2024) will actively work on the creation of international AML/KYC standards and mechanisms for cryptocurrencies. These will also form the basis of national legal mechanisms. 
 

Most large companies already use standard banking KYC procedures. In addition, some exchanges are implementing sophisticated artificial intelligence-based mechanisms to track transaction chains. 
 

There are still more questions than answers in this area. Confidence levels also fluctuate from news to news. Nevertheless, we expect that cryptocurrency exchanges and platforms will be forced to comply with evolving standards, or else their activities will be recognized as illegal.

Conclusion  
The evolution of KYC in 2024 will include many exciting developments. 

It will include

• Increased automation of document processes;
• The introduction of liveness checks as part of the KYC standard and as a standalone authentication solution;
• Increased regulatory scrutiny.  
   

All industries will adapt to these changes. This is how digital trust is built, because the essence of KYC standards is about security, transparency and simplified access to financial services.

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