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Everything You Need to Know About KYC Verification In Canada

There are different requirements and laws you must follow when running a business. For instance, address verification API is integral to a successful e-commerce store. It enables you to reduce delivery risk by ensuring the address provided by the customer is accurate.

Similarly, KYC verification is integral for running a business in Canada and other countries. Every country has a different organization that you must report to. FCA is the governing body for KYC in the UK.

Meanwhile, you must report to FINTRAC in Canada. Here is everything you need to know about KYC verification in this country.

What Is KYC Verification?

Know Your Customer or KYC is a process that enables a brand to identify its clients. It is mandatory for banks, insurance providers, lenders, and businesses that deal with money. The process allows you to verify a client’s identity to ensure they are who they claim to be.

So KYC verification in Canada will help you ensure a customer is not doing something illegal while using your service. The process varies in different countries and may require different information. This also applies to multiple business sectors.

How Can You Perform KYC Verification In Canada?

FINTRAC in Canada allows you to do KYC verification using five different methods:

  • Photo ID

A photo ID is the standard government-issued ID that will help you confirm your identity. This is also necessary if you use digital KYC verification methods. It involves a client sending you the scanned image of the picture ID. 

You can then use a service provider or unique technology to check the document’s authenticity. This involves verifying the picture, letter spacing, design, watermarks, and holograms. These design features will easily help you perform KYC verification.

  • Credit File

This method enables you to receive your customer’s credit file from the Canadian credit bureau. It involves checking whether the data provided by the client matches the things written in the credit file. There are specific details you must look for.

The top thing that must match is the client’s name. You will also need the credit file number and name of the bureau for access. Companies can only check files that have existed for more than three years. The best part about this method is that it allows you to identify local customers quickly.

  • Dual-Process

You can use information from two different sources to perform KYC verification. For instance, you may get the client’s credit file from the relevant bureau. You may also contact the customer’s bank for their financial account information.

This allows you to get information from reliable institutes. However, places such as banks don’t use advanced technology or address verification service API for checking document details. The workers mainly rely on their eyes for facial recognition and watermark scanners for ID card design.

So a dual-process may be less reliable, costly, and time-consuming than other methods.

  • Affiliate Company

An affiliate is a company owned by your parent business with shared financial statements. You can use this method to get client information from the affiliate business. This includes name, verified address (through address verification API), and date of birth.

You should match the client data provided by the affiliate to the information you already have. Checking the details will help you confirm the customer’s identity. You may also combine the earlier three methods for KYC verification using an affiliate.

  • Reliance Method

The final way to perform KYC verification is the reliance method. It allows you to use verification data by other Canadian companies and affiliates for identification. It involves you having a written agreement with various partners for obtaining the information.

Like the earlier method, you can compare details to see if they match. Meanwhile, you must also use the initial methods of photo ID, credit file, or dual-process to know your customer.

Final Thoughts

This is all you need to know about KYC verification in Canada. You can easily confirm a client’s identity using a government-issued photo ID. A credit file is also a reliable process.

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