The covid-19 pandemic radically transformed the world, and the world observed a rise in the use of digital technologies in every sector. The quarantine led to a transition towards online education and work-from-home. Moreover, people worldwide switched to digital means to perform their everyday tasks. Other than this, virtual assets like cryptocurrencies have gained significant popularity in recent years, leading to the use of digital currencies. Therefore, it resulted in a rapid surge in digital transactions.

Recent Rise in Digital Financial Transactions

Digitization, particularly during the covid-19 and post-pandemic era, has led to an increase in cashless transactions. A study unveiled that only 5% of global payments were done through paper, underscoring the major shift in digital transaction methods. However, financial crimes have also risen with that. Consequently, financial organizations, specifically banks and crypto exchanges, must adopt financial technologies and upgrade their regulatory procedures to monitor and evaluate financial transactions for AML compliance. This is where a KYT solution provider comes to the rescue.

Know Your Transaction to Prevent Financial Crimes

Know Your Transaction, or KYT involves assessing financial transactions for suspicious and fraudulent activity like money laundering and terror financing. KYT is a more advanced procedure of KYC.  SaaS companies developed their KYT solution provider to enable financial institutions to conduct efficient surveillance. KYT solely deals with the transactions flowing through a financial organization. Most financial transactions include domestic cash, trade finance, card, cross-border transactions, inward and outward remittances, bills, etc.

Banks and other organizations can precisely evaluate them by using the KYT service. Financial records and money trails must be tracked carefully to achieve AML/CFT compliance and seek protection from financial crimes such as terrorism funding and money laundering. Moreover, a KYT solution provider saves financial organizations from becoming a channel of illegal monetary transactions that can cost them hefty penalties while damaging their reputation.

Know Your Transaction Guide

Companies must pair KYC or Know Your Customer with KYT to deter fraud and money laundering, as it is more significant for your financial organization to analyze your customer’s transaction activities deeply. An authentic  KYT solution provider ensures your company complies with transaction monitoring standards. Every KYT solution provider offers a Know Your Transaction guide to its clients, i.e., financial institutions like banks. The guide provides an understanding of the significance of KYT procedures. Moreover, it highlights multiple benefits of KYT service, some of which are enlisted below:

• Elevated security
• Enhanced customer service
• Transparency
• Accountability
• Cost and time saving
• Prevention of illegal financial activities
• Effective AML/CFT compliance.

KYT Verification & Anti-Money Laundering Regulations

As mentioned above, complying with anti-money laundering and counter-terrorism financing (CFT) guidelines is the most significant advantage of seeking the services of a KYT solution provider. Know Your Transactions compliance is closely knit with AML regulations. Financial organizations such as banks and crypto exchanges must adopt robust systems to detect suspicious activity by monitoring real-time transactions through KYT solutions. Then they must report to law-enforcing agencies and help disrupt criminal networks involved in money laundering and terrorist financing. An effective KYT verification process is crucial in mitigating any possibilities of fraud and achieving AML compliance.

What Services Does a KYT Service Provider in US Offer?

Financial organizations in developed countries, like the US, must resort to KYT solution providers to monitor customer transactions. If your bank or crypto exchange is based in the US, you have various options to explore. Like others, a KYT service provider in US offers multiple features in a KYT solution that make up the transaction monitoring procedure. Financial organizations should be aware of the services provided by a KYT solution provider.

• Transaction monitoring is initiated through data collection from various sources, including customer information.
• It is then analyzed and assigned a risk score based on the transaction’s nature and other factors.
• When a transaction is identified as suspicious, an investigation is launched to dig deeper into its trail.
• Lastly, the financial organization must report the findings to the relevant agencies under AML/CFT compliance obligations.

Possible Know Your Transaction Limitations Every Financial Organization Should Be Aware Of

Implementing KYT procedures can be challenging for companies. However, they can be resolved through adequate measures. Your financial institute should know certain Know Your Transaction limitations and their solutions.

1. KYT in smaller financial organizations can prove costly. However, using open-source technology may reduce costs.
2. Similarly, some financial institutions may have limited resources to seek services from a KYT solution provider. Its solution is redefining the organization’s priorities and allocating more resources for the latest procedures.
3. Emerging technologies like cryptocurrencies and blockchain pose another significant challenge. However, staying updated about advancements in the fintech industry can lead to effective planning and competing with emerging technologies.

To conclude, Know Your Transaction is a significant development in the fintech industry as it aids in transparently monitoring transactions. A KYT solution provider possesses immense significance in providing KYT services to financial organizations so that they may achieve AML/CFT compliance with utmost precision.