Smile ID's KYC & Compliance Glossary

Unlocking Africa’s digital potential, Smile ID provides key definitions for navigating identity verification and compliance. This concise guide is essential for businesses aiming for secure growth across the continent.

A

Adverse Media

Negative news or information about an individual or business. AML checks often include screening against adverse media to identify potential risks.

Active Liveness

This is a verification process in which the user must perform specific actions, like blinking or turning their head, to prove they are physically present during the verification process. This helps ensure the user isn't just a picture or recording.

Adaptive Compliance

The ongoing process of adjusting compliance practices to keep up with changing regulations. This allows for a more efficient and user-friendly verification process, focusing stricter measures on higher-risk scenarios.

AML Compliance Checklist

A business should follow a list of tasks and procedures to ensure they meet Anti-Money Laundering (AML) regulations. This checklist typically covers customer due diligence (CDD), transaction monitoring, suspicious activity reporting (SAR), and record-keeping requirements.

Audit Trails

A chronological activity record within a digital identity verification system. It tracks user actions, system events, and verification results, providing a detailed log for compliance and security purposes.

Authentication

The process of confirming a user's identity. This is often done through a login process where a user enters a username and password.

AML Compliance Program

The set of policies, procedures, and controls a financial institution implement to comply with AML regulations. This program typically includes customer due diligence (CDD), transaction monitoring, suspicious activity reporting (SAR), and employee training.

Anti-Money Laundering (AML)

Regulations and procedures designed to prevent criminals from disguising the origin of illegally obtained funds.

Attribute

A piece of information used to describe an identity, such as name, date of birth, or address.

B

Biometrics

The measurement and analysis of unique physical or behavioural characteristics used for identification or authentication purposes. Examples include fingerprints, facial features, iris patterns, voice prints, and typing patterns.

Beneficial Ownership

The person(s) who ultimately owns or controls a company. AML regulations require businesses to identify and verify the beneficial owners of their customers, especially for companies and trusts.

Biometric Fraud

Criminal activities that involve the misuse or impersonation of someone's unique biological traits to gain unauthorised access or benefits.

C

CDD (Customer Due Diligence)

It is the process businesses undertake to verify a customer's identity, understand their financial activities, and assess their risk profile.

D

Document Verification

Confirming the authenticity of identification documents, such as passports or driver's licenses.

E

EDD (Enhanced Due Diligence)

A more thorough KYC process applied to high-risk customers, such as those in sectors prone to money laundering or terrorist financing. EDD may involve additional checks like verifying the source of funds and business ownership structures.

H

High-Risk Customers

Individuals or entities that are considered to pose a higher risk of money laundering or terrorist financing.

I

Identity Liveness Detection

Techniques used to ensure the person presenting themselves during verification is a real person and not a photograph or recording.

K

Knowledge-Based Authentication (KBA)

Authentication based on a user's knowledge of secret information, such as passwords or answers to security questions.

Know Your Customer (KYC)

A process for verifying a customer's identity to comply with anti-money laundering and other regulations.

KYC Documents

Documents used to verify the identity of a customer during Know Your Customer (KYC) procedures. These documents typically include proof of identity (e.g., passport, ID card) and proof of address (e.g., utility bill, bank statement).

L

Layering

A technique used by money launderers to move illegal funds through multiple financial transactions to make them appear legitimate. This makes it harder to trace the origin of the funds.

Local Regulatory Expectations

AML regulations can vary from country to country. Keeping up with changing regulations and ensuring compliance across different markets can be challenging for multinational businesses.

M

Money Laundering

Money laundering is the illegal process of disguising the illegal source of funds acquired through criminal activities such as drug trafficking, corruption, embezzlement, or fraud.

O

OFAC Penalties

Civil and criminal penalties imposed by the Office of Foreign Assets Control (OFAC) for violating US sanctions regulations. These penalties can be significant and include fines, license revocation, and even imprisonment.

R

Reputational Risk

The risk of damage to a company's reputation due to negative publicity or association with illegal activity. Failing to comply with AML regulations can lead to reputational risk.

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