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.

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.

B

Biometric Fraud

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

Bank Verification Number (BVN)

A unique identification number for individual bank accounts in Nigeria. It is used to verify customer identity and prevent fraud.

C

Counter-Terrorist Financing (CTF)

Refers to the global effort to stop money flow to terrorist organisations and individuals. This includes various strategies employed by governments, financial institutions, and international organisations.

Churn

The rate at which customers stop using a service. A high churn rate can signal problems with your onboarding process or user experience.

Cash-Intensive Businesses

Businesses that deal with a large amount of cash in their daily operations. Examples include casinos, pawn shops, and money service businesses. These businesses are considered at higher risk for money laundering due to the difficulty of tracing cash transactions.

Compliance Risk

The risk that a company will fail to comply with relevant laws and regulations, including AML regulations. Compliance risk can lead to financial penalties, reputational damage, and even criminal prosecution.

Continuous Authentication

The ongoing process of verifying a user's identity throughout a session, not just at login. This is becoming increasingly important for high-risk activities.

Central Bank of Kenya (CBK)

Kenya's central bank and main financial regulatory body. It issues guidelines and enforces compliance with AML regulations.

Central Bank of Nigeria (CBN)

Nigeria's central bank and apex monetary authority, established by the CBN Act of 1958. It is responsible for maintaining the country's external reserves, promoting monetary stability and a sound financial environment, and acting as a banker and financial adviser to the federal government.

Chargeback Fraud

When a customer disputes a legitimate purchase with their bank or credit card company, claiming they didn't make it or are unhappy with the service. This can be a real issue for businesses.

Channel Risk

The Money laundering (ML) /Terrorist Financing (TF) risk is associated with the way a financial service is delivered (e.g., online banking, money transfer services). For example, internet-based transactions may have a higher risk of identity theft.

D

Deduplication

The process of removing duplicate data from a system. This is important to ensure the accuracy of your records.

E

Electronic Know Your Customer (eKYC)

The digital verification of a customer's identity using electronic means, such as facial recognition or document scans.

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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