KYT Verification — Ensuring Safe and Secure Financial Transactions

Candice Spencer
Shufti Pro
Published in
4 min readMar 16


The risk of money laundering and terrorist financing is rising in today’s digital age. According to the survey, the annual amount of money laundered is between $800 billion and $2 trillion, or 2% to 5% of the world GDP. However, business professionals must use cutting-edge digital tools to combat fraud and other financial crimes. For this reason, KYT verification facilitates financial firms to fight fraud and ensure KYC and AML regulations. Thus, this strategic approach gives businesses a competitive advantage and helps them better serve their customers.

Let’s discuss the significance of KYT verification and how businesses may use it to combat money laundering and terrorism financing.

KYT Verification — A Quick Overview

KYT verification helps businesses in the financial sector quickly identify clients’ IDs and monitor their transactions accurately. Moreover, customers can make the following transactions:

  • Cash & card transactions
  • Cross-border exchanges
  • Inward & outward remittances
  • Trade finance transactions

According to the latest KYC and AML standards, all businesses must keep track of customers’ financial details, especially when third parties are involved. However, know your transaction limitations can help determine the nature and purpose of financial dealings, eventually facilitating fraud prevention.

For this reason, several financial institutions are implementing KYT methods to extract the following information:

  • Customer name
  • Transactions patterns
  • Country of origin
  • Type of money exchange
  • Originating banks

Know your transaction procedure is a data model that can support banks in monitoring financial exchanges and discouraging fraudulent activities. This way, banking firms can deter both internal and external scams. Thus, the results from the KYT verification can help experts fight fraud and ensure compliance with KYC and AML regulations.

What are the Methods of KYT Verification?

Due to technological advancements, fraudsters now commit financial crimes using more subtle methods. It requires the application of new interventions such as KYT verification. Moreover, the global transaction monitoring industry will reach a financial worth of around $16.8 billion by 2023, at a CAGR of 15.1%.

The following sections will discuss the different methods for conducting monitoring of transactions;

  • Knowing the Customer

Risk assessment procedures and customer due diligence methods must comply with regulatory standards before establishing a business partnership. Moreover, these methods determine the potential dangers that particular clients may present. After establishing a client relationship, businesses should keep tabs on their customers’ professional successes.

  • Applying a Risk-Based Approach

The second method of KYT verification is risk-based analysis, where financial firms must build up appropriate parameters for organisations. Moreover, accurate predictions require experts to back-test to examine primary data frequently. Likewise, Financial Institutions (FIs) must perform data integrity checks to ensure the accuracy of information. Such measures enable detecting and investigating all abnormalities and mistakes negatively impacting data integrity.

  • System Implementation

Financial institution staff handling KYT verification procedures and producing alerts must undergo thorough training. However, companies in the financial sector pay more attention to employee training and minimise mistakes. This innovative strategy makes the adoption of KYT procedures more efficient. Thus, staff members can conduct pre-transaction checks and manage alerts & relevant documentation properly.

  • Resolve and Enhance

The last step is deciding what to do when a company discovers a potentially unlawful or illegal transaction. For this reason, immediate reporting of any suspicious activity to the regulatory authorities involves filling out a Suspicious Transaction Report (STR). However, if an enterprise wishes to continue doing business with a customer after submitting an STR, it must take steps to limit risk.

What are the Advantages of KYT Verification?

KYT verification comes with several advantages that businesses of any size should consider.

  • Fraud Prevention

Monitoring for KYT compliance can help identify potentially fraudulent activity and protect against financial losses. A recent study reveals that penalties for not preventing financial crimes, including money laundering, rose by more than 50% from the previous year. Moreover, KYT monitoring helps companies to detect unusual customer behaviour patterns and make more informed risk assessments. As a result, it helps companies avoid potential civil or criminal obligations and hefty fines.

  • Improved Regulatory Compliance

By establishing KYT practices, companies may gain insight into their customers’ previously unaware behaviours. Knowing what kind of activities customers engage in allows organisations to tailor their policies and procedures to ensure compliance with the applicable laws and regulations. Thus, it provides the safety of their business and indicates to authorities that they are working to comply with regulations.

  • Transparency

KYT compliance provides businesses with better insight into their customer’s transactions. It allows them to monitor financial dealings more closely, detect suspicious activities, and prevent fraud or money laundering.

Transparency also helps companies develop trust with their customers, as customers know their data is secure and protected from outside influences.

To Sum It Up

If companies wish to stay away from severe offences, including money laundering and terrorism funding, transaction tracking is the only solution. Moreover, cybercrime, such as financial fraud, is rising today. Money laundering is not only a crime that affects businesses and the individuals who do it but also goes against human rights. Thus, KYT verification makes firms abide by the law and helps deter criminals.



Candice Spencer
Shufti Pro

Researcher, Fraud Preventer, Traveller, Reader, Writer, Thinker :)