KYC onboarding in Mexico: key to eradicating money laundering

In Mexico, money laundering represents up to 51% of the GDP, equivalent to more than 1.1 trillion pesos annually. This alarming figure highlights the need for companies to implement effective KYC (Know Your Customer) onboarding processes to prevent financial fraud and strengthen corporate transparency, as well as avoid fines or larger legal issues.

Money laundering is not an issue exclusive to large corporations or financial institutions; it affects businesses in all sectors. According to data from the Financial Intelligence Unit (FIU), it is estimated that more than 351% of suspicious transactions in Mexico originate from small and medium-sized businesses that do not comply with prevention regulations.

The Anti-Money Laundering Law In Mexico, the KYC Act establishes a solid regulatory framework to prevent money laundering. However, compliance with this law goes beyond a simple legal obligation. A robust KYC process is a strategic investment that allows companies to build trusting relationships with their customers, mitigate risks, and protect their reputation. By thoroughly identifying and verifying their customers, companies can detect suspicious activity and prevent significant financial losses. However, between 2020 and 2023, the National Banking and Securities Commission (CNBV) imposed fines totaling more than 1.2 billion pesos due to noncompliance in this area.

KYC: Beyond a Legal Obligation

KYC Onboarding not only ensures regulatory compliance, but also acts as a strategic tool to mitigate risks and establish trusting relationships with customers. effective KYC process allows:

• Identify potential risks: By analyzing background and behavioral patterns.
• Prevent fraud: by detecting suspicious operations from the start.
• Strengthen transparency: by improving business reputation in a competitive market.

The challenges of digital onboarding KYC

Despite technological advances, many companies still face significant challenges in implementing KYC systems. The main obstacles include a lack of automation, resistance to change, significant initial costs, and finding solutions that truly fit each company's needs.

However, implementing innovative technological tools helps transform the KYC onboarding process into a seamless and secure experience for customers. In this case, some of the most common are biometric identification, risk profile analysis, blacklist database checks, and, finally, what is unpredictable for most companies, compliance with official regulations.

Adopting an efficient KYC onboarding system not only reduces the risk of fines and sanctions, but also improves the customer experience, building loyalty and trust. In a recent study by the IBM Institute for Business Value, 721% of users said they prefer companies that prioritize data security and transparency in their operations, while up to 521% of consumers have stopped purchasing from a brand after experiencing some type of incident related to a lack of transparency.

Ending money laundering is a shared responsibility. Businesses have a crucial role to play by implementing robust KYC processes, while authorities must strengthen oversight and sanctions mechanisms. Only through joint efforts can a safer and more trustworthy financial environment be built.

A first step to act today

Your Identity offers businesses the digital tools they need to prevent fraud, reduce costs, and optimize operating times, all while complying with Mexican regulations. This comprehensive service includes validation of INE (National Institute of Statistics), CURP (Currency Identification Number), employment history, legal background, proof of life, FaceMatch, tax status, CLABE account, IP address, and more.

With these solutions, companies can build a more reliable identity validation ecosystem, ensuring that the collected information is pre-validated and contributing to the creation of more trustworthy internal profiles.

To transform the KYC onboarding process into a competitive advantage, companies are encouraged to learn more about how Your Identity can optimize their operations and protect their future.

Contact us now and discover how to integrate this innovative technology into your operations.