Merchant Data Validation

KYC – Use Case

Know your customer (KYC) guidelines in financial services place an obligation on businesses to make an effort to verify the identity, suitability and risks that might be associated in maintaining a business relationship with that client/customer. It fits more broadly into Anti Money Laundering (AML) procedures.
In the card payments industry, many of the participants in an electronic transaction do not have a direct relationship to the merchant. They are just part of a longer chain. They are reliant upon data provided to them, by the merchant, giving the merchant name, their address and the merchant category code (MCC) they operate within.

Also, given the merchant provided information is used to determine the risk level of the transactions from that merchant and the charges or other restrictions that might be levied, some merchants might wish downplay or omit higher risk elements of their business.

So how can an intermediary with no direct link to the merchant discharge their KYC obligations and avoid potential fraudulent behaviour?

How can Symilarity help?

Symilarity’s automated and AI enhanced KYC validation service uses a combination of the merchants internet presence, secondary references and training datasets to validate the data provided by the merchant.
• It looks for evidence that the business exists and the business address is “as stated”
• It can identify the business address if it appears to be different
• It can derive the Merchant Category Code (MCC) so it can be compared to the merchant defined category?

How can it be used?

Validate

The service can be used to validate information provided by the Merchant (i.e. the Business Name, the address and MCC code).

This enables the business to ensure the risk profile attributed to that merchant (based on the MCC) is appropriate to the business being conducted by the merchant.

Cleanse and Enrich

The service can be used to cleanse and enrich the data held. Merchant narratives are often a mixture of the legal name and the place at which they operate and because they are limited in length, can often be ambiguous. The service can provide cleansed business names, addresses, coordinate locations and in some cases provide the trading name if that is different from the legal name.

Surveillance

It is possible that a merchants business may change over time but their MCC code not updated to reflect the change. In other cases, merchants may deliberately omit detail of their higher risk activities from their web presence until their MCC coding has been agreed. Symilarity offers a surveillance service, where the web presence of a merchant is monitored at prescribed intervals to detect deviations from their prescribed MCC.