Finance

4 March 2023

Highlight: Learn about the recent KYC scams, as well as SBI’s three mantras for keeping your account secure.

KYC (Know Your Customer) refers to the process of verifying all customers’ and clients’ identities and addresses by banks, insurance companies, and other institutions before or during transactions with their customers. KYC has been made mandatory by the Reserve Bank of India (RBI) for all banks, financial institutions, and digital payment companies that conduct financial transactions.

KYC for banks

KYC completion and updates vary from account to account frequently, depending on the bank’s risk perception. As a result, KYC becomes critical when performing transactions such as opening bank accounts, investing in fixed deposits, recurring deposits, mutual fund accounts, and making online investments.

KYC has become critical because it allows banks to ensure that the application received and all other details are from a legitimate customer. Banks can easily predict and prevent fraud by ensuring an individual’s identity.

KYC fraud

Since the outbreak of the novel coronavirus pandemic, online fraud has increased in the country, owing to increased digital payments via mobile wallets, UPI, and other platforms and increased internet/mobile banking usage.

In the midst of an increase in Know Your Customer (KYC) deception, India’s largest lender, State Bank of India (SBI), has warned its customers of increased online fraud. In a statement, the bank stated that KYC fraud is real and has spread across the country.

SBI issued a warning to its customers via its official Twitter account, stating that there have been cases of fraudsters duping people with KYC verification.

“KYC fraud is real, and it has proliferated across the country. The fraudster sends a text message pretending to be a bank/company representative to get your personal details,” tweeted SBI.

During the second wave of the Covid-19 pandemic, the bank recently allowed customers to update their KYC via mail or post. Customers were having difficulty completing their formalities due to the novel coronavirus, so this decision was made.

Customers can protect their accounts by following three safety tips provided by SBI:

• Think before you click any link: Customers must exercise extreme caution before clicking any link, especially if they receive a message stating that failing to click it will suspend their account.
• The bank never sends links to update KYC: According to the bank, it never sends any links to customers to update their KYC. As a result, there is a possibility that fraudsters will pose as bank representatives and dupe people.
• Don’t give out your phone number or any confidential information to anyone: SBI has warned its customers not to share their mobile numbers or other confidential data with any third party.

This is not the first time the bank has tweeted about safety precautions. It has regularly communicated to its customers that they should never share their OTP, CVV, or ATM PIN with anyone, including bank officials. SBI has also advised its customers not to download any mobile apps based on the advice or tips of unknown individuals. Messages containing OTP/PIN/CVV can be read or tapped even from a remote location.

Reporting KYC fraud

The State Bank of India has warned its customers to immediately report any unauthorized or suspicious bank transactions in their accounts. Any unauthorized transaction in your bank account can be reported by calling the toll-free customer service numbers 18004253800 and 1800112211.

You can file a complaint with the National Cyber Crime Reporting Portal, a government initiative to combat cybercrime against women and children. You must provide accurate information when filing your complaint so that action can be taken as soon as possible.

Conclusion

There has been an increase in robust digital payments infrastructure with UPI at its core in recent years. The Covid pandemic also highlighted the significance of digital payment. It resulted in a significant shift in consumer behavior, forcing them to adapt to digital transactions. 

However, the convenience that digital transactions provide has its drawbacks. Fraudsters and scammers with a strong understanding of social engineering techniques have used KYC procedures to steal people’s hard-earned money. They primarily target people who are unfamiliar with these technologies. Therefore, it is critical to protect yourself from these KYC scams in order to protect your finances.

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