How to Protect Yourself From KYC Fraud
3 June, 2024
Synopsis
KYC fraud poses serious identity and financial theft risks.
You must stay vigilant against unsolicited, deceptive communication.
You must report KYC fraud to banks and authorities promptly.
The Know Your Customer (KYC) process is crucial in the financial landscape. It allows financial institutions to authenticate the identity and address of the customer they are onboarding. KYC protects financial institutions from fraud, money laundering, terrorist financing, etc. Cybercriminals are exploiting the very system designed to protect consumers' financial and personal information. As a consumer, you ought to be aware of KYC fraud and prevention methods.
What is KYC Fraud?
KYC fraud typically involves fraudsters impersonating bank officials or representatives of financial institutions. They contact individuals under the guise of needing to update KYC details, often issuing threats such as account suspension to coerce compliance. This form of deception is widely known as KYC update fraud, a tactic that can lead to unauthorised access to personal and financial information.
Common Tactics in KYC Frauds
There are several methods employed by scammers in committing KYC scams. These include:
Fake KYC updates: This involves contacting individuals under false pretences, claiming that their accounts require immediate KYC verification.
Phishing: Cybercriminals use deceptive means, like sending links to fraudulent websites or apps, to trick individuals into disclosing sensitive information.
Identity theft: Cybercriminals use another individual's identity for financial gain, often leading to the individual’s financial losses and credit score damage.
Smishing: Smishing involves sending malicious messages with dangerous links or attachments, disguised as legitimate communication from reputable sources.
How Should You Detect KYC Scam?
KYC scam detection involves being vigilant about unsolicited communication from unknown sources, claiming to represent financial institutions. It's important to remember that genuine banking entities will never ask for sensitive information like account details or passwords over the phone or via email.
What are the Dos and Don’ts to Prevent KYC Fraud?
In the wake of an increasing number of KYC updation frauds, the Reserve Bank of India (RBI) has outlined the Dos and Don’ts:
Dos
If you receive a request for updating your KYC, directly contact your bank or the financial institution for confirmation.
Obtain the contact details of the bank or financial institution only via their official website.
In the case of any cyber fraud incident, inform your bank or financial institution immediately.
Enquire with the bank branch to confirm the available methods of updating KYC details.
To keep abreast of changes associated with KYC, you ought to read paragraph 38 of the RBI Master Direction on KYC, dated February 25, 2016.
Don’ts
Do not share account login credentials, card information, PINs, passwords and OTPs.
Do not share KYC documents or copies of KYC documents with unknown or unidentified individuals or organisations.
Do not share sensitive data or information via unverified or unauthorised websites or applications.
Do not click on suspicious or unverified links received on your mobile or email.
Additionally, to prevent falling victim to a KYC scam, you should:
Regularly review bank statements for any unauthorised transactions.
Update contact details with the bank to ensure you receive legitimate communication.
Use secure networks and devices for online banking.
What Steps Should You Take In Case of KYC Fraud?
In the unfortunate event of encountering KYC fraud, immediate steps should include informing the bank and the local police. Compiling all related information and documenting evidence such as screenshots and call details is crucial for further investigation.
In the case of financial cyber fraud, individuals must immediately lodge a complaint on the National Cyber Crime Reporting Portal (www.cybercrime.gov.in) or via the cybercrime helpline (1930).
Staying vigilant and reporting suspicious activities immediately can help mitigate the risk of KYC fraud. If approached for KYC updates or any other personal information, always verify the authenticity before responding. It's also advisable to lock sensitive personal information, like biometrics, which can be done through official government portals.
Join Vigil Army, where Vigil Aunty will decode various frauds and give people a heads-up on the dos and don’ts of combating frauds online. To join the Vigil Army, send ‘Hi’ to her via WhatsApp number: 7290030000.
Disclaimer: *Terms and conditions apply. The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances.
