Identity verification for the fintech industry has certain best practices to ensure a world-class automated customer onboarding experience without compromising the AML-KYC compliance of a fintech business. In this blog, we will read how advanced automation has changed the way fintech does business and performs its KYC checks securely and efficiently. The fintech industry segmentation is huge, with investment & capital, digital lending, ecommerce, data solutions, insurance & healthcare, and payments all falling under the scope of fintech.

The fintech industry has the highest number of start-ups today. Robotic Process Automation (RPA) in fintech helps companies speed up their remote onboarding process while strictly adhering to the fintech guidelines and regulations.

A Unified API System Approach for Fintech

Empowering Robotic Process Automation (RPA) in fintech is vital to maintaining a centralized system with a unified API for business operations. Gone are the days when customers had to wait for a month for their onboarding approval. To survive in the competitive market, automated client onboarding software fulfills the norms of KYC for fintech companies.

Client databases, document IDs, client profiles, and background sources are linked and stored strategically to perform frictionless multiple verification methods using a centralized API system.

Automated Customer Onboarding with Single Step Integration

Seamless customer onboarding steps should not come at the cost of risking the AML-KYC regulatory standards, or a fintech may have to pay hefty non-compliance fines to the authorities for such negligence. The user identity, individual or business, should be matched against strong and authentic datasets to assure compliance with the due diligence procedures.

An automated client onboarding software offers multiple methods of identity verification for the fintech industry with single-step integration. This state of art software comes with various inbuilt features, for instance, two-factor authentication (2FA) or a multi-factor authentication onboarding method. Identity checks are enhanced thru liveness detection, biometrics authentication, and facial recognition technologies.

A Tailormade KYC for Fintech Companies

Fintech trends are continuously changing. Industries must remain updated with the Robotic Process Automation (RPA) in fintech.  The robotic identity verification process for the fintech industry encapsulates various anti-money laundering (AML) and Combating the Financing of Terrorism (CFT) regulatory frameworks. Fintech businesses can leverage various tailormade and automated customer onboarding technologies to scale up their onboarding operations, combating regulatory and technological challenges.

It is on the part of the businesses to follow the national and international regulations and remain fully AML-KYC compliant. Customized automated client onboarding software has certain inbuilt features and is continuously upgrading. The core AML-KYC and Know Your Business (KYB) regulatory guidelines like FATF, GDPR, and international sanctions features are also ingrained in the software that must apply to businesses.

Audit Trail and KYC Automation in Fintech

Identity verification for the fintech industry not only means onboarding efficiency but also extends continuous transaction monitoring and performance of due diligence of the entire customer lifecycle. These transaction-monitoring red-flag rules vary from industry to industry depending on the nature and operational region of the company.

Monitoring client behavior and suspicious transaction activities also fall under this ambit—an ideal automated client onboarding software auto-generates red flags based on the scenario or pre-historical dataset model. And maintains an audit trail based on the client-behavioral patterns.

Fintech demands a mass user-onboarding process automation with the best UX-UI KYC verification interface to reduce friction at the minimum possible levels. IDMERIT extends KYC automation with IDMkyc and IDMscan products. We use AI Machine Learning technologies to verify identities against the most authentic databases. IDMkyb authenticates worldwide businesses to offer a secure merchant onboarding method for fintech enterprises.

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BFSI ID verification automation is important to release banks of regulatory burden and avoid heavy non-compliance fines they often have to pay due to unmanageable workload and subsequent negligence in KYC risk mitigation procedures.

What are the main KYC Verification Steps in BFSI ID Verification Automation?

KYC automation in the BFSI sector is the need of the hour. Recently, the industry has witnessed an increasing number of financial crimes in the banking and insurance sector linked to converting illicitly gained money into legally acceptable forms. Let’s talk about the main BFSI Robotic Process Automation (RPA) processes that could make KYC verification steps in the BFSI sector time and cost-effective to a great extent.

Merging BFSI ID Verification Automation with Great Customer Experience

Low code automation to connect databases with technology is helping the banking and finance industry to create a user-friendly onboarding process for their customers. Today, every organization is seeking a competitive advantage over its equals. Financial organizations continually improve the customer experience while adhering to fraud mitigation and regulatory standards.

BFSI ID verification automation has helped banks to structure their various operations. Orchestrated data linked to various systems are processed and placed together in one securely accessible location. This system has accelerated commercial lending and onboarding processes as the bank employees get access to a 360° customer KYC life-cycle view and respond in real-time with minimal friction.

Fraud Risk Mitigation with KYC Automation in BFSI Sector

Financial crimes in the BFSI sector have come of age as sophisticated banking cons are untraceable, and today only 20-25% of the customers can recover the losses. Many fraud case studies have shown that the siloed data storage structure – in banks and conventional financial institutions – has made fraud risk mitigation cumbersome.

Even today, most financial organizations do not have a platform for a holistic view of customer data and life cycles. Finding suspicious behavior patterns for suspicious activity reporting (SAR) is challenging for the risk team. Effective deployment of a BFSI automation tool can stimulate SAR filings by tracking customer behavior in real-time and connecting the patterns with the data points to produce customer case management.

Many advanced automation tools auto-populate the SAR filings based on customer risk patterns and auto-generate the submission forms for timely inspections.

Accelerate your digital transformation journey with IDMerit customer onboarding and BFSI Robotic Process Automation (RPA) solutions. Learn more about automated KYC verification steps and book a demo to see how IDMerit flagship products IDMkyb and IDMkyc help businesses with KYC automation in the BFSI sector across various global industries.

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Trade-Based Money Laundering (TBML) exploits international trade and trade finance systems for laundering illicit proceeds. It involves a series of schemes for TBML, including falsifying invoices, commodity misclassification, forming shell companies, forging trade documents, etc., for illegally moving funds across the continents.

Currently, international financial institutions estimate $2 trillion worth of trade, out of around $20 trillion, to get laundered annually in the form of Trade-Based Money Laundering. Customs fraud is mainly synonymous with Trade-Based Money Laundering. Customs manipulations like price, quantity, and quality alterations in the import/export of the goods are involved in the TBML of illicit bulk cash across nations. This blog sheds light on the TBML methodologies, TBML red-flag indicators, and its regulatory compliance policies.

Widespread TBML Methodologies Exploited by Money Launderers

Over Invoicing, Under Invoicing – When an exporter receives more money than the value of goods sold to an importer, it’s over-invoicing. On the other side, when an importer receives more money while selling the goods in the local market after buying them at an unvalued price from an exporter, it’s under-invoicing. Both the instances trigger an extra value transferred via trade between the parties as money laundering.

Multiple Invoicing or Carousel Transactions – A money launderer misuses the legal system to produce multiple invoices for the same shipment by complicating the payments with more than one financial institution. It’s a typical multiple-invoicing method for legitimizing one payment more than once and integrating illicit money into the financial system.

Over Shipment, Under Shipment – The trade involves misrepresenting the number of goods; the over and understatement of items give the money launderers a scope to process excessive payments of illicit money.

Inferior Shipment – It involves exporting cheaper quality goods with falsified invoices and submitting bills for relatively costly goods to customs.

Front Fake Commodities – The shipment of commodities does not match with the business classification, and the trade is made to transfer the illicit money value rather than the actual goods.

Shell Companies – Offshore companies, acting as front or shell companies for organizations involved in sending excessive funds across the continents. For years, law-breakers have preferred shell companies as camouflage to facilitate TBML activities. At times, it may so happen that established companies make their foray into an entirely distinct market segment to divert their income via shell operations.

Phantom Shipment – There may be no shipment at times, and the invoices are still generated and bills passed in the customs.

Major TBML Red-Flag Checks for Customs and Financial Institutions

A joint effort of Egmont Group and Financial Action Task Force (FATF) to combat the worldwide TBML activities has set-forth imperative red-flag checks on this trade-based financial crime.

Common Anomalies – International trade-related activities involve a lot of paperwork. All the more challenging is that the financial institutions are only exposed to the official documents and not the commodities in trade. So, on the face of it, common TBML red flags involve finding anomalies in product pricing, irregular product description, and price matching with the product quantity and quality standards.

Unnatural Transactions – Financial institutions must keep a regular Transaction Monitoring on the trade activities of the parties involved; the monitoring includes the nature of transactions, business locations, background checks, the characteristics of the traded goods, etc. Unusual transactions also consist of substantial below-threshold cash payments and inexplicable third-party payments.

High-Risk Jurisdictions – Businesses set up in jurisdictions with weak AML-CFT regulations, suspicious addresses, with an indistinct online presence. All the mentioned red flags give a clear indication of out-of-sync business activity. Such entities generally have unstructured business operations with no proper payroll, marketing, advertisement, or accounting reports.

Free-Trade-Zones (FTZs) – The customs-free nature for bringing liberalization in global economic activities has paved the way for acceleration in the TBML activities as criminals are continually exploiting the eased-up trade barriers in around 3500 ports worldwide. Trade activities at the FTZs are more vulnerable to being misused for laundering money.

How Regulated Institutions Must Remain AML-CFT Complaint

Risk-Based Model – Financial Institutions (FI) must follow regulatory Customer Due Diligence (CDD) and keep their Know-Your-Customer (KYC) records updated. It is on the part of the FI to conduct proactive Enhanced Due Diligence (EDD) on the potential high-risk clients with stringent identity checks and transaction monitoring. In addition, the records must be kept updated and presented to the Financial Intelligence Unit (FIU) authorities on suspecting unusual trade activities.

Transaction Monitoring – The financial institutions that handle large trade-related activities must monitor their clients in real-time. All Suspicious Transaction Reports (STRs) and Suspicious Activity Reports (SARs) must put the financial authorities to alarm. A series of SARs and STRs trade datasets also help establish emerging TBML typologies for predictive analysis.

AI-Based Machine Learning Algorithms – All leading financial institutions utilize the best-in-class data analytics technology to monitor transactions. The Artificial Intelligence-based rule engine algorithms instantly trigger unusual events to discover trade-related suspicious activities occurring across the businesses in real-time.

Know-Your-Business (KYB) – The financial and other regulated institutions must regularly check on the businesses they are doing business with. Know-Your-Business (KYB) involves business identity verifications for genuine business onboarding. At the same time, the regulated financial institutions must authenticate the Ultimate Beneficial Ownership (UBO) for both individuals and businesses involved in trade transactions.

Sanctions, PEPs and Adverse Media – The compliance officers must screen businesses and individuals against Sanctions and PEP lists. In addition, adverse news about the owners and entities across the press and online media indicates brewing illicit activities somewhere down the line.

Conclusion 

Given the scope plus volume of today’s trade, masking illicit gains with trade-based activities has become easier for the launderers. Furthermore, there are fewer initiatives taken in the TBML AML-CFT methods than in other money laundering methods. It has been believed that the global trade system is so complex – involving many deterrents and regulatory sluggishness – that it has made laundering money for criminals and terrorists more convenient via global merchandising activities.

The unrestrained threat of Trade-Based Money Laundering has given this financial crime an Advanced Persistent Threats (APTs) risk status, which is otherwise mostly used for cybercrimes. If you are a financial or regulated institution seeking AI-Based client behavior tracking, document verification, and suspicious transaction reporting solutions to fulfil your business compliance, schedule a call with the IDMerit AML solution advisor. We offer best-in-class Fraud Protection and KYC-KYB Compliance solutions to businesses worldwide.

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What Are Digital COVID Travel Passes & Which Airports Use Them?

Facial recognition and biometrics are being rolled out across the globe at many international airports. In addition to this innovative approach to PCR test result verification, travel associations and governments are also implementing digital COVID travel passes. IBM says these passes, “enable businesses to verify health credentials for employees, customers, fans and travelers entering their site based on their own criteria.” Airports Currently Using Digital COVID Travel Passes:

• France: Paris-CDG & Paris-Orly
• Dubai: Dubai International Airport (DXB)
• United States: Atlanta’s Hartsfield-Jackson International Airport
• Japan: Haneda Airports
• Brazil: Florianópolis Airport
• Singapore: Changi Airport

Biometrics, Digital Apps, & Facial Recognition Add Security & Speed To Security Lanes Worldwide

As the travel industry returns to semi-normal conditions, major glitches still impede smooth travel for passengers. Long lines and wait times were the norms at security checkpoints even before this crisis began. Thanks to the adoption of biometrics, facial recognition technology and digital travel pass apps, that is rapidly changing. COVID Health Travels such as CommonPass, IBM’s Digital Health Pass, and many more are available for uses to download. These digital apps streamline the boarding and security checkpoint processes.

Facial Recognition Technology Speeds Up Boarding Time & COVID Health Screening

According to a recent Government Accountability Office (GAO) report, “U.S. Customs and Border Protection (CBP) has made progress testing and Facial Recognition Technology (FRT) at ports of entry to create entry-exit records for foreign nationals as part of its Biometric Entry-Exit Program. As of May 2020, CBP, in partnership with airlines, deployed FRT to 27 airports to biometrically confirm travelers’ identities as they depart the United States (airexit) and was in the early stages of assessing FRT at sea and land ports of entry.” The results of a recent controlled scenario test by the Department of Homeland Security (DHS) Science and Technology Directorate (S&T) showed that facial recognition reached up to 96% accuracy which is a useful statistic for those in favor of this technology. Additionally, the GAO notes, “According to TSA officials, automating current identity verification capabilities through the use of facial recognition technology has the potential to improve this process by better identifying impostors, or travelers using valid travel identification documents for fraudulent purposes at the checkpoint.” Facial recognition and using biometric technology have the potential to improve the lives of millions and deter bad actors at the outset. IDMscan, IDMerit’s flagship identity verification tool, can help your compliance team leverage facial recognition and biometrics to streamline your identity verification program. Examples of biometric technology include:

• Iris recognition
• Fingerprint scanning
• Facial recognition
• Finger-geometry recognition
• Hand-geometry recognition

Thermal Facial Recognition & Remote Fever Detection Detect PCR Status

Thermal facial recognition and remote fever detection are used regularly by Airport security and CBP officers to ensure travelers are not currently suffering from symptoms of COVID. According to the Oxford Journal of Law and the Biosciences, “[a]mong a growing list of COVID-19 symptoms, fever (defined as a body temperature above 100.4°F/38°C) is one of the tell–tale symptoms of infection. As the pandemic has gained momentum, government agencies and corporations are increasingly turning to fever checks as a mechanism for gauging the potential presence of SARS–CoV-2 among citizens, travelers, and employees.”

Airports in France, UK, and Japan First To Adopt Digital Health Travel Passes

France Uses Facial Recognition & Digital App To Determine Negative PCR Test Results

France became the first EU country to implement an app-based COVID Health Travel Pass. According to American Airlines(AA), this feature on the government’s TousAntiCovid app allows “users to upload antigen or PCR tests by scanning a QR code on the test result form.” Additionally, AA goes on to state, “A negative test result can be used for limited air travel to Corsica on Air France and Air Corsica flights and to overseas territories beginning at the end of May.” Common features of COVID digital health travel apps include:

• upload antigen or PCR tests
• Third-party data sharing
• Upload digital photographs
• Cryptography protects personally identifiable (PII) data

British Airways Adopts Self Boarding as COVID Crisis Continues

Self-boarding has been underway at Heathrow during the pandemic but recently British Airways has also begun to adopt self-boarding or “touchless travel” procedures. The EU Digital COVID Certificate (EUDCC) was approved and is expected to enable travel within the EU in early July. The EUDCC will be, “proof that a person has been vaccinated against COVID-19, tested negative, or recovered from an infection.”

Dubai International Airport

Dubai International Airport recently implemented digital COVID travel passes and continued the mandatory use of masks in some areas of the airport. “Pre-COVID-19, passengers, on average, spending about 1.5 hours in travel processes for every journey, the organization suggested. The time included check-in, security, border control, customs, and baggage claim,” Alarabiya News reported. Over the last six months, 154,000 travelers have used Dubai International Airport’s biometric system to prove their COVID vaccination or current negative PCR test results. Other international implementations of facial recognition and biometrics include:

• Japan: Face Express, a new facial recognition system is being launched throughout Japanese airports this July
• Brazil: Florianópolis airport is also preparing to integrate facial recognition into its processes in July

Privacy Still Up For Debate

Facial biometrics legislation is still being debated but some privacy think tanks are lobbying to “give people the information they need to accurately decide how they want to share their facial data with companies. It also gives them control over how their facial information is shared with companies that use facial biometric identity verification. The goal of the legislation is to prevent consumer-focused facial recognition Software companies from mismanaging people’s facial data.” Despite privacy concerns, identity verification and digital COVID travel passes are now the norms, not the exception.

IDMscan: Fast, Secure, & Global Identity Verification Solution

IDMscan can authenticate and verify government-issued identity documents in online and offline conditions. It is a part of several identity fraud solutions that IDMERIT has created which offer fraud detection before it happens. Our document verification solution provides powerful security in the airline industry, at home and abroad.

• Multi-Language support
• Integrate seamlessly with IDMaml and IDMdevice
• Easily integrate into your system with a simple API
• Biometric facial recognition & face liveliness technologies are used to produce a live match
• Validate your customers in less than 6 seconds we can validate Passports, Drivers Licenses and National ID’s from 175+ countries
• Indigenously built Deepfake recognition and liveness recognition models with the highest degree of accuracy in the world

Contact one of our identity specialists to Schedule a Demo of IDMscan today.

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About IDMERIT

Headquartered in San Diego, California, IDMERIT provides an ecosystem of identity verification solutions designed to help its customers prevent fraud, meet regulatory compliance and deliver frictionless user experiences. The company is committed to the ongoing development and delivery of offerings that are more cost-effective and comprehensive than other solution providers. IDMERIT was funded by experts who have been sourcing data on personal and business identities across the globe for over a decade. This access to official and trusted data throughout the world has become increasingly important as companies find themselves completing transactions across borders as a standard course of business. www.idmerit.com

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In the podcast, Jared noted IDMERIT’s innovative entry into the identity industry almost a decade ago, as an airport security/passenger identification service and its rise to becoming an industry leader. 

The host and Tony also discussed IDMERIT’s founding and the current state of the identity verification industry including current AML/CFT trends. The identity industry is facing a large number of new laws and regulatory changes including AMLA2020 in the United States and AMLD5 in the EU which UBS sourced Tony to discuss as he has quite a bit of experience in this area. IDMERIT has assisted many multinational banks and compliance departments to mitigate their risk and reduce fraud through the adoption of eKYC,AML and robust customer Due Diligence programs.   

To listen to the podcast, visit the UBS Advisor Podcasts website or alternatively you can list to, or download, the episode on Spotify. 

Download a copy of our Press Release.

UBS bank is a leading bank and financial services advisory firm, headquartered in Zürich, Switzerland. 

Follow our LinkedIn and Facebook pages for anti-money laundering news and significant regulatory changes.

About IDMERITHeadquartered in Carlsbad, California, IDMERIT provides an ecosystem of identity verification solutions designed to help its customers prevent fraud, mitigate risk, meet regulatory compliance and deliver frictionless user experiences. The company is committed to the on-going development and delivery of offerings that are more cost-effective and comprehensive than other solution providers. IDMERIT was funded by experts who have been sourcing data on personal and business identities across the globe for over a decade. This access to official and trusted data throughout the world has become increasingly important as companies find themselves completing transactions across borders as a standard course of business. www.idmerit.com

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However, most individuals fail to determine the comparative distinctions between KYC and KYB. To start, KYB (Know Your Business) compliance shares each one of the major requirements found in KYC (Know Your Customer) compliance. They both share the same core objective and that is to follow AML/CTF regulations to make financial interactions safe and protected.

Both of the verification checks are stringent and meet compliance guidelines and, at the same time, they share a unique distinction. The distinction between both is the target that is being analyzed or attributes of that person or organization’s identity . 

What Does KYB Mean?

Also known as Know Your Business, KYB compliance checks seek to identify the veracity of businesses, companies, organizations and, in extended due diligence, monitor their financial transactions over time. These stringent checks verify a  business’ attributes, ownership, and other identifiable information to protect organizations from falling victim to any type of financial fraud. KYB compliance includes business verification which is followed by the submission of the verification data and some monitoring stages that are very similar to the KYC compliance process. The verification information is checked against data pulled from public archives and automated AML databases.

What Does KYC Mean?

Anti-money laundering compliance focuses on individuals who apply to open accounts at banks, financial institutions, or crypto exchanges to verify their financial backgrounds and past histories against any financial fraud/illicit activity to determine a risk score. These risk scores and profiles are extremely useful to banks and financial institutions and are meant to comply with stringent, and growing, AML legislation. 

The compliance and identity industries first focused on KYC, and as regulations increased, the industry pivoted to KYB and business attribute verification. KYC  digitization is more advanced than KYB. As technology and cloud computing became more prevalent, KYC became known as eKYC since its shift into the cloud and SaaS improved efficiency, lessened compliance costs, and took out the manual labor that used to slow down the verification process.

KYC To KYB: A Brief Background

Back before the introduction of KYB or KYC or their digitization, the financial fraud levels reached an epic proportion of total crime. According to the UN’s Office of Drugs and Crime, the global money-laundering rate was 2-5%, annually. There was no legitimate way to control individuals or businesses’ illegal financial interactions and major fraud cases despite the adoption of a few pieces of AML legislation.

In an effort to regulate and control financial crimes, the Bank Secrecy Act of 1970 introduced new AML guidelines, which were later incorporated into the 2001 USA Patriot Act. These guidelines were then embraced in 2003 and the term KYC was born. These guidelines were built to check the financial progression and transactions of individuals. They required financial institutions like banks to keep a diligent eye on all of their customers and follow specific regulatory requirements. KYC compliance proved to be successful however it left a loophole.

This loophole aided businesses’ UBOs and corporate owners. Banks weren’t required to check and verify the partners and representatives of the businesses they worked for so this left a huge opportunity for fraud and illicit activities to go unnoticed. Therefore, this implied that businesses could protect the personal information of financial criminals associated with them and perform illicit exchanges and activities and go unpunished. A famous incident that required an update in KYC compliance laws was the Panama Papers Scandal, which in 2016 eventually led to the birth of KYB compliance.

KYB & KYC: What Is The Distinctive Factor?

KYB and KYC compliance both follow the same causes, that is to regulate financial transactions and keep an eye on any potential financial crimes. However, the factor that sets them apart is their target scope.

● KYB: The regulatory guidelines in KYB compliance are followed by almost every industry as a massive fraud and Ponzi schemes have led to a crackdown on anonymous ownerships or shell corporations. KYB incorporates all business types and structures (S or C Corp) and is well-established throughout most industries including virtual service providers, money service providers, online businesses, the health and wellness industry, non-profit associations, and especially financial institutions/banks.

Business and Ownership Verification

In the standard KYB compliance procedure, businesses and companies are required to verify themselves as legitimate businesses by providing their own information and incorporating documents. Financial activities are then verified along with the identities of the business’ unique beneficial owners or their representatives.

● KYC: KYC compliance regulations require a more thorough verification of identity (depending on the new customers’ risk profile or geographical location). Banks are required to verify all new customers’ identities. Banks and financial institutions of all sizes have become huge proponents of eKYC regulations because it has led to the arrest and recovery of millions of dollars due to fraud and illicit activities.

Fundamental Requirements For KYB & KYC

Since KYB and KYC target different client types, data attributes that are verified are different. To register for verification, the core focus data remains the same, that is financial information and records.

For KYB

Since KYB targets businesses and organizations, its verification process requires information that includes a character report of the unique beneficial owner of the organization and that of all investors that hold a quarter share, each. The verification requirement includes:

●      Business Address

●      Recruitment Reports

●      Business Licence and Registration

●      Identification Documents of UBOs (directors and representatives)

For KYC

KYC focuses on individual customers of a bank that need to verify themselves by submitting identity and address records. These records solidify the financial character of the individual and help the bank to estimate the level of diligence they may require. The verification requirement includes:

●      A PAN (Permanent Account Number) card with a picture.

●      An ID card issued by the State.

●      Any Debit or Credit card issued by a bank.

●      A copy of utility bills such as electric bills with an address

●      Visa/Driver’s License with a digital picture.

KYB & KYC: The Digitization

After their introduction, KYC and KYB both had to go through several stages of experimentation by the financial institutions that employed them. They customized and altered the verification process to their needs but still, KYC and KYB remained labor extensive. To improve compliance, digitization was introduced to lessen manual labor and eliminate the chances of human error.

The digitization of KYB and KYC compliance includes the utilization of new advanced features such as Identity Verification, Virtual Verification, Online submission of verification records, Online Database, and AI-based Diligence. This digitization could undoubtedly forestall any slip-ups and improve the diligence procedure.

The progression in the digitization of KYB and KYC compliance is improving with each passing year as AI continues to get smarter. For instance, AI-based questionnaires aid in the process of business verification and take out the shortcomings and slip-ups that occur when registering new clients. The key elements of KYB and KYC compliance that have permanently been improved due to their digitization are:

AI KYB & KYC Registration

It is now customary for a renowned bank to employ an AI-based verification system that expands the proficiency of the registration process. It additionally decreases the expense that may involve hiring manual labor and cuts down the whole process and speeds things up.

This AI-based verification was first used for KYC compliance only, with the process requiring 25-30 days. Now, the same process is used for KYB compliance as well with the registration and verification procedure cut down to 5 minutes.

E-Archives For Business Registries

Before the digitization of KYC and KYB compliance, the records that were used to verify against the customers and businesses were physical and took up days to get through. Now banks utilize online archives that can store and protect the verification records of up to thousands of customers. This is an improvement that makes the compliance process faster and more efficient.

Advanced Due Diligence

The AI used for KYB and KYC diligence is sharp and precise, therefore improving the process of vigilance. This feature can monitor thousands of customers while efficiently providing information whenever the investigation officer looks it up by a couple of keywords. For instance, a business’s license number can be used to look up the database for that business.

Advanced diligence also includes microservices such as special APIs that can separate and check the information of a unique beneficial owner very quickly instead of taking days. These APIs are equipped for cross-referring to information across different data sets and public records that are filled in.

Virtual Identification For KYC & KYB

One of the major reasons that are causing banks and financial institutions to employ digitized KYB and KYC compliance is the efficiency that they provide. What first required in-person registration, now takes a single virtual call to accomplish. The virtual identification process has also encouraged individuals to register since they are aware of the efficient process.

The whole process can be finished in only 2–3 minutes, depending on how fast the identification software is. This virtual identification process can permit authorities to save and check the authenticity of the information provided by the individual. This process has reduced the potential of human error and cut down the hiring costs for banks.

Key Takeaways

KYB and KYC guidelines are carried out to infiltrate any individual whether alone or related to a business that is indulging in illegal tax avoidance and money laundering activities, while a side benefit for KYB includes the verification of businesses as well.

Financial fraud continues to grow with each passing day, therefore it is necessary for banks to monitor their clients. While they target different scopes of individuals, KYB and KYC follow the same cause. Other than detecting extortion these compliances strive together to make financial interactions, all around the globe more safe and smooth, while diminishing the rate of financial crimes. 

Follow our LinkedIn and Facebook pages for Anti-money laundering news and significant regulatory changes.

About IDMERIT

Headquartered in San Diego, California, IDMERIT provides an ecosystem of identity verification solutions designed to help its customers prevent fraud, meet regulatory compliance and deliver frictionless user experiences. The company is committed to the ongoing development and delivery of offerings that are more cost-effective and comprehensive than other solution providers. IDMERIT was funded by experts who have been sourcing data on personal and business identities across the globe for over a decade. This access to official and trusted data throughout the world has become increasingly important as companies find themselves completing transactions across borders as a standard course of business. www.idmerit.com

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 KYC, or Know Your Customer, is the process of verifying a customer’s identity to ensure they are providing accurate personally identifiable information (PII) as well as in order to understand their past financial behavior with previous institutions or money service providers. This process helps to ensure that the financial institution’s services are not misused for identity theft, money laundering, and the funding of criminal organizations. kYC ensures that organizations are both compliant and that customers with a suspicious financial background are not approved for an account at the bank or financial institution. 

It is now mandatory for all financial institutions or banks to administer identity verification as part of their KYC compliance. This quick KYC compliance checklist will assist your institution in developing a KYC compliance program.

What Is KYC Compliance?  

A KYC verification is conducted by a bank’s system, or through IDMerit’s identity verification system, whenever a customer applies to open an account. To have a smooth transaction process, they must verify themselves by going through an identity verification process. This process entails the customer submitting certain verification documents that authenticate their identity and financial background. This identity verification process brings to light any risk of potential financial crimes and assists banks and financial institutions with taking the appropriate action depending on the risk profile.  

How Does Proper KYC Help In Protecting Financial Institutions? 

The biggest approach to commit financial fraud and extortion is identity theft. People get away with committing these financial crimes by using a false or a fake customer background. This is where a robust Know Your Customer compliance program  severely limits the potential for fraud at the outset. During most KYC compliance programs, customers are asked to submit authentic documents such as passports, a UID (Unique Identification Number), or a copy of their most up-to-date utility bills or insurance plan. 

These documents act as identity and address proof and help the banks and financial institutions calculate the customer’s financial activities and any potential scale of risk they may pose. KYC compliance programs (which include ongoing monitoring) ensure banks and financial institutions remain alert about their customers’ risk profiles and is a process that segments suspicious customers or risky transactions. Banking is an industry with an innate danger of monetary fraud, so it is critical to perform a screening on customers to control and eliminate the potential of thefts. 

The Updated 2021 KYC Compliance Checklist 

These verification documents construct a customer’s financial profile for a bank and proper identity validation and verification processes can root out fraudulent ID cards, utility documents that have been tampered with, or all together forged documents. 

Every bank and financial institution follows different customer verification procedures, some require online identity verification while some require physical submission, therefore the documents required for identity verification are different. However, the essential documentation required per the 2021 KYC compliance checklist are as follows: 

(POI) Proof Of Identity: 

• A UID/passport, driver’s license, or a voter’s ID card. 
• A PAN (Permanent Account Number) card with a picture matching the customer. 
• A current ID card issued by the State. 
• Any valid Debit or Credit card issued by a bank. 

(POA) Proof Of Address:  

• A copy of utility bills such as electric bills with a verifiable address  
• Visa/Driver’s License with a digital picture. 
• A copy of a registered sale agreement or lease for residence. 
• Any identification document in the name of one’s spouse. 

What Are Various Types of KYC Verification? 

To make the process more convenient, there are two types of KYC verification that many banks and financial institutions follow: 

Online or eKYC Submission

The primary type of KYC verification follows an online identity verification where the customer submits their required documents online. This is fast and the most digitally modern way of document submission. This process typically uses OCR (Optical Character Recognition) technology that banks and financial institutions use to sort and extract verification data from the submitted documents. Typically, IDMerit also includes advanced security measures to identify fraudulent documents including identifying biometrics and verifying the existence of specialized features specific to each type of identification (passport, ID card, etc.). 

In-Person Submission 

This KYC verification process takes place when a customer submits their identification documents to the bank in-person. A copy of all documents is required which need to match both the image on the identification card for in-person submission. Some banks and financial institutions also require document submission for KYC through video where the customer’s presence is needed in order to verify their identity and address. This is typically done through a process known as liveness detection which removes the potential for impersonation or fraud. 

3 Fundamental Components For A KYC Compliance Process 

The process of Know Your Customer compliance is based on three components or steps. Depending on a customer’s risk level or past transaction history, there can be changes in the manner of the screening’s intensity. While a basic KYC compliance program will work exceptionally well for a customer with minimal to average transactions, a more moderate screening will be required for someone with business-level transactions. This is also true with on-going monitoring which is scaled up for customers with a higher risk profile or who are Politically Exposed Persons (PEP).  

1. CIP (Customer Identification Program) 

The first and foremost step to conducting a KYC compliance process is identifying the customer and their financial background. This is a defining component in any KYC process that is necessary for all banks and financial institutions to carry out. It is part of the law presented in the Patriot Act, 2001 that requires all individuals with bank accounts to undergo a CIP to have their backgrounds recorded and examined. 

Since the latest 2021 KYC compliance is approved by the FATF (Financial Action Task Force), a CIP is made mandatory for all banks and financial institutions to administer against their customers. Not only does this program help these financial institutions identify their customers but also assists in monitoring their financial activities of the next steps in a KYC compliance process.  

While it is approved by FATF to conduct a CIP, it falls under the banks and financial institutions to decide its level of verification — deciding upon the proof documentation to ask from their customers. However, the essential prerequisites that any bank must ask from its customers to open an account follow:  

• Customer name  
• Date of birth  
• Permanent address  
• A UID 
• Copy of utility bills 

To ensure a CIP’s success, the bank must conduct a thorough examination of these documents in terms of validity, authentication, and relevance. Such prerequisites are also required when conducting an AML (Anti-Money Laundering) procedure. 

2. CDD (Customer Due Diligence) 

Perhaps the most cumbersome part of a Know Your Customer process for banks in determining the reliability of their customers. It is crucial for banks to decide whether they can trust a customer. This process of determination connects with the CIP conducted before to ensure a potential customer is trustworthy. CDD helps the banks and financial institutions stray clear from dealing with thieves and possible frauds. There are three levels of the Customer Due Diligence process that depends upon the customer: 

• SDD (Standard Due Diligence) is initial information required by customers that usually indicates any initial risks. If the chances of financial fraud or tax evasion are low then a full CDD isn’t required here.  

• CDD (Customer Due Diligence) is compulsory information that all customers must submit to undergo a financial activity examination that assesses any further potential risks related to the customers.  

• EDD (Enhanced Due Diligence) is any extra information that a bank may decide is compulsory for their respective KYC process. This information is usually asked by customers with higher-risk profiles to give a more profound insight into their financial activities.  

Some pragmatic steps that may assist banks and financial institutions to conduct their CDD process include: 

• Banks may inquire about the nature of a customer’s business and their scale of transactions to gain an insight into their business financial activities.  
• While confirming or checking a customer, banks can classify their risk-profiles and characterize what kind of customer they are. 
• If dealing with a higher-scale customer, banks can ask them to submit any business verification records they find necessary to keep the CDD process updated. 

Because this is such a detailed process, the identification of any suspicious financial activity can be pointed out easily even if it is subtle. Tracking all the CDD and EDD performed on every customer is essential to ensure the KYC compliance process’s success.  

3. Continuous Customer Monitoring  

Once all is said and done, a Know Your Customer compliance process keeps on its vigilance until a customer suspends their bank account.  It’s insufficient to simply check a customer once, hence banks use a vigilante program to screen their customers continuously. This continuous screening allows the bank to keep an eye on customer’s every single financial transaction and alerts the bank when it senses something suspicious. 

Once again, every bank or financial institution follows a different program of this conscious monitoring, however the variables they look out for remain the same, such as:  

• Elevation in transactions 
• Frequent offshore or out of region transactions. 
• Any transactions made to the account by an unidentified party.  

Continuous Customer Monitoring is a tedious part of a KYC compliance process, however, due to its constant surveillance, even a little spike of financial activity that can lead up to financial theft is detected. This continuous monitoring is all digitized and provides uninterrupted vigilance to each customer, hence the reason why a KYC compliance process remains a successful counteractive solution to all types of financial fraud.  

Final Thoughts : KYC Now & Looking Towards The Future

As banks and financial institutions shift their services online, it is becoming easier and easier for online hackers and thieves to find better approaches to commit financial fraud. Because of that, financial specialists felt the need to discharge new procedures to resist these fraudulent approaches. A KYC procedure works both ways, not only does it protect the bank’s services from getting misused, but it also protects the customer’s financial health. 

As 2021 is progressing, it has now become a high priority for financial institutions and banks to have a viable KYC compliance program to remain consistent with their customers and alleviate the danger of financial extortion. While every financial institution is different, the above-mentioned KYC compliance program and checklist remain the essential vigilance process that will assist them with conducting a proper identity verification program just the same.

Follow our LinkedIn and Facebook pages for anti-money laundering news and significant regulatory changes.

About IDMERIT

Headquartered in San Diego, California, IDMERIT provides an ecosystem of identity verification solutions designed to help its customers prevent fraud, meet regulatory compliance and deliver frictionless user experiences. The company is committed to the on-going development and delivery of offerings that are more cost-effective and comprehensive than other solution providers. IDMERIT was funded by experts who have been sourcing data on personal and business identities across the globe for over a decade. This access to official and trusted data throughout the world has become increasingly important as companies find themselves completing transactions across borders as a standard course of business. www.idmerit.com

The post An ultimate Checklist for KYC Compliance to protect financial institutions appeared first on IDMERIT.

Anti-money laundering regulations become more stringent every year as do the associated fines. On January 1, 2021, Congress passed the National Defense Authorization Act for Fiscal Year 2021 (the NDAA), which includes the most substantial and sweeping improvements surrounding AML legislation. This omnibus bill includes amendments to the USA Patriot Act which address a wide range of gaps in previous legislation.  The US’ AML Act 2020 (AMLA) was designed to address changes in the technological landscape and the lack of motivation (monetary or otherwise) for whistleblowers to share AML information with authorities.

Key Provisions of the AMLA 2020

The AMLA 2020 brought forth major changes and amendments which strengthened the penalties for non-compliant banks and financial service organizations. Major changes include:

• Stringent AML Enforcement Through Improved Compensation For Whistleblowers
•  AMLA 2020 Expands Existing BSA/AML Violation Penalties
• AMLA 2020 Legislation Allocates More Government Resources Committed to Address Money Laundering 
• AMLA Provides Additional Statutory Authority for DOJ to Seek Documents from Foreign Banks & Financial Institutions
• The AMLA References a Pilot Program To Share SAR (Suspicious Activity Report) Data Across International Borders
• The AMLA Extends the BSA’s Reach To Cryptocurrency (Nontraditional Value Transfers)

7 Anti-money laundering Compliance Fines You May Have Missed

“Financial institutions have been hit with $10.4 billion in global fines and penalties related to Anti-money laundering (AML), Know Your Customer (KYC), data privacy, and MiFID (Markets in Financial Instruments Directive) regulations in 2020, bringing the total to $46.4 billion for those types of breaches since 2008,” ComplianceWeek reports. Failure to comply with Anti-money laundering laws and regulations brought heavy fines in 2020 and continues to increase. Below are seven of the largest fines levied on banking & financial institutions:  

1. 2019 Data Breach leads to Capital One fine of $80 Million 

The US Office of the Comptroller of the Currency (OCC) levied an $80 million civil fine against Capital One in August for its mismanagement and inadequate security systems. According to Fortune Magazine, “the bank’s own internal audit failed to identify “numerous weaknesses” in its management of the cloud environment and ‘engaged in unsafe or unsound practices that were part of a pattern of misconduct.’”  The breach compromised over 140,000 Social Security numbers and 80,000 bank account numbers. Paige Thompson, a former Amazon Software Engineer, stands accused of stealing personal identifiable information (PII). Charges include computer fraud and “abuse for an intrusion on the stored data.”

Large gaps in information security and Anti-money laundering regulations influenced the adoption of the most recent AML legislation which helps support previous computer security and fraud legislation. While Thompson’s motives may still be under investigation, proper employee vetting through background checks and PII security policies are paramount to ensuring these types of breaches do not occur. Banks and corporations are required to follow stringent information security guidelines to avoid large fines and public scrutiny. 

2. OCC Issues $85 Million Penalty To Usaa Federal Savings Bank

The OCC slapped USAA Federal Savings Bank with an $85 million fine for risk management inadequacies in October. This is the second fine this San Antonio bank has been levied with. According to the Office of the Comptroller of the Currency (OCC), “bank’s failure to implement and maintain an effective compliance risk management program and an effective information technology risk governance program.”

Risk management and compliance programs including Customer Due Diligence (CDD) and Enhanced Due Diligence (EDD) are mandated by the Bank Secrecy Act and recently passed Anti-money laundering (AML) legislation. Large fines and penalties are being levied around the globe as banks and covered financial institutions (and cryptocurrency exchanges) fail to build proper compliance programs.  

3. Swedish Bank SEB Fined $107 Million by Regulator For Baltic AML Failures

Skandinaviska Enskilda Banken (SEB) received a $107 million fine in June for Anti-money laundering (AML) failures. SEB, the second largest bank in Sweden, has been fined for failing to  , Swedish Financial Supervisory Authority (FSA), the regulatory authority, charged the bank in early June of 2020 and levied the fine which highlights the global issues revolving around Anti-money laundering compliance in the financial services industry, “Despite the elevated risk of money laundering in the Baltics, the bank has done too little, too late,” says FSA director general Erik Thedéen.

Basic AML due diligence includes identity verification, validation, and age verification (to name a few). Not only are AML violations on the rise, victims of complex schemes and fraud are rampant within money service provider industries. 

4. Western Union Refunds $153 Million For Scam Victims

“Western Union turned a blind eye to the fraudulent payments made through its money transfer system,” says Andrew Smith, director of the FTC’s Bureau of Consumer Protection. Western Union began refunding defrauded customers in March after they were ordered to by theFederal Trade Commission (FTC). The lack of Know Your Customer (KYC) compliance can severely damage an organization and harm millions of account holders. 

According to the United States Federal Bureau of Investigations, “The FTC’s complaint against Western Union alleged that for many years, Western Union was aware that fraudsters around the world used the company’s money transfer system to bilk consumers, and that some Western Union agents were complicit in the frauds. The FTC’s complaint alleged that Western Union failed to put in place effective anti-fraud policies and procedures and to act promptly against problem agents.” While in this case, Western Union is said by Andrew Smith, Director of the FTC’s Bureau of Consumer Protection, to have “turned a blind eye,” more banks and Money Service Providers (MSP’s) are unaware of the mandatory KYC/AML regulations that can protect them from these types of horrible situations.  

5. Citi To Pay $400 Million Occ Fine For Risk Management Failures

One of the world’s largest financial institutions, Citi Bank, has been ordered to pay $400M in a case that brings to light severe risk management issues. The South Dakota bank was found to have been lacking internal controls and financial safeguards including those relating to AML and data governance. According to the consent order, Citibank needs to complete a “thorough redesign of data architecture, re-engineering of processes, and modernisation of system applications and information technology infrastructure.” This is the second fine in which Citi has been hit with in recent years showing its glaring need to update and comply with regulatory mandates and internal financial controls. 

6. Westpac Agrees To Record Aud 1.3 Billion Fine For Aml Failures

Westpac, one of Australia’s largest banks, agreed to pay a record AUD 1.3 billion ($959m) fine for money laundering breaches in September. According to court filings and Fintech Futures, the financial institution, “failed to keep records related to the origin of the transactions, or carry out “appropriate customer due diligence.” These are major lapses in AML compliance procedures and this underscores the need for both proper, and timely, Know Your Customer compliance as well as ongoing transaction monitoring. 

Westpac admitted to 76,000 additional violations including, “failures to reasonably monitor customers for transactions related to possible child exploitation”, and “further failures to assess money laundering and terrorism financing risks.” Compliance officers should take note of the challenges that exist for large banks and reevaluate their preparedness in order to avoid fines and penalties such as those seen in the above cases. 

7. Compliance Lapses & Fraudulent Accounts Generate Billions In FInes For Wells Fargo

Wells Fargo bank, the fourth-largest in the US, will pay a hefty fine of $3 billion for its failure in security procedures. The Security and Exchange Commission will receive $500 million of the total and plans to use the funds to offer restitution to those customers who were defrauded by Wells Fargo. According to Fintech Futures, the bank “pressured employees to cross-sell products and services, leading them to create millions of fake accounts using forged and fraudulent customer signatures.” Proper Know Your Customer compliance procedures and fraud weren’t incorporated into the account opening process as internal documents showed that, “[e]mployees of the bank were found to be using their own contact details on application forms, so as to ensure that the real customer was never informed about the accounts opened in their name.” 

Follow our LinkedIn and Facebook pages for Anti-money laundering news and significant regulatory changes. 

About IDMERIT: Headquartered in San Diego, California, IDMERIT provides an ecosystem of identity verification solutions designed to help its customers prevent fraud, meet regulatory compliance and deliver frictionless user experiences. The company is committed to the on-going development and delivery of offerings that are more cost-effective and comprehensive than other solution providers. IDMERIT was funded by experts who have been sourcing data on personal and business identities across the globe for over a decade. This access to official and trusted data throughout the world has become increasingly important as companies find themselves completing transactions across borders as a standard course of business. www.idmerit.com

The post 7 Anti-Money Laundering Fines You May Have Missed: Multinational Banks Held Accountable By Regulators For Compliance Missteps appeared first on IDMERIT.

Know Your Customer (KYC), which can also be called Know Your Client, is mandatory for banks, money service providers, and cryptocurrency exchanges. KYC allows for a crypto exchange or money service provider (MSP) to identify risk levels of new customers and protect against fraud, theft, and otherwise suspicious or illicit activity. Both traditional stock exchanges such as the Dow Jones and nontraditional money exchanges such as in the crypto space are required to engage in Ongoing Monitoring of their customers. 

Risk Profiles (which are identified at the onset of a customer’s relationship with the bank or exchange) are monitored and updated at varying points in a customer’s relationship with the institution (one year, three years, or every time a significant transaction is completed). According to Dow Jones, “[c]ustomer profiles will change over time and firms must conduct ongoing monitoring of their business relationships to ensure risk profiles haven’t changed in a way that would expose the firm to non-compliance and reputational damage.” Know Your Customer (KYC) is standard practice for any compliance program and necessary to ensure clients are who they say they are.  

What is Blockchain?

Blockchain is a distributed ledger framework that cryptographically stores data on an open or private network. Blockchain is a technology that aims to transform the backend systems that most businesses run on. It aims to become a lower cost, more efficient way to share information and data between open and private networks.

Blockchain is useful as a tool in new Anti-money laundering solutions for fraud and risk departments across financial institutions. This is because the data that is stored on the framework is immutable. Within a blockchain system, data entries cannot be edited or modified.. Instead, they can only be appended after entering the system. This is particularly useful in AML transaction monitoring because it prevents criminals from trying to mask their transactions to prevent detection. The transactions will always be on the blockchain, no matter what a criminal does to attempt to modify them.

This will help banks save money in the long run. For example, Deutsche bank recently was fined over $700 million in 2017 because of accusations that it helped launder money out of Russia. Earlier this month, USB was fined over $5 billion by French regulators for money laundering and tax evasion. With blockchain technology in place, it would be more difficult for associates to evade the AML process and cause damage to a financial institution’s overall reputation.

An Anti-money laundering solution built on the blockchain could leverage the inherent qualities of the blockchain in order to identify and prevent illicit transactions. If the software used to monitor transactions is an AI with machine learning functionality, it could effectively run through strings of data to determine if money laundering activity is occurring. The reason this would work is because AI will be able to detect patterns in large volumes of data while adapting to changes in criminal activity over time with its machine learning capabilities.

Blockchain for AML Compliance

These tools would automate the transaction monitoring process and make it much more efficient and effective than current processes are today. Plus, if suspicious activity is detected, it could be highlighted, flagged and stopped for further investigation. All this activity would be immutably stored on the blockchain as well.

$1.4bn Stolen by Cyber Criminals as the Cryptocurrency Industry Faces New Round of Compliance/AML Failures

Major cryptocurrency exchanges are on the alert as 2020 brought another round of hacks, thefts, and decimating losses. Despite more stringent regulations being adopted across the European Union (EU), billions of dollars are being lost due to banks and exchanges failing to implement these new compliance hurdles.

EU Enforces Compliance as Fifth Anti-money laundering Directive Shakes Industry

As the EU’s Fifth Anti-money Laundering directive came into force on January 10, 2020, organizations operating in the crypto space are being challenged to update their compliance programs. Most notably, Bitcoin.com notes that the EU law will, “oblige digital asset exchanges as well as providers of crypto payment and custodian services to apply for licenses from the Federal Financial Supervisory Authority (Bafin).”   

The Fifth Directive states, “Recent terrorist attacks have brought to light emerging new trends, in particular regarding the way terrorist groups finance and conduct their operations. Certain modern technology services are becoming increasingly popular as alternative financial systems, whereas they remain outside the scope of Union law or benefit from exemptions from legal requirements, which might no longer be justified.” 

Major Risks For Non-Compliant Organizations Operating in the Crypto Space 

Risks Surrounding Client Anonymity: The Fifth Anti-money Laundering Directive’s 9th section points out that, “anonymity of virtual currencies allows their potential misuse for criminal purposes. The inclusion of providers engaged in exchange services between virtual currencies and fiat currencies and custodian wallet providers will not entirely address the issue of anonymity attached to virtual currency transactions, as a large part of the virtual currency environment will remain anonymous because users can also transact without such providers.” It goes on to note that in order to combat this loophole, “national Financial Intelligence Units (FIUs) should be able to obtain information allowing them to associate virtual currency addresses to the identity of the owner of virtual currency.” In the United States, financial institutions are required to identify and report suspicious activity reports (SAPs|. 

The Fifth Directive also discusses the idea of self-declaration and that FIUs, “should be able to obtain information allowing them to associate virtual currency addresses to the identity of the owner of virtual currency.” Despite growing regulations, there still exist major challenges which have led to billions in scams, ponzi schemes, digital currency theft and extortion. 

PlusToken, WuToken, & KuCoin Just To Name a Few Highlight Need For KYC in Crypto Space

Boxmining, a leading technology and fintech asset media property and FinTech trends outlet states, “Plus Token” was a cryptocurrency Ponzi scheme disguised as a high-yield investment program. Platform administrators closed down the operation in June of 2019. Fraudsters abandoned the scheme by withdrawing over $3 Billion dollars in Cryptocurrencies (Bitcoin, Ethereum, and EOS) and leaving the message “sorry we have run“. This has led to an international manhunt for the platform administrators and creators of Plus Token. Plus token has been blamed for causing Bitcoin prices to fall in 2019 as stolen funds were sold via Bitcoin OTCs.” The need for proper KYC and transaction monitoring is especially apparent in the case of PlusToken. 

WuToken Hack: $281M Gone In An Instant

Cryptocurrency exchange KuCoin was instantly decimated with losses of over $281M in 2020. COO Insights reports that, “[o]n September 26, cryptocurrency exchange KuCoin issued a statement that it experienced a ‘security incident’. At that point, some USD 150 million in BTC (bitcoin), ERC-20 (ethereum-based tokens), and other cryptocurrencies were estimated to be stolen. 

Over the next couple of days, that amount had grown to USD 280 million, effectively making the KuCoin hack the third-largest crypto hack. Only Coincheck, which suffered a USD 534.8 million hack in 2018, and Mt. Gox, which lost USD 460 million in 2014 to another hack, were ahead in terms of loss.” 

Hacks and Ponzi schemes like these are rampant but organizations that build strong compliance programs, including AML risk profiling and KYC and Extended Due Diligence (EDD) processes will face a much less risky foray into the crypto space. 

About IDMERIT

Headquartered in San Diego, California, IDMERIT provides an ecosystem of identity verification solutions designed to help its customers prevent fraud, meet regulatory compliance and deliver frictionless user experiences. The company is committed to the on-going development and delivery of offerings that are more cost-effective and comprehensive than other solution providers. IDMERIT was funded by experts who have been sourcing data on personal and business identities across the globe for over a decade. This access to official and trusted data throughout the world has become increasingly important as companies find themselves completing transactions across borders as a standard course of business. www.idmerit.com

The post Theft, Ponzi Schemes, & KYC Challenges Rampant in the Crypto Space appeared first on IDMERIT.