It’s no secret that in today’s constantly changing regulatory environment staying on top of current requirements and knowing exactly who you are dealing with at the end of each transaction is key. Key to fighting fraud, avoiding findings, fines from regulators, and potential reputational risks. Your primary focus should always be on growing your business and not just on shielding your institution from bad actors and the regulatory labyrinth. However, proper Know Your Customer (KYC) and Anti-Money laundering (AML) programs need to be in place to ensure that your institution is not enabling illicit activities such as money laundering, fraud, terrorist financing, human, and drug trafficking. Digital Identities and partnership ecosystems can severely reduce these risks, and more importantly, help you stay in business and focus on thriving. But, more on that in a moment.
Bad actors are far more sophisticated in their fraudulent methods and have a better understanding of how our financial system works than ever before. They can attack a business several times trying to bypass their identity security checks and utilize compromised individual information, stolen or purchased from the dark web without businesses realizing it until it’s too late.
Rampant Identity thefts and data breaches have led to the compromise of Personally Identifiable Information (PII); therefore simply verifying PII that a person is claiming will no longer be enough, corroborating this information will also be necessary. From a regulatory perspective, institutions must always ascertain the identities of the individuals and entities behind every transaction. With the growing trend of digital transactions it is becoming more and more difficult to be able to prove whether you are dealing with a true individual or entity at the beginning and end of each transaction. In order to stay compliant with regulators, Institutions must:
- Substantiate the identity of the Ultimate Beneficial Owner(s) (UBO)
- Substantiate the controller(s) of the company/entity
- Source of funds
- Source of wealth
- Initial Geo location of transactions
- Ongoing sanctions screenings
That’s why establishing proper KYC and AML programs are absolutely necessary for survival and why leveraging the power of digital identities and partnering with tech firms that leverage technology ecosystem that focuses on verifying a wide variety of data attributes can make all the difference.
Ensuring that you are doing everything in your power to protect our financial system from bad actors is not just good for the encouragement of a fair economic system, but good for your business as it instills trust in customers to know that your institution is not involved or enabling in any criminal activities. Institutions must also comply with International regulatory requirements as well if they have a global customer base. Each jurisdiction will have their own reporting requirements and AML requirements that must be met as well in order to avoid the scrutiny of regulators.
As part of a strong AML program, you’ll need a solid KYC process. The IdentityMind process is designed around answering the following questions:
1. Is It a Real User?
2. Is It Authorized to Use the Data it Presented?
3. Can You Do Business With It?
4. What Is the Risk of Doing Business With It?
In the IdentityMind process, we take the provided information and assemble it into a digital identity. With IdentityMind, a digital identity is an asset that evolves as the entity behind it changes. It is reusable – the digital identity information is encrypted so it cannot be seen or stolen – across businesses and business units so that users are not treated like new users every time you see them.
In response to the first two questions above, we’ll start out by verifying each of the provided data fields to see whether they are valid, whether they belong together, and whether the provider has the right to use them. This is where the technology partner ecosystem comes into play enhancing IdentityMind’s own database of digital identities. IdentityMind’s technology partner ecosystem brings together information across a variety of areas including email, phone, identity, device, documentation, sanctions screening, geolocation, biometric, behavioral verification, and more. And it represents 30+ tech vendors including Mitek, Ciphertrace, Idology, Telesign, Id Analytics, and Experian to just mention a few.
The collection and verification of standard data sets such as name, address, phone number, email as your primary means of verifying the identity of an individual or entity is no longer sufficient as this information is the most commonly hacked and stolen by cyber criminals who can then easily build synthetic identities. Your identity proofing process should include a diverse set of data against which you will evaluate the entity. Further identifiable information will need to be utilized and corroborated, such as bank account information, credit card info, biometric fingerprint, just to mention a few, to evaluate and substantiate the identity of the individual or entity. Because you are not likely a software provider, there is not much of a business case to build your own system to integrate these data sources. And, even if you wanted to spend the time and resources to integrate all of the required data sources, building and verifying digital identities (more on that next) would require more money, effort, and time than you’d want to spend. That is why we make our services easy to connect to. This enables you to verify the data, to understand whether it is a real or synthetic identity, and to understand the risk of that identity, all through a single API.
Next, we analyze the data. The first step is to understand whether the individual is sanctioned or whether there are other reasons why you can’t do business with them. From there, we will conduct identity link analysis to understand whether the identity is linked to bad actors, and then machine learning to determine the reputation of the person that you are looking to do business with.
IdentityMind excels above its competitors in reputational scoring and graph analysis through the use of it’s patented Electronic DNA™, eDNA™ for short. eDNA links entities/individuals based off the various provided attributes, behavior and transaction types. Our link analysis provides insight into whether these individuals/entities are linked to any bad actors within our ecosystem via the various captured attributes. For instance, we can look at whether a good actor is linked to a compromised bank account purchased on the dark web, or whether you are seeing the same account information being used with multiple merchants and being rejected. This could indicate the use of a synthetic identity.
Through the help of machine learning, we collapse all of this information into a single identity graph score that easily communicates the overall risk of a given transaction based on the complexity of the graph. It encapsulates all of this information in order to provide clients with an accurate real time reputational score, aiding in the decision making process. Furthermore, the link analysis is fundamental to understanding more complex scenarios like fraud, identity theft rings, money laundering schemes, and more.
Only through IdentityMind’s platform and market leading partnership ecosystem can you capture various data attributes in one easy to view place for real time risk analysis and assessments for operational efficiency and institutional soundness. Protect your institution from bad actors and the fear of regulatory scrutiny. IdentityMind can be your peace of mind. Find out how here.