4 Reasons why KYB is Inevitable for your Business

When it comes to corporate collaborations, Know Your Business (KYB) is the ultimate source of securing business interests and staying compliant with Anti Money Laundering obligations. Before a business wishes to associate with another, it should make sure whether the client is trustworthy and authentic. The Know Your Business criteria, which falls under the hierarchy of AML standards, provides a reliable means of verifying the partner organization. 

A study conducted by Ponemon Institute states that, on average, more than $4 million is lost as a result of not investing in compliance practices. The scenario becomes more amusing since a substantial sum of $5.47 million is spent worldwide on compliance costs. KYB, as opposed to KYC, verifies businesses instead of customers by using certified identification parameters consisting of validation documents of the business owner and the company registration number (CRN), etc. 

Secure Business Relationships

Today, business associations depend on mutual understanding and interests. While your affiliate enterprise might be reliable, they may not realize the impacts of the ever-changing world of digital technology. Moreover, business partners have little or no control towards the vendors of their partner company. There is a constant need to verify trust between both entities to build secure and stable relationships. Know Your Business (KYB) standards are a reliable means of building trust and a secure channel of communication. 

KYB gives business verification methods a new sense of authenticity and eases the lengthy business verification operations, ultimately increasing the sales and nurturing business interests across both parties. Apart from trust and reliability, security measures are equally significant. Organizations should be mindful of KYB compliance when establishing B2B connections with other businesses. Over the years, regulatory technology has significantly changed the way business verification is performed. By using corporate information and other identity parameters such as the ultimate beneficiary chain of the partnering company, KYB is helping build secure business relationships. 

Compliance with AML Obligations

The escalation in financial crimes has made it necessary for law enforcement agencies to implement regulatory measures. One of the principal guidelines that were established during the Vietnam war in 1970, was the Bank Secrecy Act. The motivation behind this law was to counter tax evasion incidents rising out of unlawful drug dealing. Under this financial policy, banks are obliged to report dubious customer activity, for example, transactions more than $10,000. These regulations laid the first stone for AML and other relevant business verification standards to deter money laundering activities. As a result, organizations like the FinCEN (Financial Crimes Enforcement Network) and FATF(Financial Action TaskForce) came into being in the subsequent years. 

AML practices are a good bet when it comes to verifying companies and safeguarding the interests of businesses. As a result of non-compliance, poorly organized corporations suffer considerable disruption costs that often lead to sizable customer loss and compensation fees. The annual report on KYB compliance states that a sum of more than $5 million is paid to regulatory authorities, for not complying with Anti Money Laundering obligations. 

The 4AMLD, Anti Money Laundering Directive that came into effect in 2017, encourages financial institutions to perform KYB checks to reduce the potential risk of money laundering and terrorism funding. KYB compliance falls under the hierarchy of AML criteria that protects the business interests and also serves as a good means of safeguarding against potential crime. An online AML/KYB verification solution is a need of the hour to meet the needs of the current regulatory landscape.

Enhanced B2B Conversion Rate

Conversion rates are the most important B2B marketing benchmark for any commercial entity. For corporate businesses, a relation based on trust is of great importance for smooth communication. KYB is a quick and easy way to create positive impressions on your partner organizations to get started. By running a series of identity checks, the business is all set and ready to collaborate, as it creates a trustworthy relationship between both parties. It not only creates a better opportunity for promoting sales but also developing a good market reputation. Achieving healthy business relations and trust is directly proportional to increasing sales ultimately leading to a higher B2B conversion rate. According to statistics provided by Hubspot, the average conversion rate for page visitors lies between 20-25%, while the expectation of converting to a client should be nearly 1.5-3%.

Business relations play a significant role in establishing a good reputation for an enterprise in the market. It makes or breaks the economic prosperity for the particular company, and directly impacts the B2B conversion rate. Whether it’s a startup or established business, partner collaborations are the utmost priority. Know Your Business (KYB) provides a convenient way for affiliate businesses to verify their identity without reporting physically to sites and offices. By using business verification solutions, enterprises get to know their partners better, focus on specific concerns, and provide interest-oriented services that ultimately increase the B2B conversion rate.  

Reduced Operational Costs

In the increasingly digitized world of finance, businesses employ automated solutions to cut human resource expenses and to increase productivity. The fact that machines are self-driven systems and less prone to errors makes it a profitable opportunity, ultimately eradicating the prospect of human faults. When it comes to enterprises, a considerable rate of operational activities is as necessary as security. Unexpected and constant process delays could result in a compromised business relation or decreased sales that increase the risk of losing valuable capital contributions. 

For a seamless partnership experience and better engagement, there should be minimal delays in the identity verification of related businesses. Online KYB solutions play a vital role in achieving benchmark standards that help reduce operating costs. They come with the ease of remote identity verification, which reduces business onboarding expenses. A KYB verification process could include validating the Ultimate Beneficial Ownership (UBO), the Company Registration Number (CTA), or the identity of the sole owner. The guidelines of the Financial Action Task Force (FATF) on transparency and beneficial ownership lists, and pre-emptive verification policies for business verification.

To sum it all up, KYB is an effective means of creating secure business relations by enhancing the B2B conversion rate, reducing the total operational expenses, while complying with AML policies and procedures.

Online ID Verification

Online ID Verification – A Solution to Tax Refund Fraud

An increase in identity theft and tax fraud have become a major concern these days. Criminals are stealing other people’s identities to get access to the benefits that do not belong to them. Governments are under a lot of pressure to eliminate these crimes. In 2019, a resident of St. Louis was sentenced to jail in a case of stolen identity fraud and claimed around $12 million in Tax refund fraud. To fight this issue, we present you with a real-time solution: online ID verification. With the help of an online ID verification service, identity thieves can say goodbye to stealing someone else’s tax refund. Here in this blog, we will discuss what tax refund fraud is and how online ID verification services can help at the government level to fight these crimes. 

Tax Refund Fraud

Identity theft occurs when an individual steals someone else’s personal information like their name, address, social security number, etc. to practice illegal activity. Tax refund fraud takes place when an individual uses somebody’s personal information to file for a tax return in their stead. By filing for a tax return under somebody else’s identity, criminals can gain access to their tax refunds. A tax refund is reimbursement of the overpaid money to the government while paying taxes. 

The first-ever recorded case of identity theft in tax return fraud occurred in 1988. According to Los Angeles Times, a man named Donald Penrod was the person to be charged for electronically filing false tax forms and receiving illegal refunds. 

The identity thief uses legitimate taxpayer’s identity. They can steal or forge their SSN or ID document and claim their refund early in the season. They usually file for tax refund early in the season so they can steal the refund before the victim files for their tax return. The e-filing for tax returns has made it easier for identity thieves to file for fraudulent tax refunds. Even due to the online systems, people’s personal information has become easier to obtain.

One of the ways these identity thieves use to gain somebody’s personal information is through phishing. Fraudsters can contact the potential victim through email or telephone and pretend to be from a government organization like the IRS. The victim will trust them and reveal their personal information to the criminals. Another common method of stealing someone’s personal information is employees gaining information about other employees through their company databases. They can use this information to steal their tax refund or sell it to fraudsters. 

increase in percenatage

The problem that comes with Tax refund fraud 

Tax refund fraud is a growing issue that cheats the government out of millions every year. U.S. treasury inspector general, J. Russell George, states that identity theft related to tax refund fraud is a “growing epidemic”. This is a problem that is rapidly increasing each year. Identity theft fraud is rated number one scam by the IRS. 

According to the U.S. IRS, a 2.2 million fraudulent tax return scam occurred in 2011. Out of which, $6.6 billion worth of tax fraud included identity theft. The department of treasury investigators have estimated that the IRS has paid around $5 billion to identity thieves in fraudulent tax returns in 2011, and around $21 billion in 2016. This shows that the issue is increasing over time. 

The government is not only facing the loss of billions of dollars due to identity theft in tax return fraud, this also affects the economy of a country and its annual national budget. A lot of budget is allotted to fight against the tax return fraud. In the USA, an estimated $5.2 billion annually is spent on fraudulent tax returns. Then there is an additional cost of $31.8 billion spent in screening for millions of tax returns. This issue is extremely unavoidable.

Along with the government, citizens have to face a lot of problems as well. Their identity is being misused in criminal activities. They are cheated out of their deserving tax refund and on top of that, they have to go through the hassle of verifying their identity to government organizations. According to Bill Smith, a managing director of CBIZ MHM’s National Tax office, it takes the IRS around 6 months to investigate and then return the fund to the identity theft victim. 

US tax authority IRS Identity Verification Service

identity thief

The Internal Revenue Service (IRS) is taking steps to eliminate tax return fraud activities. Although many believe that the IRS is not doing enough, the IRS has its own ID verification process.

In case the IRS suspects fraudulent activity or tax return is filed twice, they will mail a 5071C or 5747C figure to the address provided to alert the person for potential Identity theft. This letter then takes you to further steps to verify your identity. What you need to verify is, your identity is the tax return of the prior year and current year both, your SSN and DOB, account number, credit card, student loan, mortgages, loan info etc., a mobile number, copy of the letter sent by IRS. You will be asked questions only you know and you will be able to answer. If your identity is proven then you will be provided your refund, if not then further investigation will be held to catch the identity thief. 

It takes the IRS a long time to complete the verification process. The growing number of identity theft has made it hard for the IRS to catch and investigate all the criminals. This is why a more efficient and quick solution to this colossal problem is required.

Help of Online ID Verification  

Online ID verification solutions could help government organizations fight tax fraud. 

If in today’s world criminals are using technology to commit a crime, then the best way to fight these crimes would be to fight fire with fire. That means, use the technology to halt fraudulent and criminal activities. Artificially intelligent softwares working with human intelligence can be a great asset to the government. Introducing these ID verification services online can help the government to verify the identity of the fraudsters within seconds and the innocent citizens would not have to pay the price of losing their funds and time. 

With the help of online identity verification, the government can gain the confidence and trust of the citizen by quickly verifying and catching identity thieves. It can help the government catch many fraudsters and lower the crime rate. This can save the government a lot of money and time on screening identities. 

How the ID Verification Solution Works

An online ID verification solution ensures that customer businesses are not involved in identity theft. It is to ensure that the individuals are who they claim to be. There are a number of ways identity can be screened. Following is the list of few explained:

  • Face Verification

With face verification, the citizen will have to upload their selfie or through 3D liveness detection can show their face on a webcam. The face of the person will be matched with the picture provided on their ID document. This way the identity of the person will be verified before they file a tax refund. 

  • Document Verification 

Document authenticity can also be checked through this online Id verification service. A citizen would be required to send a picture of themselves along with their ID document to ensure that they are not using a stolen Identity card or SSN. The face of the person will be matched with the picture of their ID document. The authenticity of the document will also be checked to see that if the document is fake or not. 

  • Address Verification

In this, the identity of the person is verified through their address information. A person is required to submit their government-issued documents along with a secondary document that has their address on it. With the help of the address verification, the government can also ensure that the important mail contains sensitive information, payments, legal documents to reach on the right address. 

On-Premises Identity verification solution

On-Premises Identity verification solution can give all the access of the government only so the personal information of the citizens cannot be compromised. The service provider will not have access to the data of the citizens. They will only provide the software to the government and the database will be secured by  the government. 

To Sum it Up

This is an easy authentication solution that can verify the end-user within seconds. With the help of AI solutions, the government can verify the identity of all the citizens before giving them access to any kind of tax refund. Anybody’s identity can be verified no matter where they are in the world. With just these easy steps, not only the government but citizens can be saved from unnecessary stress, wastage of time, and money. 

Halloween and the spooky

Halloween and the Spooky Scams – How identity verification helps?

Halloween is just around the corner and so do the scammers ready to exploit the opportunity. Which possible tactics can fraudsters use? Which businesses are on target? 

This blog covers major Halloween scams and how industries can integrate identity verification services to secure their business.

October is a spooky month. The ghosts, zombies, and werewolves are scary but real-world monsters are even scarier. Scammers never take a break and during Halloween and holiday season they get even more active. The monsters are lurking in the shadows to scam individuals and businesses through spooky tricks on social media, eCommerce platforms and other digital channels. Identity verification solution is the need of the hour for businesses to combat these frauds.

6 scams to watch out this Halloween

The shipping scam

Every year around October, the internet is full of Halloween-themed stores and promotions. These online stores showcase quite attractive costumes, decorations, accessories and offer impressive promotions and discounts. But this is just a trap, not all the sites are authentic and most of the time the products uploaded on these stores don’t even exist. The retailers owning such sites will never deliver the ordered items.

Such stores, even if they exist, have no intention of shipping goods. Sometimes, the order is cancelled from the retailer’s side without any notification, or the delivery date is postponed for weeks until after Halloween. Moreover, some incidents have been reported in the past where the buyers received empty packages. All these tactics are of shipping scams. Though shipping scams exist all around the year, during Halloween, Black Friday and Christmas the number increases.


Shoppers need to be careful while purchasing items online. The best practice is to look out for the store’s phone number, physical address and their return policies just in case things go out of hands. Most importantly, be careful while giving your credit card information to online shop. Sometimes, these sites are just there to scrap out users’ credit card information. 

The information ghosts

Ghosts don’t only exist in movies and fairytales, the real-world information ghosts aka identity thieves are enough to give you sleepless nights. With events like Halloween approaching near, scammers gear up their phishing game to trick people into giving their personally identifiable information. The malicious activities of these bad guys are not limited to social media only, but every other digital platform is on the hit list of con-artists. 

Through various social engineering and phishing techniques, fraudsters fool people into providing their personal and financial information. With Halloween around the corner, one most commonly used tactic is discount coupons and gift vouchers. In order to avail these coupons, individuals are often lured into providing their information, which most of the people happily give in. This stolen information, later on, leads to account takeover frauds, card-not-present frauds and identity theft.

Fraudulent purchases and chargebacks

Among Halloween scams, fraudulent purchases top the list. Scammers use stolen credentials and credit card information to purchase products which result in fraudulent and false chargebacks claims. In such scenarios, the eCommerce site owners have to suffer the major loss. According to the chargeback report, against every one dollar fraud, merchant losses $2.40. Every year this cost increases.

Sometimes, even real customers claim chargebacks after receiving the product to enjoy free products. No matter whatever the case is, the business has to bear the loss. 

A ghost rising from the grave

Have you ever seen a ghost? You might not but banks and financial institutions do. Wondering how? Well in the form of deceased identity theft. According to the report, around 2.5 million deceased individuals become a victim of identity theft every year. Moreover, some studies claim that around 800,000 out of these victims are specifically targeted because they passed away. 

In most of the cases, the families of the deceased person neglect the need to check up on their credit report and dispose of their social media and bank accounts. Thanks to the publicly available information that it is easy for identity thieves to accomplish their goals. Due to this type of fraud, banks, insurance institutions and credit organisations have to suffer a lot. 

The fraudster may take out a loan using the identity of a deceased person and by the time banks figure out the fraud, they have already moved to their next target leaving no trace behind.

The bogus purchase scam

Bogus schemes have been rising for a few years now. In this type of bogus purchase scam, the fraudsters convince individuals that they have bought something which they did not buy. All this is done to get personal information from the customers. Once the customers are convinced to share their data and scammers get hold of information, they can do anything with it. From emptying your bank account and taking out loans in your name to committing heinous crimes using your identity, fraudsters can do anything.

Most of the time, these fraudsters try to imitate the employees of some well-known site so that individuals may find it authentic.

It all goes down to online businesses

With all these scams around the corner, no doubt individuals are badly affected. However, online businesses are the ones that are under continuous threat of digital frauds. Halloween is approaching near and eCommerce platforms and banking institutions are going to face a potential wave of identity frauds. Fraudsters are not going to miss any chance to fulfil their malicious intents. They will target individuals through Halloween-themed scams and businesses will have to suffer the major loss in the form of chargebacks and fraudulent loans and insurances.

Online identity verification to combat Halloween frauds

Frauds always occur because of the negligence and inefficient measures of the organisation in place. Identity theft, card-not-present fraud, chargeback frauds are the result of inefficient identity checks. The traditional verification and authentication checks are not enough to combat identity frauds since stealing credentials are very easy through various phishing and social engineering tactics. Businesses need an advanced solution to identify the fraudsters in the first place and authenticate users before allowing access to services and products.

In the case of chargebacks, the major issue is that e-commerce sites don’t authenticate users at the time of checkout, hence resulting in fraudulent purchases and chargebacks. With a biometric verification solution in place, online retailers can combat identity thieves, since only authorised customers can access the account and make purchases. Moreover, with biometric authentication at the time of checkout, retailers can ensure only real customer is making a purchase. With proof of verification, false and fraudulent chargeback claims can be deterred.

Apart from e-commerce sites, banks, financial institutions, insurance companies and other digital businesses can eliminate the risk of identity fraud including false loans, account takeover fraud, insurance frauds, identity theft, etc. in real-time by incorporating online identity verification solutions.

Learn how you can secure your business from identity frauds with Shufti Pro’s Global identity verification solution.

Why Do Freelancing Platforms Need KYC

Why Do Freelancing Platforms Need KYC?

Technological advancements came with several betterments for humans. Where every industry is benefitting from the advanced technology, the businesses are also making tremendous progress. With the introduction of freelance jobs, people can now work from home and earn a handsome income through contractual jobs. 

Freelance workers have a variety of jobs every day, and the benefits of working in this industry are more than what one could expect. In the United Kingdom, almost two million people are working in the gig economy, and the majority of them pursue it as their main source of income. The rest of them have it as a secondary job. However, freelance platforms are facing some serious issues while catering to the needs of employers and employees. Some of these major problems include verification of employers and employees and forged documents for identity verification. Freelancing platforms can employ Know Your Customer (KYC) verification to avoid all these issues.

Are you wondering about the connection between KYC and the gig economy? Here’s what you should know.    

What is KYC?

KYC means Know Your Customer, which is an efficient process of verifying your customers. Financial institutions and other businesses follow KYC to identify whether the applicants are authentic or not. Providing forged documents, edited images, and entering wrong information during verification are very common nowadays. Getting know your customer verification service can help you keep these issues away. 

How Does KYC Verification Work?

KYC is a regulatory obligation for all financial and non-financial firms. What is the process of this verification method? The freelance platforms are obliged to develop a verification process and fulfil the KYC requirements to identify all their customers. The fundamental process includes the following steps:

  1. Collection of information from customers 
  2. Collection of identity proof
  3. Verification of the provided information

Read more about the KYC process: KYC Verification Process – 3 Steps to KYC compliance

What Is the Gig Economy?

If you are a freelance employer or employee, or someone willing to enter the freelance industry, you must have heard the term ‘gig economy.’ What is the gig economy? As alien as it sounds, it simply refers to the freelance community. The number of freelance workers and recruiters is continually rising, which is significantly contributing to a large proportion of the economy. These individuals and recruiters are now characterized in the gig economy. 

The UK gig economy statistics show that the freelance labour market is booming, the size has doubled in the last three years, and currently, there are 4.7 million freelance workers. 

Why is KYC Demand in the Gig Economy Rising?

The increasing number of cybercrimes is making it a problem for companies to function effectively. Hence, the demand for a robust verification is essential. Here’s why KYC demand is rising in the gig economy.

4 million more freelancer

Getting the Right Customers Onboard 

None of the industries is free from scams, and the situation is no different for the gig or freelance workers. With rising scammers, it is getting difficult for the freelancing websites to get the right individuals on board. Many fraudsters use forged documents for verification, which results in identity theft, financial crimes, and many other issues. 

Know Your Customer verification makes it more convenient for these sites to get the right people on track. Otherwise, the freelance recruiter may cause problems, or the employee can be troublesome too. 

Avoiding Scams for Freelancers 

According to a survey, freelance workers can represent 80 percent of the workforce by 2030. Ensuring their safety is essential for freelancing platforms; therefore, KYC becomes vital. The number of scammers as freelance recruiters is rising, and usually, they are either unverified (which is visible on their profile). The budget of the jobs is exceptionally high, which compels most of the workers to bid and start working. However, they end up getting scammed with no money in their bank accounts. Onboarding thoroughly verified recruiters reduces the chances of scams targeted towards freelancers. Know Your Customer for freelancing platforms ensures that every hiring individual is authentic. 

Combating Employer Scams 

The majority of employers file complaints against freelancers regarding offsite payment of projects or prepayments. Freelancers also offer proprietary work, which is ethically unacceptable. How can a recruiter and a freelancing website stay safe from fraudsters like these? For the platforms, they must verify every worker through KYC. As for the recruiters, they should only hire workers with verified accounts and ask for legitimate samples of their work rather than copyrighted ones. 

Ensuring Financial Security 

Financial information is strictly confidential, and the majority of individuals avoid providing sensitive information. Sometimes workers and hiring authorities start with a remarkable profile, however, they can go off-track in no time. Moreover, it is easier for hiring bodies to post fake jobs to attract competent workers. Once the job is done, recruiters vanish into thin air leaving freelancers without any money. KYC verification can identify these fraudsters in the beginning and protect their platform as well as freelancers from the scams. 

Preventing Money Laundering Cases

Money laundering cases are on the edge of breaking records. The gig economy and all its service providers are not safe from money laundering threats as well. The free trade is now a new means of laundering money for traffickers. Recruiters, after successful completion of the job, ask freelancers to transfer some funds from one bank account to another. The freelancer becomes a third party making money laundering easier unintentionally. These individuals are known as money mules. 

Learn more about money mules: Jobs in the frame of money laundering.

Know Your Customer verification ensures that everybody on the platform is legitimate. Furthermore, it will help you monitor transactions effectively. This way, you can reduce money laundering cases from your platform in no time.  

Making Freelancing Platforms Credible 

Many employers and employees have trouble trusting an online platform for job purposes. Clients prefer sources that have robust verification processes, and adding KYC to your business means you are attracting more customers. It encourages recruiters to post more jobs, whereas employees are motivated to work. Both parties experience financial security, which generates positive word-of-mouth for the entire platform. In short, for everybody it’s a win-win scenario.

Improving Customer Experience 

All companies focus on improving client experience and so do the freelancing platforms. The traditional process of client verification is time-consuming and requires effort, and eliminating human error is crucial for better verification. Digitally verifying identities is a better way of onboarding customers. It only takes a few seconds to verify and the chances of errors diminish, making the entire process effortless yet credible. If freelancing platforms add digital identity verification systems, they can enhance customer experience through a time-effective and instant process. 

Summing It Up

KYC compliance is an effective method of securing all information and profiles on a freelancing platform. The emerging gig economy needs extra security to gain customer trust and loyalty. The era of digitization is not free from scams, and we at Shufti Pro are here to assist your business.  

Shufti Pro is PCI-DSS and GDPR compliant solution for your platform. We provide a hybrid service that combines Human and Artificial Intelligence for achieving 98.67 per cent accuracy. Furthermore, liveness and face detection enables you to know every client to the fullest. With accurate results in 30-60 seconds.

Have some questions? Get in touch with us.

KYC remediation to prevent money laundering

The Importance of KYC Remediation to Prevent Financial Crimes

If we talk about financial institutions including banks and their processes, one can freely argue that the financial sector is mandated to have certain processes set up in place specifically for impeding financial crimes including money laundering and terrorist financing otherwise collectively known as ML/TF. A currency business in Costa Rica was closed down across 17 countries because the company laundered an estimated $6 billion from various criminal activities. If you are familiar with KYC or Know your Customer, you would know that it is a key practice that can not be underestimated by the financial industry, as it ensures that their customers are not encompassing money-related crimes. 

KYC processes require the financial sector to maintain an in-depth understanding of its customers and any associated money laundering risks. As client information changes with the times, many financial organizations are still resting on outdated customer data. This is where KYC remediation comes in, it prevents the financial sector from drawing into money crimes, by regularly maintaining and updating client’s information. 

What is KYC Remediation?

Remediation means getting rid of inaccurate client data that financial institutions seem to have ignored for years, after which regulatory authorities increasingly became more concerned about rapidly evolving financial crimes. Swiftly, KYC became the topmost concern for financial institutions. Since then several regulations have been initiated including KYC remediation which needed organizations to remediate customer KYC profiles to comprehensively evaluate risks. 

Therefore, KYC remediation is the ongoing process of updating customer documents and information gathered through KYC to meet regulatory compliance. Non-compliance with regulations may pose risks of ML/TF which can lead to reputational damages.  It allows businesses to conduct a risk assessment and optimize customer KYC files that emphasize the risk elements linked to every client.  A thorough remediation procedure can drastically minimize the business risk along with giving companies a chance to understand their customers better. 

The KYC Remediation Process

The KYC remediation process varies from company to company and is complex but the most used remediation strategy is screening, verifying, and identifying customers. The regulatory landscape constantly changes, so does the customer profiles. Successful compliance depends on updated KYC data, making the whole remediation process time-consuming and costly. 

However, ‘know your customer’ remediation process can be achieved by opting for automated compliance products, and can also be carried out manually. But the main objective is to distinguish between the customer risk profiles from non-risk profiles, meaning which clients are more apparently inclined towards financial crimes from those who are not. So it’s crucial for companies to have sufficient client information purposely to prevent money launderers from entering into the legitimate financial system. Failure to comply with remediation can put your company, reputation, and revenues in jeopardy. 

Therefore, it is mandatory for the financial sector to follow the policies put in place by FATF (Financial action task force) to deter financial crimes. Whereas, KYC remediation facilitates the financial sector to execute the obligation. The process formally includes the following steps:

  • The first stage is based on the exhaustive collection of customer information, after which companies can initiate their remediation process.
  • Organization of all the collected data to identify potential gaps, and conflicting information.
  • After the remediation process is finished, financial institutions take a risk-based approach to smoothly recognize the level of risk each customer presents on money laundering, corruption, tax evasion, and terrorist financing. 
  • After extensive screening, Financial institutions report the potential suspects to relevant authorities. 

KYC remediation is considered a fundamental step for the financial industry to meet AML compliance. Because it enables companies to become completely known about their customers and the level of protection they need from financial criminals. 

The importance of KYC Remediation

The importance depends on how swift the process is. Manually gathering customer information, compiling profiles, and running audits take too much time and incur higher costs. According to a survey in 2016, financial institutions spent an estimated $60 million on KYC processes annually followed by $78 million in the USA, and $80 million in Germany, Hong Kong, and the UK. Additionally, the cost of KYC remediation is only expected to grow remarkably over the next four years. The reason why financial institutions are adopting a risk-based approach to remediate instead of optimising KYC files, alone.

The whole remediation process not only ensures that the KYC files are optimised but also mitigate any financial risks presented by customers. Thus, it is as important as the KYC for customer due diligence. It allows you to perform a risk assessment on an on-going basis instead of one time only. Also, the entire process makes you aware of who your customers are and what they are trying to achieve (say for example in the form of illegal transactions) after entering your financial system. Since 2009, banks have been charged with $30 billion in fines globally because they failed to report or identify the financial crime happening right within their systems. Not to mention the reputational costs for being involved in money laundering scandals.  The reason why on-going KYC remediation and AML regulations are excessively highlighted. 

Challenges in KYC files Remediation

The process of remediating files only are no longer needed because it is surrounding with ample challenges as given below:

Outdated processes: Company KYC remediation processes, technologies, and solutions have evolved over the years, but still, many businesses continue to use old and broken ways of doing things since recently. Risk assessment and due diligence policies were considered adequate when they were not. Which has led to many organizations carrying out more than one remediation project in order to fill the gaps. Subsequently, untrained staff led to the same outdated process with the same results. 

Weak onboarding procedures: Onboarding is an integral part of the KYC remediation process. During the early stages of onboarding, financial institutions are supposed to collect client data, and poor customer onboarding makes it complicated to gather every single piece of information about a customer which is very daunting. This is directly related to outdated and inadequate processes of gathering, maintaining, and updating data making the entire onboarding process inefficient and prone to errors.

Poor customer offboarding: A lot of financial institutions have not yet opted for a formal offboarding process, so the customers who were onboarded years ago are still sitting in their records, even without the existence of any business relationship whatsoever. Therefore, it makes cleaning up the old data unsettling because sometimes the data is sitting not on one but multiple systems leading to duplication, error, and disparity.

Meeting regulations: Most financial institutions are using AML software to combat money laundering activities within their system. But companies lack clarity on whether to inspect every piece of client data available under the remediation program or just associated risk areas. This ambiguity makes it difficult for companies to implement the practices for KYC remediation. Firms start to remediate everything due to the lack of direction and at times miss out on the high-risk profiles while focusing on low-risk issues.

But recently regulators have stressed more upon the risk-based approach. It involves a risk assessment of high-risk profiles based on which firms decide which files to prioritize and are remediated first, making the entire process easier. In addition to this, continuously changing compliance standards makes it very challenging for financial firms to implement changes in their processes. 

Key takeaways

Seamless customer onboarding is a top preference for businesses, however, having a weak onboarding process and customer due diligence can only make the process difficult and expensive. Global financial businesses can opt for digital identity verification solutions for KYC to meet AML compliance. Digital KYC makes customer onboarding smoother and error-free. Also as client risk status is regularly changing, so the companies are obliged to have remediation processes in place to obstruct financial crimes right away. 

Due to the rising cases of money laundering, regulatory authorities are putting more pressure on financial institutions to curb the crime. The AML regulations have been amended many times since the pandemic and will continue to do so, as financial criminals find more sophisticated ways to misuse services. Investing in digital identity verification solutions is the need of the time for effective KYC remediation and compliance. 

Shufti Pro is a leading identity verification solution for KYC and on-going AML. Regular AML monitoring of clients through Shufti Pro develops comprehensive high-risk profiles for fraud prevention. With Shufti Pro’s ongoing AML compliance services, companies can establish consistency with authentic background data checks while maintaining high-risk profiles at the same time. It performs global AML screening for accurate risk profiling and updated risk status based on high-security standards followed by additional identity assurance.

Identity verification in healthcare

How identity verification can help prevent Medical Identity Theft?

Digitization is reshaping the future of healthcare. With the healthcare industry, having more resources at their disposal, medical treatment is becoming more accessible to patients irrespective of the location. But this exponential growth has also given way to technical crises and predicaments one of which is Medical Identity Theft. Medical Identity Theft is becoming increasingly popular in this age of digitization. Identity thieves are targeting medical records without any hesitation and the number of cases continues to grow each day, affecting the healthcare sector on a much larger scale. Problems as such insist on innovative digital identity verification solutions. Speaking of which, in this day and age, many online systems are vulnerable to and defenseless against massive data breaches.

Let’s look into what Medical Identity Theft actually looks like, the damages it can cause if go unnoticed, and how to prevent it.

These breaches are not limited to the corporate world but the health care sector has been greatly impacted as well.

health insurance portability

Medical identity theft has always been there, which is pretty evident from the numbers given above, and can have more detrimental effects than the usual identity theft. Here fraudsters use the healthcare information of patients to get expensive medical services, and the aftermath is in the form of millions that can take eons to fix and settle.

What is Medical Identity Theft?

Medical identity theft is considered a healthcare fraud that transpires when someone steals medical and personal information of patients to get medical treatments or prescriptions. Not only this, but they can also use that information to make false claims to insurance providers to obtain medical reimbursements or fictitious medical services from government healthcare programs.

Medical identity theft may not be in the spotlight but it is a growing threat that can have some serious consequences on hospitals, insurance firms, victims and not to mention the considerable financial losses. All it needs for the crime to take place is the patient’s personally identifiable information and/ or personal health information such as your social security number, mailing address, name, medical record, prescription history, and other pieces of information that identify you as a specific individual.


What are some of the types of Medical Identity Theft?

Healthcare is expensive around the globe especially in the US  but it affects everyone equally as it strains the budget of individuals and taxpayers all the same. Healthcare costs continue to rise and account for almost 90% of the spending in the US alone. However, everyone has access to health insurance to cover the costs. 

Undergoing free medical care: Keeping in view the expensive medical services, now just imagine the damage online medical frauds can do to the community. Using a patient’s health insurance number, fraudsters can get free treatment from practitioners at a number of hospitals either undergoing major surgery or getting a prescription they don’t even qualify for or just making claims for the medical care they might not even need just for the sake of receiving reimbursements by fabricating medical records.

Healthcare industry and black market: Fraudsters can pose as patients and use insurance to get expensive medical equipment, only to sell the equipment on the black market. On the other hand, PHI is worth a great deal of money on the black market because it can be used to procure pharmaceuticals, pull off insurance frauds, or obtain government healthcare programs like Medicaid and Medicare.

stolen health blog

No access to health coverage: Patients can lose their health coverage due to these imposters. They can exhaust their health benefits (which were initially in place for the patients). As a result, it can put the patient’s health in jeopardy when they actually need medical attention in case of emergencies. 

The world’s privacy forum published the first-ever major report about the crime of medical identity theft in 2006 and its implications on patients as well as hospitals.

Insider threats: Surprisingly sometimes the perpetrators work within the healthcare sector. They are well aware of the insurance billing system enough to charge your bill for inflated claims to treatments you never received. 

Prescription drugs: Here thieves can use patient’s health insurance to obtain restricted or otherwise prescribed medications in order to feed into their addiction or for treatment. According to a Consumer Reports article, in 2006 a woman was allegedly arrested for buying 1,700 opioid painkiller pills on prescription. Someone stole her purse and her wallet according to the story. The charges were dissolved after she filed a report, still, it took her almost 7 years to clear her name.

Government Healthcare: False use of identity to get government health benefits which they otherwise don’t deserve. 

How Medical Identity theft can affect patients and businesses? 

The repercussions of Medical identity theft to consumers and businesses are acute. 

An estimated 1.4M Americans were victims of medical identity theft in 2009 which is the only 5% of reported incidents, according to experian. 

Whether its plain identity theft or medical identity theft specifically, it takes time to resolve. Oftentimes it can not be identified which makes it extremely dangerous. Other times victims don’t even realize that they were the victims of such a menace until after it’s too late. Which in return can leave negative footprints on not only patients but the healthcare industry as a whole. 

Negative Outcomes on Patients: 40% of customers say that they have no idea that their information is compromised until after they receive a medical bill for services they didn’t get or when they hear from a debt collector about a medical debt they were unaware of. Sometimes the victims have to pay for the damages out of their own pockets to make up for the losses. 

Negative Outcomes on Businesses: The impact of such a breach is as detrimental to businesses as it is to consumers. According to Ponemon Institute research, the average cost for a company to address a medical data breach is $211 per record. On top of that, the companies that fail to comply with the HITECH Act may have to pay $1.5M in fines.

Damages go beyond just financial losses and fines. It also ruins the industry relationships including trust and is damaging to the overall business reputation.

major healthcare blog

How Identity Verification can help prevent Medical Identity Theft?  

Medical identity theft is preventable. Therefore, some studies and practical implementations have shown how identity verification can solve this problem. To prevent healthcare data breaches and medical identity thefts, hospitals need to have adequate and digitized identity verification solutions in place that provide a comprehensive patient screening process, known as ‘Know your Patient or KYP’. This will reduce the risk of medical identity theft that is negatively impacting the revenue cycle of hospitals, patient privacy, customer experience and onboarding.

To prevent medical identity thefts by authenticating patients, healthcare institutions can use a biometric identification system. Opting for an online identity verification system during the early stages of patient onboarding has some really convincing advantages.

Healthcare fraud prevention: Online identity verification can seamlessly help with medical identity theft and healthcare fraud prevention as it uses ID document verification to identify and verify a patient. More so, a complete ID verification solution not only relies on document verification using OCR to fight insurance frauds but a mixture of facial recognition features through liveness detection, and consent verification to ensure that the patient is who he says he is and not impersonated by mere imposters. Moreover, as telehealth continues to develop gradually, ID verification and biometric authentication can effortlessly verify the identity of patients while providing services online. These processes are not only crucial for quick and safe patient onboarding but also improves consumer satisfaction. 

Healthcare Compliance: Fortunately, there are many healthcare regulations that basically lay the standards of data protection such as KYP/ AML compliance. HITECH and HIPAA compliance sets forth the policies and procedures to address online security in the healthcare industry. Failure to comply with these regulations may incur penalties on the industry. Patient screening through AML regulations can help healthcare institutions to run background checks on new patients against AML watchlists to ensure that the patients do qualify for the said treatment. Which can save them from future medical identity theft incidents and data breaches.

Swift user onboarding: In most cases, online identity verification is performed during patient onboarding, meaning when they create their online accounts on the hospital portal. This instantly captures its data in real-time for online verification in seconds to be able to efficiently deliver patient care.  Verification of government-issued ID document, or health insurance cards upon onboarding facilitates smoother processing of payments and/or insurance claims. 

Protecting a patient’s data: Online identity verification effectively protects the patient’s medical records by eliminating the risk of medical identity theft. Using strict security protocols such as anti-virus and malware alone isn’t enough. The healthcare sector needs a proper ID verification solution in place to ensure that the patient isn’t posing as an imposter. Hospitals can achieve this through enhanced KYC. 


Patient identification solutions can protect the healthcare sector from online frauds, possible data breaches, medical identity theft, and non-compliance penalties. Verifying age can provide prescription-only pharmaceuticals, document verification can prevent false insurance claims, facial recognition can catch identity theft and biometric authentication can help prevent unauthorized medical account access. The innovations in ID verification solutions are outstanding. This paradigm shift from manual paper-based solutions to automated online verification solutions continues to solve many problems for businesses around the globe. 

Trade Based Money Laundering and Terrorist Financing

Trade based money laundering – Challenges, detection and prevention

Back in 2006, Financial Action Task Force (FATF) emphasised on new measures and strategies for banks to combat money laundering and terrorist funding in its report on trade based money laundering. As per the report, FATF highlighted the fact that with new standards applied, other money laundering techniques are becoming more effective. And there’s a high possibility that trade based money laundering will grow more attractive. Moreover, very little attention is paid to combat the abuse of the international trade system currently.

Trade based money laundering has become a growing concern since the publishing of FATF report. According to the Global Financial Integrity analysis, from 2005-2014, the illicit cash flow to and from emerging and developing countries was 12-24% of their total trade. Not to forget the potential damage through the use of these funds, is more than a trillion-dollar problem. For years, regulatory authorities and international trade sector have worked together to address the rising issue. Authorities such as FATF, have issued various guidelines to assist banks in combating money laundering.

What is trade based money laundering (TBML)?

Trade based money laundering is the most sophisticated approach to make black money white by taking advantage of complex trading systems It generally involves importing and exporting goods and exploitation of cross-border trade finance. TBML is most prominent in the context where multiple parties and jurisdictions make customer due diligence (CDD) and AML screening more difficult.

Money laundering is the third-largest global industry after oil and currency, states the International Money Laundering Information Bureau (IMLIB). With the advancement in technology, criminals are becoming more sophisticated and trade based money laundering is one of the oldest yet refined forms of money laundering.

Why is Trade based money laundering done?

Crimes and money laundering are interrelated concepts that balance each other. Money laundering is done to hide and wash away dirty money generated through crimes. Individuals want to secure their illegal earnings by keeping them at lower tax jurisdiction and washing away the dirty money. Crime is not a crime unless it is proved and that’s how money laundering is done, i.e. presenting illicit money as the hard-earned money.

Money launderers use various channels and networks to bring their dirty money at a place where it’s hard to detect the source of money and trace the transactions. Moreover, these channels are adopted to ensure personal security, lower or no tax, and political stability. The leaked Panama papers highlighted different aspects that how rich and powerful people are hiding their wealth. Secondly, how companies helped their clients to dodge sanctions, launder money and evade taxes. Most of the illicit money comes from various trade based money laundering schemes.

Some recent statistics show that the illegal cash flow from Bangladeshi nationals is growing. It is because the major portion of Bangladesh’s export earnings comes from RMG export. And in order to execute RMG export order, million-dollar Back-to-back Letter of Credit (BBLC) are issued every day against export contacts and letter of credit. That’s where trade based money laundering risks arise because it makes money laundering easier than other foreign trade operations.

Three stages of trade based money laundering

Trade based money laundering, like money laundering, usually occurs in three stages. The flow goes like

  • Placement: At the placement stage, the criminal transforms the illicit proceeds into some legally transferable assets; for instance, purchasing goods.
  • Layering: At the layering state criminal attempts to hide the relationship between their proceedings and criminal source, for example, trading goods cross-border.
  • Integration: Lastly, at the integration stage the offender re-introduces the illegally laundered money into the legitimate economy, for instance, reselling the purchased goods.
Stages of Money laundering

Non-documentary trades – The biggest challenge

Trade based money laundering is often hard to detect because of its nature. One of the biggest challenges that make it difficult for compliance officials to identity TBML is non-documentary trade. In a non-documentary transaction, banks get limited access to information depending upon the transaction structure and the institution’s policy. For instance, the bank may only have the name, address, and account number of the seller, and buyer’s name and account number.

In such scenarios, the trade occurs without any human intervention like a wire transfer. Banks cannot identify the underlying trade flows for international transactions in a non-documentary trade. Even in a wire transfer, very little information is available that does not suffice for the bank’s validation system. Banks only intervene if the transaction instructions are unclear or a sanction stops the transaction itself for further review.

Banks must understand their customers and their businesses using a comprehensive due-diligence assessment that may include the volume and the type of goods or services. Customer profiles can help banks to validate the flow of transactions and ensure their authenticity.

Trade based money laundering schemes

With the evolution of AML controls globally, criminals are exploiting new ways to hide their dirty money. Trade based money laundering is one of the ways to deceive regulatory authorities and move illicit funds cross-border without getting detected. Even in TBML, criminals adopt multiple schemes which include:

  • Over or under-invoicing: It involves misinterpreting the price of goods sending either inflated or deflated invoices to the importer. In the case of over-invoicing, the exporter receives a greater value from the importer. Whereas, in the case of under-invoicing, the greater value is transferred to the importer.
  • Multiple invoicing: It means invoicing one shipment several times. When exporter invoices multiple times for the same shipment, they receive greater values from the importer.
  • Short or over shipping: This scheme involves shipping more or fewer goods than invoiced. In case of short shipping, the exporter ships fewer goods than the previously agreed contract, therefore, receiving greater value. Alternatively in over-shipping importer receive more goods, hence more worth.
  • Obfuscation: It involves shipping something other than what is invoiced. For instance, exporter misinterprets on official invoice/documentation claiming the goods are of premium quality hence receiving greater value from the importer.
  • Phantom shipping: In this type, the exporter ships nothing at all with false invoices and receives payment from the importer.

Scope of trade finance

Banks and financial institutions are under the continuous scrutiny of regulatory authorities because of the nature of operations. Trade finance is emerging as a significant concern for anti-money laundering (AML) enforcement authorities and compliance officers. It is difficult to detect and combat abuses within trade finance processes. Within the scope of trade finance, financial institutions provide various services that are resulting in trade based money laundering risks. These services include, but not limited to:

  • Banks guarantees and document collections
  • Loan services (import/export, packing, pre-shipment loans etc.)
  • Financing under open account transactions
  • Trust receipts and letters of credit (L/C)
  • Structured trade financing
  • Warehouse financing
  • Import/export invoice discounting

In order to identify red flags and combat money laundering, officials need to take a fresh look at these channels to derive risk factors.

FATF report – Red flag indicators

The financial action task force has issued multiple guidelines for the banks and other sectors to combat money laundering. In its recent trade based money laundering paper, FATF presented the list of red-flag indicators for the bank trade finance departments. Detecting these red flags, banks can deter TBML activities.

These red-flag indicators include:

  • Significant disparities between the descriptions of the commodity on shipment bill and the invoice.
  • A notable difference between the value of goods or commodity reported on invoices and the market value of the item. For example, exporting gold
  • jewellery at $500/ounce when the market price is $950/ounce.
  • The goods being shipped are not in line with the exporter’s or importer’s regular business activities. For instance, cloth manufacturer exporting gold jewellery is suspicious.
  • Inconsistent shipment size according to the exporter’s or importer’s regular business scale and activities. For example, a small toy exporter shipping a consignment worth $50 million when the normal business turnover is $10 million only.
  • The transaction involving cash payments or receipts from third-parties that have no direct link with the transactions. Such transactions usually involve the use of shell companies.
  • The commodity is shipped through one or more jurisdictions or subsidiaries that are not connected without any valid economic reason.

It all comes down to Know your client

Analysing various trade based money laundering schemes and the red-flag indicators issued by FATF, it all comes down to one major thing, i.e. Know your customer or know your client (KYC) to combat money laundering. An effective AML compliance program makes it obligatory for banks and financial institutions to cross-link the know your client data and regular business alerts.

In trade based money laundering, the involvement of shell companies is often witnessed. For banks and financial institutions, it is important to know the business (KYB) and ultimate business owners (UBOs) to detect shell companies and any other business entities having money laundering risks associated with them.

RegTech The Case for Financial Inclusion

RegTech: The Case for Financial Inclusion

The FinTech industry has grown tremendously in recent years, introducing both scale and efficiency in new banking technologies. According to Statista, at an annual growth rate of 18%, the global transaction value in FinTech is expected to grow to $8 trillion by 2022. But according to research by Thomson Reuters, the financial industry spends at least a day, weekly, to track regulatory shifts which can be increasingly time-consuming and costly. So as the fintech and compliance costs continue to grow, RegTech seems to be getting global attention from the financial sector, as well. 

Traditional financial service providers (banks, insurance, transactions, and payment services, mobile wallet payments) have no option but to catch up with changing tides, in order to survive the technology revolution. From cutting costs to providing seamless transaction experiences, FinTech and RegTech both have changed the way individuals and businesses manage money. 

The world has witnessed more transparency in banking, and, financial transactions are thriving with the use of disruptive technologies such as AI, machine learning, and blockchain. Fueled by the advent of the internet, FinTech has now grown to taller heights with mobile payments and online banking. 

Reaching the Unbanked

One of the marked success of this digital wave is how it has led to increased access for previously unbanked populations, largely due to mass outreach of mobiles and the internet. Now, mobile phones are making it possible for more and more people to enter the global financial system, albeit with limited access to services such as mobile payments and transfers. 

The mobile money market is witnessing a revolutionary transformation fueled largely by:

  1. Growing focus on customer experience
  2. Diversified financial services structure
  3. Evolving regulatory landscape
  4. Expanding mobile money services

Mobile money accounts, as well as text and app-based financial accounts, are providing financial coverage to growing global populations. A small but rising percentage is also taking advantage of smartphone technology around the world. However, this is subject to the availability of adequate underlying infrastructure such as power supply. The challenge is greater in developing countries where only 40% of adults have access to both the internet and mobile phones, as opposed to 82% in high-income economies. 

Online Security and meeting global compliance is still a topmost priority for customers and businesses alike. For this reason, digital banks are also focusing on RegTech in banking solutions for building long-term trust in the market.

How RegTech and FinTech are related

A large customer base is currently left unserved in the financial services industry due to a lack of the right infrastructure. As the FinTech revolution continues to benefit the economy and break into new markets, it promises to close gaps in financial inclusion. However, this comes with high risks of exploitation that need to be managed. 

Currently, 1.7 billion people in the world are unbanked, down from 2 billion in 2014. This is one of the most challenging pain points for financial service providers. FinTech is changing this, and RegTech can accelerate the process.


How RegTech is Relevant to FinTech


RegTech startups are experiencing growth and investment at almost the same rate as the FinTech industry. Firms are realising the need to capitalize on compliance efficiency and use it for a competitive edge in the industry. There is great potential for powering the future of financial regulation by integrating technologies into supervisory systems used by banks.

RegTech has major implications for financial institutions in the form of reduced regulatory costs and improved operational efficiency. With far-reaching benefits for the economy, RegTech in banking is also aspiring to drive growth and profitability by better regulatory reporting and risk management, as well as transaction monitoring. 

This is especially relevant for emerging markets, where a notable percentage of the population can experience compounded benefits from access to services like micro-credit and remittances. The effective use of RegTech in banking strikes a balance between access to credit and credit security. 

With machine learning, artificial intelligence, and e-KYC (Know-Your-Customer) verification methods, the gains are far-reaching. Fraud mitigation and reduced compliance costs make it possible for FinTech to include more financially excluded population segments. Automated KYC processes through RegTech ensure that foolproof methods for legal use of financial services can be made effective. Using API code, RegTech can also simplify complex regulations that optimise compliance costs of time and labor. 

Both financial institutions and regulatory authorities see added value in the adoption of RegTech for better compliance and service delivery. APIs for data collection and reporting have also shown a marked improvement in customer engagement, as well as compliance. 

RegTech solutions and AML compliance

RegTech solutions are increasingly used by financial institutions to comply with the regulation of anti-money laundering and the evolution of other financial crimes. There is no denying the fact that eliminating the crimes of money laundering has been one of the biggest challenges for financial institutions over the years when new and improved methods of money laundering are on the rise. But regulatory technology (regtech) is helping financial institutions to eliminate financial crimes through regular AML checks, set into motion by regulatory authorities. 

Regtech solutions for AML compliance offer a cost-saving solution to the financial sector for real-time identity verification, crime monitoring, and reporting. It not only improves the efficiency of the entire system but also reduces operational costs altogether. 

With the use of intelligent technologies, RegTech in banking is a frictionless solution that can reduce time by easily screening people against vast databases. The regulatory landscape is subjected to regular change, this evolution of regulatory trends affect the business operations directly. That’s why RegTech solutions and AML compliance is the need of the hour. 

Service offerings by RegTech

Driven largely by business demand and technology innovation, there are five main service offerings by RegTech :

  1. Regulatory reporting
  2. Risk management
  3. Identity management and control
  4. Compliance
  5. Transaction monitoring

Challenges in Financial Service Delivery 

As financial services become more digitized and pervasive, regulatory systems need to adopt more forward-thinking ways of digital transformation. 

The foremost challenge in providing digital financial services to previously unserved populations is risk management. In most cases, financial authorities are still learning their way into the digital revolution. If vast amounts of data are collected without apt use of APIs, serious data security concerns could arise. This could undermine the regtech revolution and make the onboarding process more complex for new entrants.  

Supporting infrastructure in the form of digital databases is also absent in most cases. While there is a steep demand for mobile money accounts, some key services such as government payments (pensions, wages, social benefits) are still paid in cash. This reinforces financial exclusion for large segments of the population who could otherwise benefit from services such as mobile payments. 

Additionally, stringent identity verification requirements, such as those in KYC, get in the way of digital relevancy. National identity document verifications are sometimes not enough to ensure that people from remote areas can open an account and other local documents are required for account opening. This opens up a range of opportunities for the RegTech industry to influence financial service delivery, and in turn financial inclusion. 

RegTech Solutions: Closing Delivery Gaps

Across the globe, traditional financial systems are increasingly embracing technological advancements and committing to streamlining regulatory networks. Regulatory sandboxes and ‘reg labs’ are now being facilitated for innovation, to cater largely to the spike in RegTech solutions and AML compliance in both developed and developing countries. 

Sandboxes are controlled spaces for tech firms to test out new technologies under the regulator’s supervision. In addition to offering room for innovation, RegTech sandboxes can also be used as effective feedback and communication channels between FinTechs, regulators, and RegTech solution providers. For financial inclusion, this means balancing innovation and risk to reach underserved customers. 

Improving access to mobile money markets also depends a great deal on the efficient implementation of KYC regulations. In areas where access to financial services is a challenge, fulfilling tedious document verification requirements can be a cumbersome task. This stands in the way of scaling mobile money networks, hence hurting financial inclusion. 

This is where RegTech plays a central role. By simplifying customer onboarding processes, through efficient use of AI and HI, the mobile money industry can get a real push. The use of innovative e-KYC technologies such as biometric authentication and digital ID systems can make the process more efficient. 

With tangible results in the form of financial stability and customer engagement, investment in better regulation technology is being recognised as key to an efficient financial system. A sound regulatory environment, with regtech applications that support risk management, will ensure that economies reap maximum value from the FinTech revolution.

Shuftipro vendor due diligence importance

Vendor due diligence – Why it’s important and how it’s done?

In today’s ever-changing corporate landscape, businesses are always looking for ways to make their operations as functional as possible for acquiring profits and success altogether. Outsourcing third party vendors to carry out certain tasks is a growing trend across the globe. Apart from saving time, it saves costs too. But as businesses grow, the need for employing third-party operations arises and so do the risks. Therefore, such risks are making companies more vigilant in analyzing and detecting associated threats to safeguard their businesses, clients, consumers, and company sensitive data at all costs. This is where the enhanced vendor due diligence process comes in.

Vendor due diligence is usually conducted on the request of the buyers to inquire about the financial prospects, stability, and processes of the company they are attempting to buy. A comprehensive report is developed by the third-party networks and presented to potential buyers and/or investors. But in some cases, it takes place on the request of the seller to address any concerns as well.

Thorough screening helps to eliminate vendor fraud surrounding vendors before the acquisition. Moreover, the vendor due diligence process is considered a crucial part of AML as it indicates that the company you are entering in business with is ethical and compliance risk-free. This helps companies to avoid any financial and reputational harm in the future. So it is beneficial for buyers and sellers both to perform a thorough vendor due diligence process before selling and buying so that financial issues can be rectified before the business is concluded.

Vendor due diligence and AML compliance

Global businesses are always subjected to financial, reputational, and regulatory risks. This is why various regulations including AML (Anti-money laundering) are in place to mitigate partner risks. Companies attract in-depth regulatory scrutiny especially when third parties are involved regardless of the location. Both third parties or companies are legally bound to go through a rigorous vetting process including screening against global sanctions in order to determine the significant risks entities can pose. The SEC claims that Mozido’s founder Michael Liberty had defrauded 200 investors, raising $55M in fundings, in 2018.

Buyers should pay attention to AML obligations before making a purchase because no one wants to be related to a company that is subjected to money laundering in the past.

ShuftiPro uncover potential corruption and money laundering activities

Why is vendor due diligence important?

The entire business ecosystem is rapidly expanding across borders. Interestingly, corporate partnerships and friendly alliances are in the spotlight. That’s why it is vital to know the vendor you are toiling with is in good standings. Thus, making vendor due diligence a robust solution for successful vendor onboarding and risk assessment. Theranos – a blood-testing startup managed to raise more than $700M for a bogus blood testing technology that didn’t even exist. In the wake of technological disruptions and financial crimes around the world, conducting an extensive due diligence process is worth it.

  • Increases prospective buyer’s trust, and confidence which as a result intensifies the possibility of a successful acquisition
  • It makes the whole structure and processes of the business in question more transparent
  • Allows the seller to identify any risk pertaining to the company’s assets beforehand
  • Discovering issues at the initial stages speeds up the entire negotiation process
  • An in-depth due diligence report lessens the legal and financial questions from the buyer’s end
  • Vendor due diligence enables competitive selling price and increases the financial value
  • Potential buyers can save costs otherwise spent on their own investigations

Vendor due diligence process

A comprehensive vendor due diligence process includes the following stages:

Step 1: In the initial stage, the vendor connects with a third party network to conduct due diligence on their account. This happens before the target company’s assets are offered for purchase. The third-party should be unbiased and officially trained to perform the audit.

Step 2: After the audit, the third party is expected to develop and present a draft of the vendor due diligence reports (VDDR). The VDDR is sent to all the relevant parties involved for review. After which sellers permit buyers to conduct their own due diligence.

Step 3: Depending upon the intricate nature of the sale, both parties lead the stages of sale negotiations.

Step 4: After the partnership is concluded, the third party sends the final and complete VDDR to the buyers.

Vendor due diligence Checklist

Basic company information: The first step in the vendor due diligence checklist is gathering the company-specific information. It assures the potential buyer that the target company is legal to operate in its area. Basic target company information can include and is not limited to:

  • Geo-location
  • Incorporation documents
  • Tax number
  • Legal status such as risk-free
  • Key stakeholders and beneficiaries
  • Company structure
  • Reliable references
  • Business license

Financial information: Checking financial information is one of the most important items for potential buyers to check off the list. It gives buyers a holistic view of the vendor’s financial footing and whether the sellers are financially solvent and paying the taxes or not. If the vendor is not paying the taxes then there are no practical reasons to acquire a company that will run out of business the second it is sold.
The financial information can be fetched by analysing:

  • Tax documents
  • Balance sheets
  • Loans
  • Major assets and/ or liabilities
  • Compensation structure

Political and reputational risk: It’s not just about vendors but also whom vendors would choose as their third party link for due diligence. For example: choosing an audit firm whose general manager himself is involved in frauds is bad. That’s why evaluating reputational risk is critical, for buyers and for sellers alike.
As mentioned above, financial crimes such as money laundering and corruption can be dangerous, an added level of scrutiny for target companies is stressed upon. In other news, Rothenberg Ventures, known for investing in Elon Musk’s SpaceX, used investor money to fund his extravagant lifestyle.

Political and reputational risks can be analysed through the following ways:

  • Checking the target company against global watch lists, sanctions, and watchlists
  • Screening key stakeholders against politically exposed persons (PEP) lists
  • Reports from government agencies
  • Litigation history of company and employees, if any
  • Adverse media news and scandals

Online security risk: Online frauds and data breaches are becoming quite popular across industries. Thoroughly assessing the cybersecurity policies of vendors can do the trick. Identifying risks encompassing online security can help potential buyers make informed decisions.

  • Online security policies
  • Compliances such as ISO 270001
  • Penetration testing
  • History of data breaches and online frauds

Operational risks: Exposure to operational risks such as frauds, litigation, system failure, etc. can have disagreeable consequences on businesses. Therefore assessing operational risks is an important part of a vendor due diligence checklist.

  • Disaster management plans
  • Business continuity plans
  • Code of conduct handbooks
  • Employee lawsuits and turnover rates

How Shufti Pro facilitates Vendor Due Diligence?

To follow rapidly changing policies and technology can be challenging. There can be a number of factors that can hinder vendor identification processes such as budget limitations, time, availability of data, etc. Shufti pro’s know your business solution facilities companies with acute vendor due diligence. Its KYB provides a corporate solution to check the authenticity of businesses. It offers various parameters against which target businesses are verified irrespective of the location. It identifies the rightful owners, geographical location, and company registration number to validate the legitimacy of businesses.

From the company name to the date of incorporation, all the information can be accessed from Global Commercial Registers using APIs. Along with this, Shufti Pro’s KYB solution provides a comprehensive approach to global risk mitigation. Verification of the business, owner, and key stakeholders can be performed against sanction lists, PEP, and adverse Media news to meet AML compliance.

With that being said, manual business verification can take days and is prone to errors and can be costly. Also, procuring the identities of owners can be tiresome. Therefore, choosing a digital KYB system not only ensures compliance but automates the entire verification process.

Ready to streamline your Vendor Due

Shufti Pro’s KYB process

Business Search: This gives the background data of the target company for vendor due diligence such as a registered address, current status, company type, UBOs, previous name, trademark registration.

Business Filings: Potential buyers can find all the financial information. They can access financial statements, sources, and links to downloadable reports and shareholder lists.

Business Statement: The business environment is always evolving so in order to stay ahead of the curve, you can access the updated follow-up information through business statements.

Business Networks: It provides a detailed insight into corporate structures including parent entities and associated subsidiaries.

Key Takeaways

Vendor due diligence ensures that the target companies are compliant and risk-free. Shufti Pro is equipped with AI-based technology to facilitate companies with vendor due diligence processes across industries. This not only helps potential buyers develop a better understanding of their vendors but also make them aware of potential risks. Suspicious activities can be easily identified using AML screening and all the data imparts whether a vendor should be pursued or not. It is necessary to check target companies throughout the process to prevent entailing risks.

kyc video

Video KYC – Ultimate Solution for Financial Institutions

With social distancing becoming the necessity during the pandemic, more and more companies began to onboard customers and perform customer verifications through digital means, and it is believed that this trend will continue long after. Now as the world recovers from COVID-19 blow, this acceleration towards digital adoption is expected to further increase in the banking and financial sector, with the introduction of video-based KYC method.

The financial sector businesses are bringing exciting new digital services for their customers. With the introduction of these services, the need for online identity verification increases as well, that can be well met by integrating the systems with an advanced verification system such as video-KYC.

In Video KYC, a KYC expert or representative of the financial institution authenticates the identity of a customer. He/She also verifies the documents presented during the live video call. During the video call, a customer is required to display their government-issued identity documents to the company’s official after verifying his credentials. Significant financial and other mobile wallet companies have started setting up infrastructure for this new verification system. 

Who performs video KYC with customers?

In video KYC, the customers are connected with a trained KYC expert, who conducts the interview and asks them to verify their identity by showing a government-issued identity document as proof of identity. During the process, the KYC expert asks questions from the customer and observes their behaviour and body language as well to ensure that the person in front of the camera is not an impersonator.

Read more: Video KYC – Understanding the ‘what’ and ‘how’ [A short guide]

General guidelines for Video KYC

Companies have to follow certain guidelines while employing a video identification process for customer verification.

  • Record video and capture live photo of the customer
  • Capture image of the identity document
  • Match the photo of the customer with the one on the identity document
  • Match details on ID file with that on the form
  • Use the latest AI and Face recognition technology
  • Recorded video to be saved securely with date/time stamp
  • Identification and liveness of customer beyond doubt

Advantages of implementing video KYC system

Using video-based customer identification method has various benefits for organizations;

Effective fraud prevention

Effective fraud prevention is one of the most significant benefits that video KYC offers. With live video interviews and the use of AI and facial recognition, companies can reduce identity fraud cases and secure their operations significantly. 

Ian Kane, COO and founder of TERNIO, believes that Video KYC offers more security as compared to other verification methods. “Video would be more secure than photo-based ID checks. It’s much harder to fake a video, especially if the user has to meet certain criteria like holding a piece of paper or saying a certain phrase. I think ultimately, it gives all compliance teams more confidence that a user is who he/she says they are”.

Prevent money laundering

Onboarding legitimate customers will also protect your business from money launderers. With video KYC interviews, thorough background checks can be performed on your clients to ensure they are not present in any sanctions or watch lists. So video KYC can prove to be a handy tool in the fight against money laundering as described by Victor Fredung, CEO of Shufti Pro.

Victor believes that, “Video KYC is a robust safety measure, an additional layer of security to safeguard onboarding processes and to curb financial crimes, especially money laundering. A blend of video KYC and other AI-based verification solutions can prove to be an unbreakable risk cover for banks and businesses.”

Reduced paperwork

With the complete verification process being performed digitally, the companies can say goodbye to the hefty paperwork, and long manual processes.

Eliminate human errors

With the help of advanced technologies like artificial intelligence and liveness detection, the possibility of human errors is substantially reduced.  

Drop-off reduction

With a quick and smooth customer verification process, video KYC helps in reducing the drop-offs, which they normally have to face with the traditional authentication methods.

Enhanced customer experience

KYC through video call eliminates the major struggle of the verification process including the drop-offs that occur at multiple steps of the physical verification process. Slow onboarding process can frustrate new customers, who then abandon the onboarding process, as evident from the stats below.


These statistics show why quick online verification tools are the need of the hour. With video KYC solution customers can easily verify their identity by displaying the identity documents to the camera and answering a few relevant questions asked by the KYC expert taking the interview. After the collection of the user-provided information, he or she will be verified.

Faster identity verification

Customer authentications through video KYC method replace the physical visits of the customers for verification. Hence by remote verifications, the process gets completed faster without any delays.

Video KYC solution by Shufti Pro

Shufti Pro’s video KYC solution enables a swift and secure identity verification process for your customers. Both banking and financial institutions can acquire video KYC service from Shufti Pro and onboard customers without any delay. Shufti’s video KYC solution utilizes facial recognition and liveness detection for effective customer face authentication and to ensure the live presence of customers during the interview.

Furthermore, Shufti Pro’s document verification solution helps to authenticate the validity of the identity card in real-time, and the entire verification process is completed in minutes. 

Three solutions for you to choose from

Shufti Pro offers three video KYC plans to banks and financial institutions from which they can select the plan best suited for their business needs. Companies can choose;

  • The nationality of their customers and the language for verification method for customized experience.
  • Their own KYC experts for the verification process. 
  • Automated AI-based option to perform verification without hiring KYC experts


Performing identity verification while onboarding customers is a requirement every bank and financial institution has to fulfil. With the development of new digital services that are being offered to the customers, these institutions must employ digitally advanced verification solutions to overcome the growing risk of frauds and money laundering. Here Shufti Pro can help them keep their operations secure and their customers happy. Our video KYC solution offers enhanced security with a quick verification system compatible with their onboarding operations.

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Video Kyc

Video KYC – Understanding the ‘what’ and ‘how’ [A short guide]

KYC is an integral part of the customer onboarding process and it has evolved with time. Do you know video identification is now the latest way to carry out the KYC process in real-time?

This blog post covers the basic information about Video KYC, including the process and use cases. Here’s the summary of the blog:

The year 2020 has brought some major shifts in the business world, digitisation being the significant change. With COVID-19 situation in question, organisations have actively shifted their operations online to capture the consumer market and reap the benefits. Among all the industries, banks and financial institutions are the ones to take a major leap in their customer onboarding process.

While consumers go digital, enterprises face a major challenge to strike the balance between security and customer experience. Which method to adopt to successfully comply with KYC/ AML regulations and provide the user with enhanced experience? Video KYC is one such solution that not only offers real-time customer onboarding but also caters to changing regulatory landscape.

How Video KYC is different from traditional KYC?

Know your customer (KYC) is generally defined as the process to confirm the identity of the customer and identify any possible associated risk with the customer. To comply with KYC/AML regulations is obligatory for banks, financial institutions and every other business dealing with money. Traditionally organisations have manual customer identification program (CIP) in place to verify customer identity at the time of onboarding. This process could take up to weeks, enforcing customers to abandon the process in the middle.

Exploer Video Kyc

Video customer identification process is the digital version of the traditional KYC process, just more secure, quick and cost-effective. Video KYC eliminates the paperwork streamlining the whole verification process with real-time results. Customers don’t need to physically visit the company and submit their identity documents to open their accounts. From registration to onboarding everything is done remotely.

Video Kyc

The growing need for video verification

Video identification is the trending phenomenon nowadays and calling it the force behind the changing identity verification industry won’t be an overstatement. Apart from making the verification process time and cost-effective, the growing identity frauds are driving the need for a secure verification process in the form of video verification. Security is one of the key concerns of industries in this digital era and Video KYC solution is quite efficient to combat fraudster’s sophisticated tricks.

Video-based customer identification serves as a shield against various identity frauds that include:

Spoof attacks

With the advent in technology, fraudsters are becoming more sophisticated in carrying out frauds to fulfil their malicious intents in the form of spoof attacks. Using AI tools and technologies, imposters are tricking and surpassing verification systems with fake or stolen identities. This type of document and facial spoof attacks are hard to detect and is not recommended to rely on the system’s decision only. Video KYC incorporates both human and artificial intelligence to detect spoof attacks in real-time.

Synthetic identities

Synthetic identity theft is one of the most difficult fraud to detect because of its nature. What fraudsters do is they combine real pieces of information, for instance, social security numbers (SSN), with fake information to create real-looking identity. Such identity is hard to detect at initial stages of fraud but with video verification services synthetics identities can be detected easily, hence preventing potential
synthetic identity fraud.

Deep fakes

Deep fakes are generally known as the falsified videos made using deep learning technology. They are made to fool the system and gain unauthorised access to the system. For instance, using deepfakes in face verifications systems, fraudsters can surpass the identity checks. Such videos are really close to real videos and not detected easily driving the need for more secure Video KYC solution.

Read more: Video-KYC – The ‘New Normal’ for Digital Customer Verification

How video KYC works?

Video KYC is similar to traditional KYC that confirms refers to face-to-face video call as a channel for conducting the KYC verification process. This process requires users to confirm their identities through valid ID document proofs during the video call. Instead of relying on various channels to complete the KYC process, video-CIP allows omnichannel customer engagement where face verification and document verification is conducted while staying on the video call.

Video Kyc

Which industries can benefit from Video KYC?

There has been a significant shift in consumer behaviour due to trending digitisation. Industries are looking for better online solutions to meet changing consumer demands and survive this digital era. Video KYC solution is one of the technologies that will soon be integrated into various sectors, in fact, some industries have already started incorporating video identification for customer onboarding.
Following industries can benefit from AI-powered video KYC solution.

Banks and financial institutions

Banks and financial institutions have always been under the tight scrutiny of regulatory authorities. With stringent KYC and AML regulations in place, customer verification during the onboarding process is mandatory for all financial institutions. Manual verification is no longer an option, digital onboarding is what every bank needs. Video KYC can prove to be an effective way to verify customers in real-time and comply with KYC/AML requirements.


Payment industry

With payment industry collaborating with other industry players, the need to put proper due diligence checks is greater than ever to prevent payment frauds and combat money launderers. Also, after the introduction of AMLD5, payment industry now falls under the obliged entities to mandate the KYC process. The minimum threshold of prepaid cards has lowered from 250 to 150 euros. Payment industry can secure payments from fraudsters and prevent money laundering through video identification.

Insurance providers

Insurance companies are one of the sectors where fraud is done on a large scale. Through fake documentation and stolen identities, fraudsters are exploiting insurance industries to fulfil their malicious intent. Not only business owners but the victims are also deprived of their rights due to such heinous crimes. With video verification in place, insurance providers can ensure that only authorised and real customers are taking their services.

Remote companies

Amid COVID-19 pandemic, remote jobs and work from home are trending resulting in ghost employee frauds and other cybersecurity threats. Fraudsters and cybercriminals are taking advantage of the situation and getting unauthorised access to enterprise’ critical information and assets. Using Video KYC solution, companies can ensure that only real employees are being hired. Moreover, with ID verification, only authorised employees can access company profiles.

Checklist for best Video KYC solution

How to ensure your selected Video KYC solution is the best? Before taking the service, it is essential to do your homework regarding the features and functionalities of the solution. Only then you can assure that your selected solution is beneficial for your business. Here’s the checklist for best video KYC solution.

1. Global coverage

Due to digitisation, your customers can be from any part of the world. It is vital to opt for a solution that offers global coverage with proper language and document support.

2. Cost-effective

An effective Video identification solution is the one that allows reducing your KYC process costs without affecting the customer experience. For every business, pay as you go pricing feature is the best option.

3. Customised solution

It’s an understood fact that every business has different KPIs and business requirements. The video verification solution has different features to offer and not every enterprise needs all those features. The best solution provider is the one that presents a customised solution as per business needs.

4. Enterprise-grade security

Video KYC process involves handling valuable data of customers that needed to be secure according to international standards of data handling. You need a solution provider that offers top-notch encryption standards to prevent any kind of data theft and maintain consumers’ privacy.

5. Omnichannel user engagement

Customer satisfaction is the major factor that contributes to the growth of the business. A video KYC solution offering omnichannel for user engagement and verification adds to enhanced user experience because the user doesn’t have to switch channels to get the verification done.

It all comes to Shufti Pro Video KYC

Video KYC is the new normal in the verification market. With Shufti Pro’s Video KYC solution, you can streamline your onboarding process and reduce turnover time of the KYC process efficiently. Having all the above-mentioned features, our video verification service along with real-time digital document verification service can assure fraud-free customer onboarding. Moreover, with our three different video KYC models, you can select one that fits best as per business needs.

The Urgency for Know Your Customer’s Customer (KYCC) in Businesses

The Urgency for Know Your Customer’s Customer (KYCC) in Businesses

It is not just the financial services sector that is required to comply with anti-money laundering regulations. Businesses too are now required to implement certain regulatory measures to curb money laundering. A term that has recently been coined for such requirements is Know Your Customer’s Customer or KYCC. With increasing rules and regulations now being put forth by global regulatory authorities, banks and other businesses will now need to implement sound measures for Know Your Customer’s Customer.

Let’s get some background as to why KYCC is important. Entities like dummy or shell corporations are used for a number of purposes. Those motives need not be illegal every time; they can also be used to limit the liability of a company or for privacy purposes. But under a common perception, they are used for illicit purposes like money laundering, embezzling, or tax evasion. This is due to the fact that shell corporations tend to have lesser legal compliance requirements.

As regulatory bodies like FATF or FINMA tighten the laws to combat money laundering, the leniency afforded to shell corporations diminishes. Heavy fines and penalties are being set for corporations and financial institutes all over to implement strong compliance procedures. There is an added pressure to implement a robust process of AML around the world. KYCC or Know Your Customer’s Customer also falls under such rules and regulations.

Regulatory authorities have made it mandatory for businesses to have proper KYC and AML check systems. Combating Financing of Terrorism CFT which involves investigating, analyzing, deterring, and preventing funding for activities intended to achieve terrorism. KYC services back these regulations to stop money laundering in the first place. 

Laws in most countries now require businesses to properly identify their customers. Moreover, they also require that a bank must make sure that their customer’s activities are legitimate and do not have any risk for money laundering associated with them.

How does KYCC help in Achieving Compliance   Regulations?

The complexity of financial transactions and the increasing advancement in technology make the whole process of maintaining and monitoring the financial system a challenging task. Keeping a track of one’s customers alone can be an onerous task on its own. Add to it the responsibility to monitor and KYCC, your workload just got unimaginably tedious and complicated. However, the risk of letting your business fall into the pit of money laundering or other financial crimes is an even worse fate. The global financial regulators are no longer willing to let corruption and tax evasion fester. This makes it inevitable for the financial services sector to implement faster digital verification systems to speed up the process. KYC documents can be used to collect the needed data to verify a customer.

KYCC in businesses enables them to achieve an added level of security for their compliance measures. It allows banks to assess whether their customer’s customer is legitimate and every stakeholder in their business has genuine practices. As every country strengthens its laws on money laundering, it is becoming a necessity for banks and other companies to establish the lawfulness of their customer’s customer’s activities.

Moreover, obeying compliance requirements is not the only plus point of KYCC or know your customer’s customer. It also allows a financial institute to manage its external risk and to build proper protection against money laundering and other illicit activities. Not building such compliance measures can have serious and dire consequences for a business. Noncompliance and detection of fraud or financial crimes in a company’s activities can involve heavy fines, sanctions and not to mention the loss of perfectly good credit to the business’s name.

Implementing KYCC Measures in Your Business

The first step in doing so is to implement a customer identification process. An effective customer identification program can enable the bank or corporation to make sure their clients have an authentic identity. This can be done through online identity verification. IDV allows banks to verify their client’s customers in a seamless and fast manner.

Most banks do not want their identification procedures to be long. Nor do they want to process and monitor large amounts of data. For this very reason, a lot of KYC service providers are rendering electronic identity verifications and AML checks for businesses including banks and financial institutes.

ID verification of customers is performed through document verifications, that allows them to digitally scan their documents for corroboration of their details. KYC verification service providers like Shufti Pro have a document verification service that scans a user’s documents, and the details within it, in seconds. This is performed through OCR or Optical Character Recognition.

Business verification has never been easier and efficient. Through digital identity verification solutions, banks can now establish the best methods to fulfill compliance and regulation procedures. Before now, companies have relied on manual or outdated verification procedures that are painfully slow and cumbersome.

Know Your Business KYB  is the due diligence review of the business and industry against Money Laundering techniques. It allows you to develop policies and assess suspicious activities or transactions. Corporate businesses can determine whether the business they are dealing with is legit or just a shell company that is present on papers through KYB checks. 

In the UK, these regulations are defined by Electronic Identity Verification (eIDV) and 4th AML Directive by the European Union. These directives dictate the KYB regulations to corporate entities. In the US, Customer Due Diligence (CDD) measures are being imposed to determine the true ownership of a business. 

Online identity verification is used to validate identity. This technology mitigates the risk of online scams and identity theft. There are many challenges faced by businesses for identity verification. This software helps restrict the access of unauthorized persons. This technology can be used to provide intelligent access within the premises of offices. So business needs to have the best identity verification solution for seamless processing. 

Importance of KYCC in businesses

All financial institutions are obligated to have appropriate procedures and processes to comply with regulatory compliance. KYCC can help businesses in the following ways:

Seamless KYB onboarding

AI-based KYCC solutions can help financial institutions to streamline their business onboarding processes. These solutions can make the entire business onboarding process simpler, and quicker, reducing the onboarding costs altogether.

Ongoing business verification

Remediating businesses can help analyze corporate client files on a regular basis to assess risks and changes within the company’s infrastructure, executives, and beneficial owners. It also includes ongoing AML monitoring for businesses.

Access to global business registries

Some KYCC solutions provide easy access to updated company information for business verification through global business registries which in return makes the compliance process easy. 

Frictionless API integration

API integrated KYCC solution collects data from various reliable sources, all businesses have to do is enter their required details to access the information. This API integration eliminates the complexity of onboarding and monitoring corporate clients.

Remote Identification

Businesses nowadays are looking for cost-effective, remote, and automated software to perform necessary business regulatory checks. KYCC verification solutions are designed to minimize extra compliance costs and time. 

Shufti Pro’s KYCC services are top of the line that makes business verification easier for banks and other companies. Its customer identification process is fast and easily integrated into any given organization’s interface. Additionally, Shufti Pro also provides AML background checks as well that can screen a person’s name against global watchlists. This can allow companies to keep track of not only their customers but their customer’s customer’s financial status.

Identity Verification Blog

Identity verification for fair and free US elections amid COVID-19

US Elections 2020 is the talk of the town these days. But with COVID-19 pandemic going on how will election commission ensure fair and free election?

Is this the time to finally turn to digital identity verification to conduct fair elections?

This article covers the current situation of the election preparation in the US followed by the shortcomings in traditional voting systems. Towards the end, we will discuss how can identity verification can be the best way to achieve fair voting this year.

November 3 is going to introduce a new president for the US. On one hand, every presidential candidate is making effort to make their position strong but on the other hand, they are driving the narrative around the upcoming election’s legitimacy in their own divergent ways. But isn’t this what happens in every election?

Of course, but this time, the ongoing pandemic has made the situation critical. Citizens are scared to step out and authorities are facing challenges to organising fair elections. Donald Trump, amid potential intrusions in the mail-in ballots, showed utter detest for the proposed system. The statement from Trump has questioned the credibility of the mail-in ballots, raising another election challenge.

There should be one method that all presidential candidates can agree to. We believe e-voting through identity verification can lead to secure and fair elections with reliable results not only in the US but in other countries as well.

Mail-in Ballots – What’s the challenge?

Till date, it is said that the US can opt for postal voting that can be secure and safe than in-person voting during this pandemic situation. But President Trump is clearly seen opposing it. Rather, he claims that the postal balloting is going to be an electoral fraud resulting in “rigged” election. This statement from Trump is quite controversial because he himself used mail-in ballot this year but it didn’t stop him from pointing out at states that are willing to take measures for mail-in ballots option.

Trump’s statement about postal ballot outlays different predicaments. The foremost is voter suppression. Postal ballots are not much common, and it’s obvious that if something is undermined, people are not going to use that. Secondly, if the postal balloting isn’t available for any reasons, or is maligned by the president and his representatives then voters will turnout for in-person voting. This will put the citizens at the risk of contracting COVID-19, and voters’ safety can’t be compromised at any cost.

Thirdly, with Trump’s incorrect claims regarding the legitimacy of postal ballots, there’s higher possibility for the President to reject the results in case he loses. The reason is postal ballot is not secure and there’s higher possibility of rigged voting. The votes can be manipulated leading to unfair elections. So what should be done to address these challenges?

Identity verification is the answer!

Online identity verification- the future of e-Voting

Electoral fraud is something we all have witnessed in previous elections. With mail-in ballots there’s a higher possibility of rigged elections. Conducting fair and free election is necessary for any democratic country and with the current pandemic going on, there’s a need for intelligent strategy incorporating secure technology to ensure open elections. Identity verification is the trending phenomenon laying foundation in every industry and e-voting is no different.

Casting a vote is the right of every citizen and that too with their free will. E-voting through face verification can prove to be an effective way to ensure secure election and mitigate any electoral fraud. With the digital identity verification in place, only authorised citizens of the country can caste vote and that too from the comfort of their homes. While in-person ballots pose a potential risk of virus spread, e-voting can be safest way during this pandemic.

Face verification to deter election crimes

Recently, FBI issued a warning on potential election crimes ahead of 2020. The FBI announced a full-fledged list of the election crimes that might turn into fedral crime if the states unable to conduct fair elections.

These crimes are common in every country conducting elections in a traditional way. Every presidential party lookout for various ways to get votes in their favour, either legally or illegally. Through face verification, such election crimes can be combatted since only registered citizens can vote and that too only once. With everything automated, voters will only have to show their face in camera to verify their identity and vote their favorite candidate without any pressure or threats. Also, the officials won’t be able to tamper ballots due to real-time voting results.

Have queries that how Shufti Pro can facilitate eVoting systems?

KYC - know your customer compliance

KYC Compliance – Strengthening Fraud Prevention Across the Globe

Know Your Customer (KYC) 

The widespread availability of the internet has made our world more connected than ever. This, however, has made our information more vulnerable to fraud. The ever-climbing fraud statistics continue to trouble consumers and businesses as well as regulators across the globe. Yet traditional practices for Know Your Customer seem no longer effective. With the increasing scrutiny of regulatory bodies and global financial regulators, businesses need to come up with an effective Know Your Customer Compliance process. The KYC process involves the verification of the identity of individual customers for preventing fraud and money laundering activities.

Traditionally, banks and other businesses performed KYC manually. However, manual customer compliance and KYC procedures take longer and tend to frustrate customers. For banks too, manually verifying and vetting each customer can be costly and arduous. Herein, comes the role of SaaS KYC service providers. Providers of identity verification as a service, nowadays are using machine learning, advanced biometrics, and a combination of Artificial and Human Intelligence capabilities to verify end users. It is an all in one solution that is equipped to fully automate KYC procedures and customer compliance programs in companies. 

A comprehensive KYC and AML solution can effectively fulfill a business’s Know your customer compliance requirements. It not only makes the implementation of compliance obligations seamless but can also improve the onboarding process. Its KYC services include document, face, and address, consent verification along with global AML background checks, and video KYC solution.

Some of the major KYC and AML procedures that Shufti Pro offers include;

  • Document Verification
  • Face Verification
  • Address Verification
  • AML Background Checks
  • Consent verification
  • Video KYC solution

Document Verification

A simple and efficient way for banks, financial institutions, e-commerce stores, crypto exchanges, ICOs, and a number of other businesses is to verify customers through document verification. It encourages customer compliance and allows businesses to verify users through multiple documents including ID cards, passports, driver’s licenses, credit/debit cards, utility bills, and other customized documents that a business may need verification, for its users. 

The verification of the document(s) can be personalized for business, according to its need to verify its users. For example, an online retailer would want to verify the address of its customers to avoid shipping fraud and errors. Different features of a document that can be verified include Name, Date of Birth, Age, Date of Issue and Expiration, Document Number (MRZ code, passport number, etc.), Gender, Nationality, etc.

The process of document verification for a business is simple and easy. All they have to do is select the mode of verification (onsite or offsite) and document checks they want. The rest is taken care of by the verification software. The process of document verification involves;

  • The end-user or customer comes in for verification and selects the type of document he/she wants to be verified by. It is up to the company to provide multiple options for its customers for verification including ID card, passport driver’s license, or any other ID document.
  • The user then scans their document(s) or uploads a copy of it to verify their identity. 
  • The system verifies the user using hybrid AI and HI technology in 30-60 seconds.

Document Verification

Face Verification

Face verification nowadays is normally performed through a facial recognition software developed on AI-based protocols. Biometric facial authentication is usually performed by businesses that run a higher risk of attracting fraud and financial crimes like money laundering, bribery, and tax evasion. This may include but is not limited to, banks, insurance providers, investment firms, crypto exchanges, ICOs, and forex companies. All such businesses are highly regulated and require additional protection from fraudsters and criminals. 

Performing facial verification is simpler than document verification and only requires the end user to show their face in front of the web camera. Alternatively, they can also upload a picture to authenticate their identity. The choice to verify the user through image or video or both lies with the company availing KYC services. An end-user is verified in the following way in the face verification feature;

  • The end-user comes in for facial verification
  • They show a fake or photoshopped image for verification
  • The facial recognition system declines the verification since a fake image is being used for verification.

In another case,

  • The end-user comes in for verification
  • He/She will show their actual face or image for verification
  • The verification is approved as the software detects the presence of a real person, or does not detect any photoshopped elements in the image used for verification.

Online Facial Verification

Address Verification

E-commerce sites, online retail businesses, and banks often require address verification of customers in order to check if the person is using legitimate credentials to gain access to services. Address verification services allow for better and more convenient authentication of users around the globe. It is the fundamental solution for businesses to eliminate identity theft. Address verification further increases the accuracy in the shipping of orders allows companies to conveniently deliver merchandise to customers. 

Address verification is performed using a number of different documents including utility bills, bank statements, tax bills, ID cards, passports, etc. The system is also able to corroborate addresses using different documents. Therefore, if either of the documents is forged or stolen, the system will stop the verification. The address verification process is performed in the following way;

  • The user selects the document using which he/she wants to verify their address. It is up to the company if they want to provide their customers or users with various document options with which they want to verify their address.
  • Scan or upload the document for address verification.
  • The system will use data extraction protocols to verify the address of the user.

Address Verification

AML Screening

Banking and financial institutions are required to perform customer due diligence (CDD) for individual customers and clients. For higher-risk individuals, they are obligated to perform enhanced due diligence (EDD) to evaluate, assess, and eliminate the risk they pose to the institution. For more efficient risk assessment, the AML compliance program for screening each individual client is a must. 

With an AML screening system, banks can now easily screen new and existing clients through a foolproof system. The screening process flags PEPs and high-risk individuals from a vast database. It contains data from over 1000 sanction lists and 3000+ databases. Some of the lists through which end users are scanned include OFAC, FATF, DFAT Australia, FinCEN, CIA, FINMA, and numerous others. The databank is updated every 14 minutes to account for any updates in the lists. Banks and other financial institutions can choose to implement batch screening or ongoing screening for their clients. Batch screening screens individuals in bulk in one request whose basic name and DOB are already known. In ongoing screening businesses operating in a high-risk environment can issue an “on-alert” status to clients with a greater risk profile. 

AML compliance program is generally availed with KYC verifications and checks are run in the background. 

  • The system extracts a user’s Name and DOB from their credentials as they perform their identity checks.
  • The system will scan the person from global AML watchlists (FATF, OFAC, Terrorist Financing, FinCEN, DFAT, etc.)
  • If the individual is flagged in any list their verification will be declined and the company will be notified of a specific individual’s flagged status.
  • If they are cleared, their verification is approved.

AML Screening

Consent verification

It is one of the solutions unique to Shufti Pro alone. Consent verification uses the technology of facial recognition along with liveness detection to verify the remote presence of customers in real-time. The process is quick and easy. The identity of the user is verified through a live selfie along with a unique or predefined printed or hand-written consent note which implies that the person in question gives his consent for the online transaction, for example. Shufti Pro checks for the authenticity of the consent note or ID document. The rate of credit card chargebacks rises by 20% each year. Consent verification ensures ‘Know your customer’ compliance and helps with the quick onboarding of legitimate customers which as a result protects businesses from high-risk transactions, chargeback requests, and friendly frauds.

The end-user is verified in the following way in the consent verification feature;

  • End-users provide their consent with a consent note along with their live selfie
  • They are then asked to show their face to the camera holding client’s choice of the document (it can be an ID document or a handwritten consent note)
  • The verification is approved or declined based on the live-ness, the validity of the consent note, or predefined document template

Video KYC Solution 

There are a few processes businesses can use to verify their customers. One such process that Shufti pro offers is KYC through a video call. Video KYC is a process of remotely identifying the customers which overcome the hassle of verifying documents manually. Video KYC has been in the spotlight especially for the banking sector and related financial institutions. It offers a quick process of onboarding customers with minimum obstacles and low KYC costs. VideoID is considered one of the most significant developments in KYC since it uses an online video interview with a KYC expert for customer authentication. The KYC expert authenticates the documents while ensuring customer compliance and through AI-enabled facial recognition technology, does a liveness check in real-time to make certain that the person is who he says he is. Which, further, prevents businesses against spoof attacks, deep fakes, and synthetic identities.

The steps involved in the Video Customer Identification Process are as follows:

  • Customers register themselves on the client’s platform
  • The client schedules a live video call with one of their KYC experts
  • Customers are asked to show the identity document live during the call
  • Shufti pro analyses the information and the legitimizing of the individual using AI-techniques 
  • Verification results are delivered to the client 

Requirements for Each KYC Procedure

The documents required from each end user for a KYC verification depends on the company availing the KYC services. Each company has its own requirements of customer compliance and verification of its users. However, certain standard documents are used by most businesses to verify their users. These documents include ID cards, passports, driver’s licences and credit/debit cards. The company can choose to provide different options for verification for its users or set a standard document through which the person can be verified. 

Documents for address verification include, but are not limited to, utility bills, bank statements, tax bills, rent agreement, employer letter, insurance agreement and other standard ID documents. The AML checks require the full name and date of birth of an individual that can be extracted – or entered – during the KYC process. Whereas, video KYC requires the remote presence of an individual. 

It must be noted that the requirement for each verification is set by the company availing the identity verification services. They may ask for only one or multiple documents for verification from each user according to the needs of their industry and the regulations they are obligated to adhere to. 

Industries that Adhere to KYC Compliance

Know your customer compliance applies to a vast range of industries. Different businesses need to adhere to KYC requirements of their region as well as the region(s) they operate in. Some of the many industries and businesses that require KYC procedures include, but are not limited to;

Kyc Compliance

  • Banking, Financial Services and Insurance (BFSI) Industry
  • E-commerce businesses
  • Foreign Exchange Brokering Services
  • Cryptocurrency Exchanges or Companies dealing with or operating on cryptocurrency (ICOs, Bitcoin wallets etc.)
  • Freelancing platforms
  • Telecommunication Services
  • Travel and Hospitality Services
  • Peer-to-Peer Marketing
  • Online Gaming and Gambling 
  • Healthcare Industry
  • Real Estate Sector

Standard KYC Compliance Procedures Around the Globe

Every jurisdiction around the globe has its own set of regulations and requirements for businesses to operate safely. Different countries and regulatory authorities set their own standards according to their legislative structure. However, standard KYC requirements are fixed for most regions across the world. Most know your customer Compliance Procedures are centred around: 

  • Digital Identity Verification.
  • Electronic identity Verification or e-IDV, that verifies individuals through different government or independent databases.
  • Address verification through different documents

Any specific distinction in the process of KYC exists based on;

  1. Use case – The use case for each business involves in what capacity a business might need KYC, how it would apply KYC procedures.
  2. Regulatory Requirements – regulatory requirements differ based on the type of industry, the level of risk an individual or business may pose and the region in which an enterprise operates in. For example, in a few countries including Germany, Spain, Switzerland and Austria the regulations require businesses to verify users through video conferencing 
  3. Type of Business – the risk associated with a business also comes with the industry it operates in and its nature. For instance, financial service firms are bound by more legal obligations than perhaps an online retail store.

Kyc Procedures

The identity solution from Shufti Pro offers universal language support, along with the ability to verify over 3000 documents. This allows us to verify users from over 230 countries around the world. Our AML databank includes names of Politically Exposed Persons (PEPs) from over 1000 + sanction lists and 3000 + databases. It is currently catering to a diverse set of clientele ranging from financial services to online retail businesses to crypto companies. With the ability to verify users in under a minute, Shufti Pro can fulfil a business’s KYC compliance requirements with increased efficiency.

Know your business protection against shell companies

Know Your Business – What Does it Mean & How can it Protect Your Company?

Businesses that offer their services to other businesses, instead of individual consumers, have to be more vigilant in their customer onboarding processes. According to a survey, B2B merchants say 19% of all online purchase inquiries are attempts at online fraud. So, it has become important, in the current regulatory landscape, to secure your own interest before engaging with another business. According to the Australia Competition and Consumer Commission’s Targeting Scams reports that $91.4 million was lost to B2B invoice fraud in Australia last year. 

For this, Know Your Business practices come in handy as they help a company to verify the corporate information of their potential clients and personal information of the higher management handling the operations of that client company. Business verification for KYC or Customer Due diligence is essential to identify the ultimate beneficial ownership (UBO) structure.

What does Know Your Business Mean?

A typical Know Your Business practice enables corporate organizations to determine whether they are dealing with authentic business entities or shell companies that are just present on the paper. AML Checks for business and proper document verification is demanded by regulators, especially in developed countries when dealing with foreign entities. Guidelines such as Electronic Identity Verification (eIDV) and 4th AML directive from the European Union are some of the examples that dictate Know Your Business (KYB) laws to corporate entities.

On the other side of the pond, in the US, Customer Due Diligence measures are being dictated to be the norm to determine the true ownership of a business entity. Several KYC service providers offer different business verification services in order to collect business verification data. Some Identity verification services such as Shufti Pro can perform business verification in seconds with the help of its document verification services, identity verification of the top management through official identity documents and Anti Money Laundering Checks.

Similar to Know Your Customer (KYC), KYB service providers verify businesses by obtaining official commercial register data using APIs. By employing the registration number and jurisdiction code of a business, an efficient digital KYB service can collect confirmable information for the business.

From KYC to KYB

The Bank Secrecy Act (BSA), introduced in 1970, is the United States’ most important anti-money laundering regulation. Banks and other financial institutions must meet the compliance obligations it involves.  BSA gave birth to KYC and AML solutions to make sure that businesses verify the identities of their customers and have valid money laundering checks. From verifying customers, the need to verify businesses emerged. The fifth AMLD  has centralized the data of beneficiary owner data. This centralization brought ease to the table for KYC and KYB.  Businesses must know the other business they are dealing with. According to Repair Driver News, $6.7 million worth of business loans were allegedly obtained fraudulently by a California auto body shop owner. In another survey, Payment fraud represents 60% of B2B fraud losses in the last five years. The reason why it is very crucial in this era to know the company you are concluding business with is because if it is blacklisted, it can cause trouble for your business as well. So the company verification process is vital to know the business one is dealing with.  

How KYB protect Your Business Interests?

Based on Artificial Intelligence, Shufti Pro can determine not only the true identity of a verifying individual but can also check for the financial risk attached to that person with AML Compliance solutions. With Anti Money Laundering services from Shufti Pro, you can check the involvement or presence of any top official of your partnering company in any watchlist or financial risk database. Shufti Pro banks on its huge databank to perform Customer Due Diligence on behalf of its customers. Shufti Pro can perform AML Background checks in real-time from 1000+ Watchlists and 3000+ databases.

Know Your Customer services might be the main objective of any identity verification service such as Shufti Pro, but the same set of services can be used to check the authenticity of any corporate entity. These KYB services are greatly helpful for financial institutions handling funds of large customer base and corporate entities. Banks, brokerage firms and dealers of several investment institutions have to be especially vigilant against every business entity that wants to partner with them.

Automated ID verification for identifying B2B frauds 

Performing Know Your Business procedures can be hectic and might require specialized manual resources, but automated business verification solutions can come in handy. Automating verification processes is a powerful step towards fighting B2B frauds. On one hand, conducting business online brings in a greater volume of online scams but on the other hand, automating business verification practices provides robust solutions that can prevent possible fraud attempts worth millions of dollars. They are not only the perfect form of Regtech but they enable businesses to be secure from multi-million dollar fines that a regulator will easily slap on such institutions if found in breach of their regulations.

Read: The Urgency for Know Your Customer’s Customer (KYCC) in Businesses

Business Verification Service – Is it Worth Your Time?

Most of the banks have already tasted the slow agonizing pain of KYC verification for their customer onboarding, transaction authentication, and remote banking services. This is the reason why most of the large financial institutions that are in dire need of Know Your Business services or who want to determine the ultimate beneficial ownership (UBO) structure of the corporations they are dealing with, find it hard to trust a KYC service provider. But with Shufti Pro and its Artificial Intelligence (AI) based identity verification services, it becomes easier to perform business verifications in seconds. With Optical Character Recognition (OCR) and Global Business Verification, Shufti Pro becomes an ultimate resource for businesses for real-time identification and verification. Shufti Pro is available in 230 countries of the world with support available for 150 official languages. It has the ability to determine the true identity of a person with the help of authentic identity documents that include ID Cards, passports, and driving licenses.

With machine learning algorithms any attempt of forging identity documents or even ownership structure can easily be detected by Shufti Pro. Fake credentials or personal information provided about the top management, a common practice in the case of Shell companies with complex management structures, can also be easily traced by Shufti Pro. Nationality verification and Geolocation services of Shufti Pro enables companies to determine the true country of origin for international clients and whether a certain company has been incorporated at a certain tax haven or not.

So in order to collect reliable business verification data and perform impeccable business verification, try KYC and AML Compliance solutions from ShuftiPro. You can even sign up for 15 days of free trial at first in order to check the service standards by this global identity verification service

Identity Verification to Control Social Media Scams in 2020

Rising Social Media Scams in 2020 Calling for Digital Identity Verification

Social media was a simple place for interaction a few years back. People valued it for its security and anonymity, but unfortunately, 2020  faced the opposite side of what was expected from it. Social media is not just a place to keep children busy with cartoon videos now. 

Social media is a big industry that provides a smooth networking space for everyone. On the other hand, it is also unknowingly facilitating the proliferation of spams and trolls. Harassment cases and scams are significantly increasing. But why are scams on social networking platforms drastically increasing? A freehand and lack of a robust verification system is the main reason. Everybody can join these platforms with fake social media identities. 

According to 2020 statistics, there are 3.5 billion social media users and a significant number of profiles are created with fake names and documents. These accounts threaten other users with hacking, social media identity theft, and other cybersecurity issues. Spammers have thousands of fake profiles that become an obstacle for legitimate users to interact and expand networks. Furthermore, fake posts and junk advertisements do nothing more than diverting attention and manipulating the thoughts of innocent users.

Professional networking sites like LinkedIn are also not secure since fraudsters post fake job ads to attract desperate job seekers. The increasing scams on social media have led to plenty of government regulations for the security of the users and their identities. However, the authorities cannot blame someone without getting their social media identities verified in the first place. 

Some Facts and Figures

This section gives an overview of social media usage and its penetration at a global level. In recent years, social networking applications have shown a clear shift towards handy devices such as mobile phones and tablets. Easy access to these platforms, therefore, have increased the usage via mobile devices. Social media is one of the most defining phenomena of the present environment that is reshaping the entire world. Statista shows that the global social penetration rate has reached about 45%. Among these, North America and East Asia have the highest penetration rate i.e. 70% and Northern Europe with 67%. Also, in the future, this percentage does not seem to go down anyhow because the survey shows that the number of expected social networking platform users in the United States would be 257.4 million by 2023. 

According to a research paper by IEEE published in 2019 named “Cyber Security in Social Media: Challenges and the Way Forward”, the number of active social media users in 2019 is estimated to be 2.77 billion and a forecast shows an increase that sums it up to 3.2 billion by the year 2021. The same paper highlights the threats in social media platforms that correspond to the impersonation of friends and celebrities, cyberbullying, and phishing scams. This increasing trend and penetration of the population into it shows a tremendous increase in social platforms’ security flaws. Lax rules of these platforms are inviting fraudsters to poison the cybersecurity triad i.e. confidentiality, integrity, and availability. Lack of security measures gives birth to attacks such as CSRF or XSS that lead to data breaches.

Social Media Scams 2020

Frauds in the Social Media World

The section covers some major frauds in the social media world that every user must beware of. Social media has penetrated every corner of the world, and it is now a fundamental source of communication. Here are some of the common frauds on social media platforms. 

Hidden URLs

Short URLs may not be suspicious for anyone, but they are now a threat to social media users. Beware of URLs that have hidden locations. They are common on twitter and LinkedIn, and they can innocently redirect you to the relevant web page. However, other social media platforms may not always look out for such issues. Fraudsters can post a trending news headline and redirect you to a scam page. Acquiring your social media identity and other personal information will not be a problem. 

Phishing Attacks

Phishing attacks are a new form of social media identity theft. These attacks were common in emails, but advancements in technology has allowed scammers to perform phishing attacks on social media as well. “Someone just uploaded weird photos of you from the party last night.” What will you do now? As a reflex, you will immediately click on the link, and it will redirect you to some other platform. It can be a twitter page that will ask for credentials. As soon as you enter your account details, the spammer can use your social media identity and other personal information for fraud.  


Catfishing is a kind of online harassment where spammers search for people desperately looking for their special one on social networking sites. Spammers create fake accounts with an eye-catching picture and false social media identity to begin a relationship. They earn the trust of the other person and ask for money after some time. 

“Who Visited Your Profile” Scam

It is always good to know who visited your profile. Someone might call you for a job or just become good virtual friends in a while. Fraudsters take complete advantage of this curiosity and create ads, for example, ‘click on this link to find out who viewed your profile today’ or ‘visit this link to know your secret admirers.’ As soon as you click the link, you are redirected to a new page that asks for your personal information or credentials of the platform. Stealing your identity is not a problem then. 

Know about the top five key identity verification market trends here.

Digital Identity Verification: An Effective Measure for Social Media Security

Individuals alone cannot always figure out these scams, however, social media platforms can restrict fraudsters from creating fake accounts for harassment and illegal use. Social media platforms that assume personal identification an overkill for social users would now be realizing that how many spammers are facilitated through these platforms, and how they are disrupting the integrity and privacy of online users. Again, spammers are not only posting junk information but exploit weaknesses of the system to damage in the best possible way among which phishing attacks and malware/malicious executables injection is the one. 

Lack of social media identity verification service on age-restricted websites affects both the social media platforms and their users. Online users below an adult age are not verified and use the applications without any restriction. Or some websites do apply age affirmation pages or checkboxes for age verification that actually does not serve the purpose of age verification and can easily be deceived by minors.

Online Age Verification

In the past few years, age verification has become a regulatory requirement that is necessary for social media platforms to consider. Taking advantage of technological advancements, social media firms can take in place various solutions that could help in identifying the individuals and restrict services if they are not for children. 

Current verification methods can easily be falsified which require obvious changes in digital practices of verification. Many social networking platforms are now using age verification services that verify using document verification if the online user has misstated their age. Those social media identities would immediately be flagged with the status of unverified as they do not lie under the age limit that could access the networking platform. 

Ideally, social media platforms are required to collect minimized data from customers. For instance, if they want to make sure whether someone is above 18 years, then the individual would have to share a proof of their social media identity in the form of an official ID document, etc. The company should ensure that the individual is above the defined age and avoid collecting much of the information from the user’s uploaded document.  

Know more about age verification at Age Verification – Does Your Business Need It?

Video KYC

Technological advancements have made everybody’s life convenient, including fraudsters. Dodging verification checks may not be a challenge anymore. Moreover, the young ones can provide wrong information to skip age verification. Video KYC allows socializing sites to verify all the clients on a live video call. Verifying social media identities through video-based KYC can enhance the result of social media verification service. 

Digital Social Media Identity Verification

In social media platforms, it is quite easy to create a fake account/profile to impersonate a social media identity online. Whether it is Facebook, Twitter, Linkedin or some dating sites, fraudsters find all of these a hot target and conduct malevolent activities there. With single digital identity verification, misuse of social platforms can be crushed. 

Focusing on just collecting data whether it is true or false should not be the goal of social networking platforms. Allowing legitimate traffic can help provide better search results. Stuffing fake social media identities affect the huge population and hence the platform reputation. Using artificial intelligence and machine learning algorithms as the underlying technology, facial recognition systems, and online document verification for social media verification service can help maintain an honest community with much more healthy working and networking opportunities. 

What’s the big deal, if a social media identity can be verified within seconds? But it would really be one if your platform is in the spotlight due to data breach that compromises the security of millions…

Have questions about how Shufti Pro can help you secure your social media platform?

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