KYC | How to perform KYC verification in three simple steps

KYC stands for Know your customer. The KYC verification process plays a pivotal role in financial institutions for preventing online crimes. KYC defines a set of verification processes that includes document verification, age verification, address verification, etc to help the financial sector to better understand their customers, and the risk level associated with them.
Following steps are including in Shufti Pro’s digital KYC verification process for customer identification:

  1. Step 1: Customer provides their data

    The first step for customers is to add their personally identifiable information(PII) for account registration. Their PII may include name, date of birth, email, social security number, passport number, driving license, and financial information including credit/debit card details.

  2. Step 2: Customers upload their ID documents

    The next step for your customer is to upload clear scanned copies of their identity documents such as ID card, passport, debit/ credit card, or driving license. OCR technology automatically extracts the data from ID documents at this stage for further processing.

  3. Step 3: Verifying Customer Identity

    The OCR extracted data is then matched against manually added data [along with checking originality of the uploaded documents] to verify the authenticity of customer’s personal details. And the document images are checked against the default document format for validation.

  4. Step4: Final results

    Final verification results are delivered and complete proof of verification is uploaded in the client back office. If the verification is positive, the customer is onboarded successfully.

KYC Verification Process at a Glance


Which software should I use to verify my customer’s identity?

Shufti Pro is one of the leading Saas products available in the market that uses advanced technologies of Artificial intelligence and machine learning, Trusted by global clients for its accurate digital KYC solution. Along with online KYC, Shufti Pro also provides biometric facial recognition, Video KYC, and on-going AML to more than 230+ countries and jurisdictions, in 150+ languages.

How much time on average should it take to verify a single customer?

It should take about 30-60 seconds to verify a customer through an online KYC verification solution for seamless customer onboarding.

Which ID documents are considered for KYC verification?

Government-issued ID cards, passports, driver’s licenses, debit/ credit cards are required for document verification. Employee letters, insurance agreements, utility bills, bank statements, tax bills, and rent agreements may be required in case of customer address verification.


Travel Industry – Trends, Scams, and a Solution to Combat Fraud

The modern world is filled with surprises for everyone nowadays. Be it individuals or enterprises, everyone has to experience a new trend every day. Thanks to technology, the corporate sector is streamlining business operations and reaching out to customers more effectively. Nevertheless, there is always a negative use of everything and modern technology has too. While companies are focusing on figuring out better ways to enhance operations, fraudsters use witty methods to pursue their criminal motives. None of the industries are safe from scams and fraud in the digital world, and surprisingly, the travel industry faces some serious problems. 

According to Finextra, the travel and tourism industry contributes to 10.2 per cent of the global GDP and fraudulent activities cost the industry approximately $21 billion every year. By the end of this year, this figure will increase by 20 per cent which accounts for more than $25 billion. 

It has become very easy to book holiday trips online, but airports and hotels have been reporting some serious input from the criminals lately. The travel industry has been facing different trends and some new kinds of scams too. However, there is an AI-powered solution that hotels and airports can incorporate to combat potential online scams. Read this blog to find out the latest trends, scams, and the solution that can help in fighting fraud in the travel industry. 

These are some of the most common scams that every country reports. Here are some of the most reported scams from hotels and airlines that are essential to address.


Payment Frauds 

This is the most common scam in the travel sector, especially hotels. Fake travel agencies are creating a lot of problems for hotels. Tourists come with fake bookings of hotels and the management has to deal with the costs. Otherwise, they will lose a lot of customers along with damaging the company’s image. Moreover, fraudsters also claim returns or chargebacks to avail free services of the hotel. Apart from these two payment issues, paying through fake and stolen credit or debit cards is also common in this sector.   

Money Laundering through Hotels 

Money laundering is the act of concealing illegally earned money. Launderers perform this in three stages; placement, layering, and integration. Fraudsters layer money in different sectors and hoteling is one of the best targets for them. Hotel management must identify laundered money on time to avoid dirty money entering the hotel records. 

On the other hand, money launderers use forged identities to get away with black money. Therefore, airports need better security checks to fight with sophisticated money launderers. 

Read more about money laundering:   3 Stages of money laundering – How AML screening guards your business

Identity Theft

Today, customers need everything digitized and the travel sector is trying its level best to provide digital means of transactions. However, it is also providing opportunities to imposters for executing their evil plans. Digital check-ins offer customers with the power to get rid of the hassles of manual booking and over-the-counter payments. They do not have to stop at the reception to pick the room keys now. While applications for different purposes is a powerful customer engagement tool, it is allowing fraudsters to use fake identities and steal credentials of other legitimate customers. The acquired identity information is later used for loyalty points and other benefits, leaving the hotel management with chargebacks and other frauds at hand. 

Airport personnel experience the same problem. Fraudsters with forged identities and passports come for ticket bookings and without any robust verification methods, many criminals get away after committing all the deadly crimes. 

Face Verification – A Solution for Combating Fraud 

The travel industry has to face a lot of consequences after fraudsters acquire what they came for. Not just financial loss, the sector also faces damaged brand reputation and distrust among customers. If you are someone operating in the airline or hotel sector, how would you recover from the losses? A trick question indeed. Believe it or not, you may not be able to recover from the loss; therefore, a robust identity verification measure is essential to prevent fraudsters from causing any trouble. Facial verification technology is one way of combating fraudsters so that hotels and airlines do not face any more damages. 

Face verification at airports and hotel entrances will allow authorities to identify criminals before they cause any trouble. 


How Does Face Verification Work?

Facial recognition technology in the modern world is not just about identifying a face, but it entails a lot more than that. The software is now backed by Artificial Intelligence algorithms that efficiently detetct fraudsters in less than a minute. How can the travel industry benefit from it? The face recognition software deploys various AI algorithms and uses the following techniques for better verification results:

  • 3D depth analysis
  • 3D mapping 
  • Liveness detection 
  • Micro-expression analysis 
  • Skin texture analysis 

These techniques ensure that the presence of customers and passengers at the time of verification to assure they are accurately verified. Deep fakes and spoof attacks are a challenge these days but advanced facial recognition technology can be of great help to businesses. 

Learn more about face recognition: Face Verification – One Solution for Several Identity Frauds

Latest Trends in the Travel Sector


The travel sector has been excelling with technology for a long time. Take a look at some of the latest trends in this sector.

Facial recognition kiosks are trending in different sectors now. Due to the COVID-19 pandemic, social distancing has become essential. These kiosks verify faces from a safe distance and the customer has to show the passport for verification.    

Brazil recently introduced revamped facial recognition technology at the airports through which the authorities there can verify passengers accurately and prevent fraudsters from flying away. This technology can verify everyone along with the masks so there is no chance of spoof attacks. 

The travel sector also includes travel through sea routes, so the cruise ships also need better verification methods and the ships are now using face recognition software for verifying passenger identities. 

Read more about trends in the travel industry: Top 8 Facial Recognition trends to watch in 2020

It All Narrows Down To…

With betterments in technology, not only the corporate sector is enjoying remarkable benefits, but criminal activities have significantly increased as well. The travel sector has digitised the processes but the inefficient verification measures are not helping in keeping customers safe. Robust security is a need of the hour, and facial recognition is one of the measures that this industry can adopt. The face verification technology checks for spoof attacks, deep fakes, and forged identities in real-time. Ultimately, there is no chance for fraudsters to leave a country after fulfilling their evil desires or fool travel agencies for any benefits. 

Shufti Pro’s AI-powered face verification technology deploys Artificial Intelligence algorithms to verify the geometry of the face with the image on the government-issued document. It only takes five seconds and Shufti Pro ensures 98.67 per cent accuracy too. 

Eager to know more about face verification?

Phishing attacks

Phishing Attacks and the Role of Two-Factor Authentication

In today’s digital world, almost everything we do is on the internet, be it for official purposes or activities in our personal lives. Digitization definitely brought convenience to lives and it is easier to communicate now. Businesses have so many opportunities now thanks to technological advancements. Nonetheless, the emergence of technology is also benefitting criminals. The traditional methods of stealing and terrifying people are gone, and the virtual road is a better way for them. With the help of Artificial Intelligence and Machine Learning algorithms, cybercriminals can barge into anyone’s social media that does not have strict privacy measures. Businesses experience ransomware and data breach attacks now and then. The financial losses have significantly increased over time. Banks introduced digital methods of transactions but cybercriminals have figured out a way to fulfill their malicious intent here too. 

Norton’s report on cybersecurity estimated that cybercriminals stole £130 billion in 2017 from the consumers along with £4.6 billion from British internet users. Identity theft, account takeover fraud, and catfishing are some of the common scams that are continuously increasing. Apart from these few scams, phishing attacks are also on the rise. It may come to you as a surprise, but phishing is the deadliest threat of all for any business and the most successful one too. Want to know more about phishing? Keep reading to find out. 

This link is the main issue. Once clicked, victims are redirected to a different website that seems legitimate but it’s a trap. The new website will ask for sensitive information like your personal information, social media credentials, or bank account information. If any of your employees provide such information, your customers’ information can be accessed and used for illegal gains.

The link you clicked may include a virus that can install malware or ransomware software that can threaten your business later. A report from Keepnet Labs estimated that only 3 per cent of the employees report phishing attacks to the management. Have you ever wondered about the number of phishing emails your employees might have ignored? 


Types of Phishing Attacks

With time, cybercriminals have also developed different kinds of phishing attacks that fit their needs.  Every type has its consequences for companies. Here are some of the common kinds of phishing attacks that you must know about.

Business Email Compromise (BEC)

Your middle-level management or first-line managers will receive information that says that you (or anyone from the higher management like CFO) is contacting due to some inconveniences. The email will show a high level of credibility with compelling statements. Some of the common reasons in such emails are:

  • Issues related to tax 
  • Demotion or promotion matters 
  • Security issues in the company 

Employees generally panic about issues like these and respond to emails. The message may ask for your company’s information and official bank account details. Your company’s information can be used for creating a fake bank account that can be used for money laundering or the information will be acquired for data breach later. 



The CEO, CFO, CTO, and other top-level managers are also unsafe nowadays. Whaling is another type of phishing attack that targets senior management. Since the targets are highly sophisticated, the emails are extremely sophisticated as well so that they can’t be traced. Maybe you receive an email from the central bank of the state saying that your firm was involved in money laundering and you have to pay a hefty fine to clear your name along with the company’s information. 

Spear Attacks

These attacks are sometimes targeted to individuals – employees of the firm, and the majority of the time firms are the target. The sender uses personal information or appears as a legitimate company to get in touch. Winning your trust gets simpler this way and you can get a link that redirects you to a website for further information. On the other hand, you may be asked to reply to the email with sensitive information. In either case, you are being tricked into sharing confidential information.  


How to Spot a Phishing Attack?

Some tips and tricks can always save your business from any phishing attacks. There is a cyberattack every 39 seconds and half of them are attempted through emails. So, you cannot stop the attacks but you can spot them on time to stay safe. Here are some hacks for identifying a phishing attack. 

Invalid Links

Always check for the validity of the link shared in the mail. No matter how hard a cybercriminal tries, it is impossible to get a legitimate domain and use it for illegal purposes. Search engines have restricted such actions. If you take a closer look at the links, the search engine will indicate a ‘not secure’ tab with such links. Moreover, the link shared in the email will never match with the one displayed in the search tab of the search engine. 

Demand for Personal Information 

Fraudsters often ask for personal information in the email so that they can use it for identity theft and synthetic identity fraud. Do not share any of the person or company’s information over the mail, especially if the source is unknown. 

Learn more about identity theft: 5 types of identity theft fraud and How businesses can prevent it?

Technical Issues

Since you are receiving emails for compromising corporate information, you can check for technical mistakes. Spelling and grammar issues in statements along with the spelling of the names are not hard to identify. For instance, your CEO’s name on official documents is spelled as ‘Sarah’ but in the email, it is spelled ‘Sara.’ It may be a phishing attack and you can confirm the email before communicating further. 

Tone of the Email

It is natural that your tone changes with the type of email and the motive of scam emails are to threaten victims for acquiring information. Always sense the tone of the email. Your employees will never order you or threaten you, so if the email from a ‘subordinate’ says that the ‘company’s domain has been suspended’, be sure to cross-verify the information before responding. 

How Can Two-Factor Authentication Help?

Protecting your business is essential no matter what, and phishing attacks are the worst of all the cybercrimes. They can easily trick you or your employees into sharing confidential information. How to secure the firm is still an unanswered question. Nevertheless, you have two-factor authentication to make emails secure, be it your personal email or business email. 

2FA is two-step verification in which one step is very common and everyone is obligated to do it. Setting a complex password is what we are talking about. Passwords are a combination of upper and lower case alphabets along with numbers and special characters. The second step is a verification code that is shared on your mobile number or recovery email registered. 

The cybersecurity department of your company can enable two-factor authentication for all the emails of the business. If any of the credentials have been compromised, 2FA will not give access to the fraudster. How? A code is sent to the registered phone number (ideally, this must be your company’s number) and without verifying this code, no one can access the emails. 

Read more: Why 2 Factor Authentication is vital for Online Identity Risk Management? 

To Sum Up

Cybercriminals have become more sophisticated than ever and there is a dire need for enhanced security measures for companies. Confidential information through emails has often compromised that accounts for a significant part of data breach every year. Business Email Compromise (BEC), smishing, and whaling are some of the common types of phishing attacks that every company experiences. There are 2244 cyber attacks every day, which means your business is also attacked almost every day. You can protect your business accounts with two-factor authentication and ensure the security of all the employees. 

Get more information about two-factor authentication from our experts.


AI-Powered OCR to Combat Challenges During Manual Data Processing

Every industry has to deal with tons of customer data on a daily basis. Receiving information, extracting important values, converting it into machine-friendly language, and making it readily available for further processing sounds easy, but it is not a piece of cake. It takes days to complete the entire process which is not only time-consuming but also demands a lot of money and effort. Today’s fast-moving environment needs a solution to eliminate manual data processing so that companies can save time, money, and effort. 

For instance, the identity verification sector can no longer consider manual data processing for its services. The ‘know your customer’ verification and anti-money laundering screening are two hectic jobs that can take days for completion per verification. If a financial institution performs thousands of end-user verifications, how can the service provider authenticate so many documents without compromising the quality of the process? It is nearly impossible to onboard customers with the manual methods of data entry and processing. The industries need an efficient solution that can ease the procedure.  

We conducted a small survey to know how manual methods of data processing are increasing challenges for the industry leaders, and the responses were overwhelming. Read this blog to find out what the challenges industry leaders are facing with manual data processing and how we can help them. 

Thoughts of Industry Leaders on Manual Data Processing

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Multiple companies contributed to our survey explaining the challenges they face during manual data processing and here’s what they have experienced. 

The CMO of Crediful, Lucas Robinson, says, “The biggest setback of manual data processing is the fact that it consumes a lot of time. When entering information manually, it takes up a lot of time, no matter how fast one can type or process information, it will never be as fast as it needs to be. Typing a lot of information can be complex and cause people to lose focus and this will also add to the time it takes for data entry. Not being quick enough leads to a big delay in data availability.”

Undoubtedly, the excessive time consumed is the biggest hassle that an organisation has to face and there is not enough time for the employees to spend in processing big data every day. 

Apart from the time consumed, Lewie Mortier, Financial analyst and trader at Mitrade has shared his inconveniences during manual data processing and reported, “A challenge faced by using manual documents is that it takes a lot of space. As your business grows, you will have to find a room to store the documents and can be a downfall if you have a small office or want to save on space.”

Although cloud storages are the best way of storing data, manual processes consume a lot of space than usual. Companies have to settle the extracted data separately and the final files have to be saved as well. Furthermore, fixing the errors again needs some space. 

Financial challenges are tough to combat and manual data processing can take up a lot of money for your company, Jacob Johnson from Symbium shared his view of the traditional processing and said, “Obtaining, maintaining, and managing that data is possible but requires a significant capital investment. In case of customer onboarding, forms and workflows should be present at a minimum level and need *not* contain any AI capabilities. However, forms and workflow tools on their own are insufficient to address complex regulatory requirements and legal analyses that form the promise of AI tech. Streamlining those complex regulatory and legal analyses in customer onboarding is possible but requires a novel approach in order to curtail the mammoth task of solving these problems through machine learning.”

Saving costs is essential but if organisations continue to go for the traditional methods of processing data, it may not be possible. Businesses need an AI-powered solution that can save costs, time, and effort as well. 

Did you know that errors in manual data processing are higher and can cost companies a fortune? Also, the security of confidential information is at risk. Here’s what Adriene Raynott, Sr. Business Analyst at Cogneesol has to say,

“When you manually file paper documents, the chances of errors and losing essential documents are increased. This can also lead to wastage of time, money, and efforts. Business documents contain sensitive information that needs to be held securely. With manual processes, you might be putting valuable data at risk as anyone can access it.”

It’s no surprise that data breaches have increased in the past few years. Manual processes give fraudsters a clear path to fulfil their malicious intent. He further added to his statement and said, “As we do multiple edits on documents, paperwork is not amendable to be changed, after each modification, the final version needs to reprint that confuses employees about the documents’ real version. So, the wastage of time and effort makes employees feel stressed.”

AI-Powered OCR – The Perfect Solution 

Optical Character Recognition (OCR) has been in action since 1990 but it is not as effective as it should be for the fast-moving world. When Artificial Intelligence is there to enhance all the operations in the highly technological world, why not improve OCR? AI-powered optical character recognition is the new normal that can enhance data entry and processing for all the industries. Be it a law firm that needs to process documents for a case or a foreign exchange firm that has to verify documents for onboarding a trader, AI has revamped the data processing method. 

The process of data processing with AI-powered OCR is completed in three stages:

  1. Preprocessing 
  2. Data extraction 
  3. Pot-processing 

Learn about the three stages in detail: AI-Powered OCR to replace data entry in 2020 – A detailed insight

Shufti Pro’s AI-Powered ‘OCR for Business’ Solution 

Processing customer data is a tough job if your business is following the traditional methods. It will consume time and effort along with a lot of capital investment. Furthermore, employee productivity decreases since the manual process requires several edits to eliminate errors. The industry leaders shared their perspectives regarding manual data processing and fortunately, Shufti Pro has a solution to combat these challenges. An OCR software powered by Artificial Intelligence is a great way of processing data and ensuring its efficacy as well. It only takes 15 to 60 seconds for the software to extract and process data, and provides more than 90 per cent accuracy. Moreover, Shufti Pro’s OCR technology provides a global coverage for 150+ languages.  

Get in touch with our experts to know more details about OCR for business.


Pension Fund Fraud and the Role of Employee Identity Verification

Old age is the scariest phase of life for everyone and organisations find it a big challenge to cater to the needs of their old employees. They cannot be retained as permanent employees after 60, but there is a gratifying reward for the employees after retirement – the pension fund. People spend years to save money for their old age and spend it peacefully, and companies fully support their employees, but is it just rainbows and unicorns for firms? With good comes bad! Pension funds are also a way of illegal activities and fraudsters are coming up with different ways of stealing pension funds from organisations.

If your company supports the retired employees, make sure you take all possible measures to keep the funds safe and readily available for them. As weird as it sounds, criminals do not leave any way of gaining financial benefits and your firm’s pension funds are not at all safe without any security measures taken. The details about pension fund fraud, how to identify them, and how to prevent them have been discussed in this blog. Keep reading to find out.

Conflicts between employer and employee result in the first type of pension fund fraud. The claim mentions that the employer is not providing the pension benefits or denying that there were any retirement benefits at all. 

In the second scenario, some fraudulent activities, usually identity theft, result in loss of funds and these attempts are common now. 

Read more about identity theft: 5 types of identity theft fraud and How businesses can prevent it?

Some Examples of Pension Fund Frauds

Pension-related fraud is increasing and The Times reported that investors lose £4 billion every year. The numbers are unknown in the year 2020. Let’s see how the COVID-19 pandemic will end up for the retired people. Take a look at some examples of pension fund fraud that your company might encounter. 

Employees’ Fraudulent Activities for Pension Fund

Conflicts often end up in serious issues for all the employees in an organisation. Beware of the following activities in your company to avoid any pension-related fraud.

  • One of the employees representing false numbers for paying the retiree. 
  • Misrepresenting the information regarding retiree’s transferable pension rights and benefits.
  • False information about employee’s contribution to the retirement fund. Sometimes, retirees also communicate false information to get extra benefits. On the other hand, rivalry results in representing lower amounts so that the retiree gets the least pension funds.   
  • Tax-related issues can be associated to create problems in the release of pension funds. 

These are some issues that can be audited so that none of your retired employees feel distressed or face challenges for spending their lives peacefully. 

External Fraudulent Activities for Pension Funds

Amid the employees’ activities for messing up with the pension funds, fraudsters fight till the last breath. Here are some examples of fraudsters’ attempts to mess with pension funds. 

  • When a fraudster claims to be one of the family members and carries out a loan scheme from the retiree’s pension. 
  • Caretakers also claim pension loans on behalf of the person which is another scam alert for the company. 

Online theft of pension funds is now the new normal for fraudsters. Keep your employees funds secure at all costs with digital identity verification. You can prevent fraudsters from gaining illegal access to your business.


How to Spot a Pension Fraud?

According to The Guardian, pension scams have cost £1 million to every victim and statistics for 2020 are still unknown. God knows where this will end up for the businesses. Nevertheless, there is always good news for businesses and you can spot pension fund fraud in no time with these tips in mind.

If your business gets a random application claiming pension funds, be sure to cross-check if the employee is near retirement or not. 

Received an application for loan from a pension fund? Beware! It might be a scam. Fraudsters often appear as family members and claim loans from a person’s pension fund. It is ideal to create a policy that would not permit any loans without verifying consent of the employee. 

How can Businesses Avoid Pension Scams?

Internal audits can help in identifying pension fund fraud if any employee is involved, but what to do about any fraudsters’ attempts? Moreover, claiming the funds after a fraudulent activity requires a lawsuit and the process never ends in some cases. Businesses can avoid pension scams if there are any identity verification measures for providing pension funds. This will not only help you cater to the needs of retirees efficiently, but it will also help your company in keeping the evil eyes away. 

Identity verification is one way out of the rising problem. Your business needs a robust solution that can not only help you in onboarding legitimate employees for the company, but you can also authenticate the retirees before releasing their funds. 

Identity verification in today’s digital world has also taken the virtual road. Verifying employees is helping different industries in remotely onboarding legitimate candidates and preventing fraud. Your company can secure pension funds with this process too. Resolving issues with the release of funds wouldn’t be a problem and fraudsters can be prevented from causing any issues for your retiring employees. 


It All Boils Down To…

Retirement brings a lot of peace if the aftermath is not disappointing for the people. However, fraudsters make the simple retirement process inconvenient for the old employees. It is not only stressful for the workers to end their working phase, but there is a lot on their plates that is under consideration. Planning out the perfect life ahead can be convenient if they get the benefits on time without any external force messing up the process. Criminals are now targeting retirees to fulfil their malicious intent and stealing pension funds is the best way for them. Conflicts between employees result in a rivalry that never ends up well for anyone. The organisation becomes the biggest victim of all these issues. Hence, companies should consider employee verification to prevent fraud. 

Eager to know more about employee verification? Get in touch with us today.


Shufti Pro’s Ongoing AML Solution to Prevent Transaction Laundering

Online financial criminals are always finding newer ways to exploit financial infrastructures in order to conceal illegal sources of their funds. After money laundering, transaction laundering is gaining the spotlight among criminals across the globe. Transaction laundering is a more refined and revolutionised form of traditional money laundering practices. Although, it may have been left unnoticed by the global regulatory authorities, until now. Transaction laundering is closely related to the e-Commerce industry. The on-going development in the e-Commerce sector has paved the way for cyber criminals mainly because it involves a large volume of personal customer data and transaction flow. Compromised customer data due to breaches lay bare the e-commerce platforms to more vulnerabilities. 

Recommended: E-commerce Frauds – Common types and Prevention tips


What is Transaction laundering?

Transaction Laundering, also known as, Electronic Money Laundering, is one of the methods for disguising illicit sources of money. Illegal traffickers set up an online illegal business website, commonly known as shell websites that seem totally unrelated to the product they are selling in reality, in exchange for a safe payment gateway through banks. Customers can order illicit goods such as drugs from the site. Criminals process card payments for illegal products through another merchant’s legal payment service accounts, which as a result, helps the criminals mask their fund’s origin. The process of using another merchant’s legal payment services is referred to as transaction laundering.

Transaction laundering – Electronic form of money laundering

Transaction laundering is mostly practised to disguise the sources of the illegal drug business and almost all the illegal transactions are carried out through transaction laundering. Here vendors of illegal products develop shell websites, completely irrelevant to the product they are selling, say for example an eCommerce platform for shoes, is processing the payments from illegal goods and Merchant Service Providers (MSPs) aids laundering money by providing a safe passage for processing illegal payments. Therefore, regulatory authorities are targeting and investigating the infrastructure aiding these illegal businesses and stressing upon the need for monitoring credit card transactions to prevent transaction laundering. 

Illegal traffickers involved in the drug business may reckon that financial institutions overlook online activities, thus using online options to their advantage to sell products otherwise prohibited through shell websites. Since transaction laundering is gaining attention from global regulators, the banking sector is monitoring websites with the objective of terminating them in case of illegal activities. But online criminals are finding more sophisticated ways to hide profits earned through illegal sources via online platforms. Additionally, an increasing number of eCommerce platforms are making it difficult to detect fraudulent transactions. 

Transaction Laundering

As crime is becoming more sophisticated, so do the Anti Money Laundering regulations to curb these crimes. Previous old manual AML regulations, that were unable to keep up with the ongoing digitisation are, too, now syncing with the digital world to prevent money launderers from exploiting digital payments. 

There are an estimated 40 million e-commerce websites around the world, which are making manual due diligence and onboarding processes inefficient and nearly impossible. The reason why customer due diligence, AML, and identity verification services are using emerging technologies of Artificial Intelligence and Machine learning to meet regulatory compliance. These technologies are helping global companies, the financial sector, to be precise, in combating the crimes of transaction laundering. AI-based Identity verification solutions to meet KYC and AML compliance are a game-changer. 

Recommended: Anti Money Laundering – What is AML compliance and why is it important?

How does it work?

Transaction laundering gives criminals ease to establish websites that may look legitimate but they are not. Plus, the transactions are carried through legal payment accounts which makes it extremely difficult to detect the sources. The process of transaction laundering is as follows:

  • The online criminals develop illegal websites with the objective of transaction laundering by simply selling illegal products such as drugs
  • Payments are processed through another merchant’s legal payment accounts to guise the illegal sources
  • Merchant processes the payment and contacts the bank for receiving funds
  • Funds are deposited to the criminal account, the money is, therefore, laundered. 

The credit market is huge. Online customers make thousands of credit card payments every day, both in debit and credit. Over 103 billion transactions were made in the year 2015, worth $5.72 trillion in the USA alone. Therefore, investigating suspicious transactions out of these $5 trillion is near to impossible and is like finding a needle in the haystack. The problem intensifies when these illicit transactions appear as legitimate. Without robust AML and KYC solutions, there is no other way for financial institutions to determine criminal activities happening right under their noses. 

Common sources of Transaction Laundering

There are 3 major sources through which transaction laundering is implemented.

  • Front or shell online companies: These companies are not what they show they are. These may appear as something else but are used to sell illegal products under the veil of a legitimate business. 
  • Pass-through companies: These basically involve merchants with legal payment accounts that provide a passage to unlawful third parties to use their legal accounts in order to process illegal payments.

Funnel accounts: These accounts accept payments from criminals in amounts below the threshold to avoid identification, in one geographic area and are then withdrawn in another. The intermediary then uses these funds to purchase goods either through wire transfers or cheques, the illegal goods are shipped to foreign countries for selling. The profits acquired through sales are transferred back to criminal organizations.


Potential risks posed by transaction laundering

Transaction laundering poses risks to financial institutions, and some of these risks are in the form of financial losses as well as reputational damages. By letting laundered money into the payment system can violate anti-money laundering laws and regulations which can result in non-compliance fines for the banking sector, hence, financial losses. Undoubtedly, technologies are making payment processing faster, but at the same time, transaction laundering is becoming increasingly popular. 

According to research, the real identities of 6-10% of online merchants remain hidden from their payment processors. Airbnb has been identified as another route for transaction laundering including Amazon, eBay, etc. Additionally, Illegal online gambling is increasingly becoming dependent on transaction laundering. 

Customers, financial institutions, and society as a whole are negatively affected by the aftermath of money laundering. Financial institutions are especially vulnerable to the threat of financial crimes as key stakeholders in the company may face jail time in case of failing to meet AML compliance. Moreover, once reported, banks may lose customer trust. By ignoring money laundering activities, world economies can fail and countries with weak governments and law enforcement may give criminals easy access to institutions to commit more crime. However, every time a money laundering case becomes known the credibility of the governmental infrastructure is further weakened.


Illegal pharmaceuticals account for only one portion of the counterfeit product market accounting for $450 billion, according to ETA experts. 

Monitoring transaction laundering

Transaction monitoring involves the monitoring of customer’s transaction history, information, and interactions. It includes the complete record of customer activities within financial institutions such as withdrawals, bank deposits, and transfers. Since AML compliance is mandatory for financial institutions, therefore, in order to meet the obligation, banks are using AI-powered solutions to perform on-going background checks for AML. Inherently, using automated AML solutions is one of the most effective approaches as compared to manually going through customer records for risk assessment. Also, manual processes require just the right amount of resources to prevent financial crimes. Additionally, automated AML solutions can prevent organizations from being exposed to greater levels of risk
Recommended: The Anti-Money Laundering Solution Market is Expected to Double by 2025

Shufti Pro’s On-going AML Solution to Prevent Transaction Laundering

Customers with high levels of risk pose great threats to the financial infrastructure. Therefore, they are required to perform a thorough risk assessment during customer onboarding processes and are checked against global sanctions, blacklists, and PEPs. On-going AML is performed to prevent high-risk customers from causing any more damage to the system, then they already have. 

Shufti Pro’s ongoing AML solution gives financial businesses a chance to perform ongoing customer monitoring. On-going AML from Shufti Pro is powered by AI and Machine learning algorithms for conducting in-depth AML monitoring of clients to develop comprehensive risk profiles which consequently prevent the crimes of money laundering and other financial crimes such as corruption and/or terrorist financing. Financial organizations can stay one step ahead of fraudulent customers and can also meet regulatory requirements. Shufti Pro’s ongoing AML is considered one of the best practices by global businesses to screen customers as it not only saves costs and resources but provides accurate authentications. The AML databases are updated on a regular basis to maintain client risk profiles and establish consistency with authentic background data.

Shufti Pro’s ongoing AML solution is helping financial service providers, retailers, credit unions, insurance firms, real estate, you name it, in eliminating false positives to identify high-risk profiles through global AML screening, including:

  • Identity assurance
  • AML onboarding solutions
  • Accurate risk profiling
  • Updated risk status
  • Enhanced compliance screening
  • High-security standards, and
  • Reduced cost of compliance

Want to know more about Shufti Pro’s ongoing AML solution?


A complete guide to understanding KYC compliance regulations (KYC Regulations 2020)

Introduction to KYC or Know your customer

Know your customer or KYC history dates back to 2001 in the USA as a part of the Patriot Act in the wake of 9/11. Before the 2000s, KYC practices were directed at preventing money laundering but after 9/11 everything changed. Furthermore, everyday companies are exposed to operational, legal, and reputational risks due to online scams and frauds, consequential losses of which are beyond comparison. Therefore, regulatory authorities developed KYC or Know your customer processes to avoid frauds and the practices of money laundering.

Financial institutions usually perform KYC processes before opening customer accounts. Money laundering is becoming increasingly widespread, bad actors are always finding more innovative ways to disguise and conceal their illegal sources of money. Illegal sources may include and are not limited to drug trafficking, terrorist financing, tax evasion, corruption, smuggling, etc. Therefore Know Your customer procedures are readily accepted by businesses across the globe as a measure towards customer identification and anti-money laundering. The guidelines are issued by regulatory authorities unique to every country, territory, and/or jurisdiction.

What is KYC compliance?

KYC compliance is important for financial institutions to ensure the identity of their customers. So when onboarding new customers let’s say for example for bank account opening. KYC checks for customer identification and verification are performed to meet KYC compliance. Banks hold the rights to refuse customer’s requests for account opening, in case their KYC verification fails or shows negative results. KYC compliance has a significant role in today’s changing financial landscape to combat against the crimes of money laundering and terrorist financing.

As the world is digitizing at a rapid pace, manual KYC checks are making it difficult for financial companies to meet KYC compliance, since manual KYC checks are becoming challenging when it comes to securing customer and business interest through accurate KYC verification.

Therefore. Online KYC verification is taking a turn for the better and for effectively meeting global compliance and regulations.

How can KYC protect global businesses?

Knowing your customer is considered important because it tells you about the customers you are doing business with. It allows the financial sector to carry out extensive customer due diligence to verify their identities to prevent identity theft, money laundering, and fraud. Know your customer compliance protects businesses against unanticipated reputational damages due to external breaches from sneaking into systems. The regulations of money laundering and terrorist financing are becoming stricter by the day in a lot of countries around the world.

Robust KYC verification processes perform a thorough analysis of entities undergoing identification including anyone wishing to connect with a business in any way or form. An in-depth customer due diligence is performed for identification, screening against blacklists to identify money laundering suspicions, checking UBOs (ultimate beneficial owners) in case of KYB (Know your business), collecting customer information, and checking against PEP’s (Politically exposed persons) global lists for additional security.

Since online KYC verification assesses the risk level associated with every individual, individuals with high levels of risks go through additional identity checks such as checking against adverse media and extensive corporate analysis for risk profiling. Risk profiles are continuously updated due to the changing security landscape. Following ‘Know your customer’ regulations are obligatory for financial institutions around the globe. Regulatory authorities have placed penalties in case of not following the set of rules and regulations pertaining specifically to ‘know your customer’ and Anti-money laundering norms. Yet, companies every year pay billions of dollars in penalties because they fail to comply with KYC and AML compliance checks, and that are just monetary damages, minus the reputational damages to corporations.

Why KYC important

Benefits of performing automated KYC processes

KYC processes ensure transactional transparency between customers and financial institutions. Some of the most important benefits of performing KYC processes are as follows:

  • ‘Know your customer’ processes establish institutional credibility among customers and across industries
  • On one side it protects customer’s sensitive data from going into the wrong hands, and on the other side, it saves businesses from facing reputational and legal damages due to breaches and cases of identity theft
  • Keeps investor’s interest secure at all costs
  • As mentioned earlier, the main focus of KYC is to prevent financial crimes such as money laundering, tax evasion, corruption, and terrorist financing
  • Preventing fraudsters from conducting fraudulent ICOs is also one of the KYC benefits
  • Manual KYC costs are pretty high, automating know your customer procedures using identity verification solutions is a step in the right direction
  • Replacing manual ‘Know your customer’ with online KYC verification is time and cost-effective
  • Automation and digitization is reducing manual labor, consequently eliminating errors
  • Helping companies stay compliant with the rapidly changing and expanding regulation landscape
  • KYC procedures for swifter customer onboarding
  • Automated KYC can help with frictionless verification processes regardless of geographical boundaries

Components of KYC

There are three main types of customer due diligence or KYC processes, which are performed based on the level of risks associated with every individual. Say for example an individual exposed to PEPs may require an in-depth screening as compared to normal account holders with minimum levels of transactions.

Simplified Customer Due Diligence or CDD

Know your Customer checks are performed on initial customer onboarding stages. It usually assesses the potential risks posed by customers. This level of due diligence does not require an in-depth screening. It is a basic process because individuals are not categorised as high or medium risk profiles.

Standard Due Diligence or SDD

SDD is carried out in the case of public authorities or famous entities. These are categorised as low or medium risk customers. Every country and jurisdiction has its own set of standards, outlining when to perform standard due diligence procedures.

What is Enhanced Due Diligence or EDD

Unlike customer due diligence and standard due diligence, high-risk individuals go through extensive screening to check the involvement in money laundering, terrorist financing, and corruption. Business ultimate beneficial owners are identified, along with sources of income, and screened against PEPs and global sanction lists to eliminate risks of financial crimes.

Apart from that, additional background checks are also performed, as needed. Enhanced due diligence also exposes the nature of the business and the purpose of bigger transactions through ‘know your customer’ remediation. Due diligence is an important step that companies take to get rid of risk by performing extra checks in return keeping businesses safe from bad actors and money laundering activities.

Global Industries using KYC services

KYC procedures are empowering businesses to fulfill their AML compliance and eliminate fraud across industries. It also offers frictionless customer experience during customer onboarding as they are performed thoroughly by KYC experts.

Use cases of KYC

What is KYC in Banking?

This is one of the most significant use cases of KYC. Financial institutions that provide account opening services rely greatly on digital KYC in banking services to obstruct financial crimes such as money laundering and identity theft. Also, in the case of remote payments robust ‘know your customer’ procedures help with customer identification and verification to ensure the authenticity of individuals sending and receiving the money. Through KYC, customers have to prove their identity either through document verification or live video KYC, which proves to be an efficient process for fraud prevention.

Not just banks, insurance companies also rely on KYC solutions as they offer online registration to prospective policyholders. ‘Know your customer’ processes for insurance companies allows them to know that the customers undergoing insurance are authentic and are who they say they are. Then there are brokerage firms, mortgage companies, and various loan companies that use KYC solutions for adding an additional layer of security to their revenues and operations.

You may be interested in Video KYC – Ultimate Solution for Financial Institutions

KYC For Gaming and Gambling Industry

The online gambling industry is rapidly growing and is expected to reach over $94 billion U.S. dollars by the year 2024. One of the reasons for this unanticipated growth is uninterrupted digitization. This continual digitization is bringing convenience to businesses and customers alike.

Over 4.4 billion people around the globe use the internet for interacting with the online world in one way or the other. Online gambling and gaming industries are mandated to verify the identity of their customers including age and address verification for risk profiling. The whole idea of KYC for online gambling and gaming sites is to prevent it from bad actors including frauds and restricting minors from approaching age-restricted platforms or items. It provides a secure player environment, builds trust among customers, and helps online companies to stay compliant, eliminating non-compliance fines.

KYC in Gaming Industry

KYC For Travel Industry

The travel industry has seen remarkable changes due to technological advancements. Technology is making things easier for global industries including travel. Travel agencies now improve their customer experience through powerful KYC and AML practices. Since technology has maximized the risk of online frauds, ‘know your customer’ for identity verification is eliminating these risks to a greater extent.

Over the course of a few years, the travel industry is a favorite sector for cybercriminals to target. In 2018, a travel booking site Orbitz lost sensitive customer data including credit card details to a security breach. These stolen payment details are then used for identity theft and sold on the black market, bought by other cybercriminals, used for the purpose of account takeovers. Therefore, KYC for identity verification including biometric technology can prevent these crimes from happening.

KYC For Travel Industry

KYC For Crypto Exchanges

The technology is also revolutionising the crypto industry. Cryptocurrencies like Bitcoin are easily available for people to buy from crypto exchanges. But various financial crimes such as money laundering are being actively carried out through cryptocurrency due to its complex infrastructures as it makes the sources untraceable. According to financial crime reports, around $2 trillion is laundered every year.

Therefore, the need for verification continues to grow along with the growth of the crypto industry. Virtual currencies have always seemed to be involved in some kind of scandals so, for the cryptocurrency industry to work, KYC crypto for customer identity verification is stressed upon by regulatory authorities to eliminate not only money laundering but fraudulent ICOs from taking place.

Other use cases of KYC are and not limited to:

What is eKYC?

Now that more and more businesses have evolved to a digital platform, simple KYC is evolving into electronic KYC thus forming e-KYC. Financial institutions or otherwise are required to identify and authenticate their customers to avoid any risks posed by false identities. When their customers lack any real identification, or when they are not authenticated, makes it difficult for businesses to execute due diligence accordingly.

The reason why a lot of companies are moving towards e-KYC for convenient onboarding processes and in return profitable customers. As online transactions increase due to the ever-increasing presence of online businesses, it has become crucial to assure the legality of online customers. This is where e-KYC comes in, it allows companies to verify an individual’s identity through digital verification mechanisms.

Document verification

Includes the verification of government-issued KYC documents identity cards, passports, or even health insurance. Financial institutions can refer to these assets when verifying the identity of prospective customers.

Video verification

One of the ways to prevent online frauds and possible impersonations during e-KYC is to perform video verification. India is considered as one of the first countries to embrace video identification. Video KYC is a face to face communication process through a live video with a compliance specialist for customer identification. It is not only a verification process but helps companies reduce the high costs of physically visiting the customers or vice versa. Video verification is basically an online version of the traditional one-on-one meetings.

Facial recognition and liveness detection

Many financial institutions make use of biometric authentication and liveness detection for fraud prevention. In facial recognition, the face of the person is matched against one or more faces to ascertain the existence of the match, to begin with. This technology is growingly becoming a part of everyday life. On the other hand, liveness detection is the technology that recognizes whether the face in front of the camera belongs to the person it was supposed to in order to avert face spoofing or identity theft. It ensures the remote presence of the users at the time of verification through micro-expression analysis and 3D-depth perception in order to combat face spoof attacks.

What is Mobile KYC?

Now that we know what is KYC, and enhanced KYC. It’s time to discuss Mobile KYC. Mobile KYC allows businesses and customers to authenticate identities using smartphones. Everyone owns a smartphone these days, the features of having a front camera and 4G internet connection makes the whole verification experience smoother. Mobile KYC services increase customer outreach with more credibility. It is revolutionizing the banking sector and eCommerce sector. In this day and age, everyone is buying and selling stuff straight from their mobile phones, therefore, identity verification through mobile for customer authentication is an effective way forward.

The ease of the digital world brings with it various online crimes thus identifying customers with just a few clicks is convenient and advantageous. In today’s digitized world, customers are carrying out their banking operations including transactions using their mobile devices. Regulations around the globe are changing due to technological advances, financial institutions are bound to follow the guidelines for AML, and are required to follow ‘Know your customer’ checks for remote customer identification. The reason why mobile KYC is coming in handy for banks to authentic transactions, and account opening.

Know Your Customer onboarding process

Oftentimes, onboarding new customers can be complex for global industries. But identity verification and verifying their transaction history and patterns is important in order to comply with Anti-money laundering regulations and customer due diligence. Having said that, KYC checks for customer verification are not only limited to early onboarding stages but also performed after regular intervals for remediation purposes. Since the KYC process is becoming intense, companies are spending a thousand dollars on manual ‘Know your customer’ processes which are inaccurate, inefficient, and expensive. Therefore, automated KYC onboarding is gaining attention. The following steps are included in the customer KYC onboarding process:

  • The first step involved in the KYC onboarding process is the customer identification program, here personal information of the client is collected
  • After the user has filled in the form with his or her personal information, the next step is to upload their identity document for verification purposes
  • After uploading the required document, the information on the ID document is extracted using OCR technology for processing and verification
  • AML screening is performed to identify high-risk entities and which as a result prevents them from entering the system
  • Ongoing financial transaction monitoring is done to identify suspicious transactions and patterns of money flow
Know Your Customer onboarding process

What is the importance of kyc process

Performing effective KYC checks reduces the threats of identity theft, financial crimes such as money laundering, corruption, tax evasion, and terrorism financing. Complete risk assessment helps in understanding clients, their behaviors, and transaction patterns. The KYC verification process collects customer information to verify their identity which consequently stops crimes from taking place in the future. KYC verification processes in financial institutions ensure that their customers are not involved in money laundering related crimes.

KYC process steps include Customer Identification, due diligence, and enhanced customer due diligence; helping the financial sector to avoid severe reputational damages and hefty financial charges imposed by regulators for non-compliance. For the banking sector, it is extremely important to perform an in-depth background screening to mitigate fraudulent activities.

  • Fraudulent activities are minimized by thoroughly following ‘know your customer’ regulations
  • Institutions can collect sufficient proof of individual identity for verification
  • Financial organizations can ensure that their services are not abused in any way through identity theft
  • Prevents money laundering, and other monetary fraudulent transactions

KYC regulations around the world

Every jurisdiction has its own laws to comply with since they have their government-issued identity cards, driver license, passports, credit/ debit cards, and utility bills. Industries such as financial, online gaming, and gambling sites have greater KYC regulations and AML compliance obligations and may have their own devoted regulatory authorities for that matter. Countries use governmental agencies to oversee compliance regulations. For example, Portugal uses three separate regulatory authorities for its banking, securities, and gaming sector.

The Financial Action Task Force (FATF)

FATF is a global intergovernmental organization committed to fighting against money laundering and terrorist financing crimes. It has 36 member states spread across its jurisdictions. FATF has been putting forth the global standards for anti-money laundering compliance by monitoring customers under AML and CTF guidance. FATF has made it mandatory for financial institutions to perform thorough ‘know your customer’ procedures, risk assessment, screening against global sanctions, and due diligence processes before onboarding customers and businesses. 

You may be interested in: 40 recommendations of FATF – Shaping the future of your business

Some major KYC regulations:

  • The European Union’s Anti-Money Laundering Directives – 5AMLD and 6AMLD
  • The Financial Conduct Authority (FCA) in the UK
  • The Bank secrecy act in the USA
  • Hong Kong Monetary Authority (HKMA) and the Monetary Authority of Singapore (MAS) for Asia
  • AUSTRAC in Australia

KYC and AML Compliance Checklist

Collecting customer personal information through the customer identification program (CIP) is an important part of KYC checklists:

  • The full legal name of the customer
  • Customer’s digital photo to match with the ID document
  • Scanned ID documents such as identity cards, passports, and others
  • POA or proof of address from the utility bills, or bank statements
  • Ultimate beneficial owners (where needed) along with other identities checks
  • Screening against global blacklists such as PEP lists, sanctions, and other watchlists to identify the involvement in money laundering
KYC and AML Compliance Checklist

Automating manual customer onboarding processes in banking

Manual ‘know your customer’ processes in banking are prone to errors, slow, complicated, and risky. Along with that, they bring problems during client onboarding because manually filling forms and answering questions are time-consuming. Whereas, automated KYC in the banking sector specifically reduces manual tasks and allows financial institutions to be more accurate and time-efficient, helping them to evaluate customer risk more effectively.

Modern technology combined with regulatory compliance is preferred. Therefore, automated KYC authentication is significant for financial institutions and other global industries. Moreover, it reduces paperwork, storage space, and costs of manual KYC. Too much documentation is prone to corruption whereas streamlined and automated KYC processes can eliminate such activities. Also, with digital KYC customers can avail banking and other services instantly.

What is KYC remediation?

Since ‘know your customer’ is becoming a topmost concern for industries, maintaining customer files, while getting rid of inaccurate and outdated information on an on-going basis is also becoming a priority. Therefore, KYC remediation is a process of updating customer KYC files to meet regulatory compliance. Moreover, KYC remediation gives businesses an opportunity to conduct a risk assessment to minimize business risks and to understand customers better.

How Shufti Pro can help global businesses?

Shufti Pro’s digital KYC solution is helping companies to minimize the complications that come with onboarding and monitoring customers and businesses, in the fastest and simplest way possible. Shufti Pro’s AML screening protects businesses from money laundering activities and identifies entities involved in financial crime to meet AML and KYC compliance within financial institutions.

  • Faster customer onboarding while reducing drop off rates
  • Enhanced customer due diligence to ensure the authenticity of individual through ID documents and face recognition
  • Ongoing monitoring for AML compliance, databases and lists are updated on a continuous basis, to remove any ambiguity in identification processes
  • Automated KYC solutions including age verification, address verification, facial biometric authentication, video KYC, and OCR for business can easily be integrated with already existing company systems for ease of use
  • The automated system is secure without the involvement of third parties

Shufti Pro uses the applications of Artificial Intelligence and human intelligence. It provides universal language support and verification services in more than 230 countries and jurisdictions.

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What is KYC?

Kyc means Know Your Customer. In simple words, KYC processes ensure the legitimacy of customers by verifying their identity for risk assessment. It is considered a major part of customer due diligence processes to prevent fraud and financial crimes.

How can KYC protect global businesses?

Know your customer compliance protects businesses against unanticipated reputational damages due to external breaches from sneaking into systems.

What are the benefits of performing automated KYC processes?

KYC processes ensure transactional transparency between customers and financial institutions.

What are the components of KYC?

There are three main types of customer due diligence or KYC processes, which are performed based on the level of risks associated with every individual.

What is customer due diligence?

Know your Customer KYC checks are performed on initial customer onboarding stages. It usually assesses the potential risks posed by customers.

What is standard due diligence?

SDD is carried out in the case of public authorities or famous entities. These are categorised as low or medium risk customers. Every country and jurisdiction has its own set of standards, outlining when to perform standard due diligence procedures.

What is enhanced due diligence?

Unlike customer due diligence and standard due diligence, high-risk individuals go through extensive screening to check the involvement in money laundering, terrorist financing, and corruption.

What is KYC in banking?

Financial institutions that provide account opening services rely greatly on digital KYC in banking services to obstruct financial crimes such as money laundering and identity theft.

What is the importance of KYC in the gaming and gambling industry?

The whole idea of KYC for online gambling and gaming sites is to prevent it from bad actors including frauds and restricting minors from approaching age-restricted platforms or items. It provides a secure player environment, builds trust among customers, and helps online companies to stay compliant, eliminating non-compliance fines.

What is the importance of KYC in the travel industry?

Travel agencies now improve their customer experience through powerful KYC and AML practices. Since technology has maximized the risk of online frauds, KYC for identity verification is eliminating these risks to a greater extent.

Why is KYC required for crypto exchanges?

Virtual currencies have always seemed to be involved in some kind of scandals so, for the cryptocurrency industry to work, KYC crypto for customer identity verification is stressed upon by regulatory authorities to eliminate not only money laundering but fraudulent ICOs from taking place.

What is eKYC?

As online transactions increase due to the ever-increasing presence of online businesses, it has become crucial to assure the legality of online customers. This is where e-KYC comes in, it allows companies to verify an individual’s identity through digital verification mechanisms.

What is KYC document verification?

Includes the verification of government-issued KYC documents identity cards, passports, or even health insurance. Financial institutions can refer to these assets when verifying the identity of prospective customers.

What is Mobile KYC?

Mobile KYC allows businesses and customers to authenticate identities using smartphones. Everyone owns a smartphone these days, the features of having a front camera and 4G internet connection makes the whole verification experience smoother.

What is the KYC onboarding process important?

The KYC verification process collects customer information to verify their identity which consequently stops crimes from taking place in the future. KYC verification processes in financial institutions ensure that their customers are not involved in money laundering related crimes.

What is KYC remediation?

KYC remediation is a process of updating customer KYC files to meet regulatory compliance. Moreover, KYC remediation gives businesses an opportunity to conduct a risk assessment to minimize business risks and to understand customers better.

Cannabs industry

Cannabis Industry – Risks, Predictions, Fraud & KYC/AML Obligations

The ever-growing industries across the world are opening gates for numerous opportunities to greet entrepreneurs. Emerging trends and advanced technology have hidden benefits that are yet to be explored. The cannabis industry is an ideal example that fits the situation. Previously, merchants could not enter the industry due to several legal restrictions, and smuggling and other illegal activities increased. Over time, there have been massive developments and medical uses have compelled many people to enter the marijuana industry. The cannabis industry has faced some interesting turn of events in the past few years. The legal requirements have become more stringent, but there’s good news for newbies. The industry is now open for business in many regions of the world. 

The global cannabis sector has the potential for tremendous growth and reports estimate that the global cannabis market is expected to be worth $73.6 million by the end of 2027. Everything has its bright and dark sides, and so does the legalisation of the cannabis industry. Want to know the rising risk, fraud, and legal restrictions in this industry? Read this blog to find out all the information you need. 

Risks for the Cannabis Merchants

First things first, legalisation is good news for people interested in entering the sector but it also welcomes numerous risks for merchants either newbies or pros of the game. Here are some of the risks that businesses faced in 2020, and 2021 is expecting more complexity in the same. 

Diverse Customer Base 

Customers are the boss and your bosses are well-educated now. The consumers know about the legalisation of the sector. Moreover, they are familiar with its uses as well. Dealing with customers demands extra efforts. 

Amid the diverse customer base, there is also a need for identifying the products to offer. Research on marijuana has resulted in its numerous medicinal uses and recreational use is already known to many. Tackling knowledgeable customers across the world will not be a bed of roses.   

Development in the Industry

In addition to well-aware customers, businesses also have to deal with constant research and innovation in the sector. After legalising its use, the R&D department is in action across the world, and with new use comes more responsibilities. Offering products and identifying your customers is a little blurry now.  

Increase in Regulations 

Everything comes at a price and high legal restrictions are the biggest price that companies have to pay for smooth operations in the cannabis sector. Marijuana has always been used as a drug and the majority of its use was illegal. Regulatory authorities have permitted its growth and use, but the legal requirements are tough to tackle. Complying with these laws and regulations is a tough call for new merchants as well as experienced ones. 

The Rise in Fraud

Fraudsters never sit back and relax. Once, the sector itself needed fraudsters and now, it is figuring out ways to prevent them. After the cannabis industry was legalised in different regions of the world, serious laws were enforced which encouraged them to kick criminals out of the picture. However, advanced technology has made it convenient for illegitimate people to achieve their malicious goals.

Legal cannabis


With the advent of technology, cyberattacks have not only increased in the major sectors but the emerging cannabis sector is another target. If you have a website for your cannabis business, make sure its database is secure. Add as many security measures as possible, otherwise, get ready for data breach and ransomware attacks. Artificial Intelligence and Machine Learning algorithms are not helping you to secure your business, but fraudsters are also benefiting from them. 

Unauthorised Vendors

A vendor data breach is another rising threat for many industries where third-parties or vendors of a company do not take robust security measures and customer information is breached. Unauthorised vendors are hard to identify and the challenges for cannabis merchants are increasing. These vendors can be money launderers who might be planning to launder their illegally earned money using your legal marijuana company as a money mule. Moreover, activities of the unauthorised vendors bring a lot of hassles for the businesses and complying with the robust aws may not be possible. Verifying vendors is, therefore, essential before completing any transactions. 

Read more about money mules: Jobs in the frame for money laundering

Cannabis Indusry

How to Secure the Industry?

The modern era is not free from criminals and protecting all sectors is vital. Preventing fraudsters from fulfilling their evil intent is crucial for the cannabis sector. However, there is a fantastic solution to the problem. Businesses in this industry must add know your customer verification (KYC) for customer onboarding. The regulatory authorities have hefty fines for firms that do not verify customers. 

Apart from customer verification, being operational in this sector also forces you to verify your suppliers. AML/KYC compliance is now stricter than ever and an inability to comply with the regulations will result in hefty fines. If you are planning to add robust authentication measures, consider video verification. Video KYC is a new way of verification that enables you to combat spoof attacks, deep fakes, and other cyberattacks. Every company in this industry can prevent fraudsters from data breaches or ransomware through digital customer verification

Video Interview KYC

KYC/AML Obligations of the Cannabis Industry

Legal requirements are stringent and all the business owners must have a clean background to operate in this sector. Moreover, companies have to verify customers, suppliers, or anyone who wants to be a part of the business. The countries legalising cannabis production and sales have separate regulatory authorities who provide guidelines for legal operations. The authorities of the state have to follow recommendations from the FATF to prevent money laundering and terrorist financing. Here are some of the prominent regulatory bodies of different states that guide cannabis merchants. 

  1. In the United States, the Marijuana Opportunity and Reinvestment (MORE) Act, the Marijuana Justice Act, the Realizing Equitable & Sustainable Participation in Emerging Cannabis Trade (RESPECT) Resolution, and the Marijuana Freedom and Opportunity Act regulate the sector. 
  2. The Federal region in Canada regulates under Cannabis Act (Police Enforcement) Regulations Cannabis Act Regulations Industrial Hemp Regulations Qualifications for Designation as Analyst Regulations (Cannabis).
  3. In the United Kingdom, the following regulations and statutes regulate cannabis: 
  • Misuse of Drugs Act 1971 c. 38 (as amended)
  • The Proceeds of Crime Act 2002 (Money Laundering: Exceptions to Overseas Conduct Defence) Order 2006
  • UN Single Convention on Narcotic Drugs, 1961

Amid these states and their regulations, different countries have statutes that ensure the security of all the merchants and the clients. 

Predictions for 2021  

The coronavirus pandemic has changed the outlook for many sectors and the marijuana sector is also expecting some challenges in 2021. Let’s have a look at the analysts’ predictions for this sector in the coming year. 

Sales are Expected to Increase

With more research and a well-aware audience for the companies, this industry can expect a high sales volume in the coming year. The introduction of new products and uses of marijuana in food, medicine, and skincare products can help businesses in achieving higher profit margins in 2021.  

Rising Competition

Believe it or not, the competition in the sector will increase next year. Many countries of the world have legalised its medicinal and recreational use; therefore, there is a potential for new investors to target people. From skincare products with CBD oil to the use of hemp in beverages, there is a lot that can be done to survive in the emerging market.   

Strict Compliance

As said earlier, the laws for the industry are becoming stricter every day. In the next year, all companies can expect amendments in the regulations, and some new laws may be introduced as well. Furthermore, the sixth AMLD will not be easy to comply with in 2021. 

Learn more about AMLD6: 6AMLD of EU – A detailed insight

Key Takeaways 

The cannabis industry is growing at a faster pace ever since its use is legalised in different sectors of the world. The US, Germany, Canada, Mexico, and the UK will be the top five countries generating revenue in this emerging sector by 2024. However, the legal restrictions are tougher for the marijuana industry than any other. The regulatory authorities are in full swing for taking care of the fraudsters in the industry. Nevertheless, criminals pave their way at any cost, and with the betterments in technology, Artificial Intelligence algorithms are helping them out. Complying with KYC/AML regulations is necessary for all the businesses in the sector before hefty fines hit you hard. For effectively fulfilling the requirements of legal survival in the sector, businesses must opt for digital verification to verify all the suppliers as well as customers. 

Need more information about compliance and verification? Get in touch with us.

What are frauds in the cannabis industry?

Fraud in the cannabis sector is increasing. Here are the most common scams that every merchant falls for:
Unregistered vendors
A high rate of return
Insulation from risk
Cyberattacks especially data breach

How to Secure the Cannabis Industry?

The modern era is not free from criminals and protecting all sectors is vital. Preventing fraudsters from fulfilling their evil intent is crucial for the cannabis sector. However, there is a fantastic solution to the problem. Businesses in this industry must add know your customer verification (KYC) for customer onboarding. The regulatory authorities have hefty fines for firms that do not verify customers.

What are the KYC/AML obligations for the cannabis industry?

The countries legalising cannabis production and sales have separate regulatory authorities who provide guidelines for legal operations. The authorities of the state have to follow recommendations from the FATF to prevent money laundering and terrorist financing.


Biometric Authentication Technology – Everything you Need to Know

Nowadays businesses are looking for more secure systems for the sole reason of customer authentication. Either it’s the small business, eCommerce industry, or financial sector, biometrics technology seems to be gaining attention. Biometric authentication technology has seen a lot of advancements over the past few years and is considered one of the most effective ways for customer identification.

Every year millions of people become victims of identity theft crimes. The Federal Trade Commission recorded 3 million reports in the previous year out of which 15% belong to identity theft, alone. Biometrics are becoming the authenticators of identity to eliminate crimes and imposters. 

Customer identification through biometrics is taking over the world and is progressively more prevalent than initially anticipated. Companies are utilizing biometric technology for fraud detection and security because biometric security is way more beneficial than old and conventional identity verification methods. Apart from providing individual verification, it keeps customer data confined for authorized access only. Biometric technology is not new and has been around for hundreds of years and has seen remarkable innovations while stepping up the ladder. 

The History of Biometric Authentication

Biometric authentication is considered a masterstroke in the verification market. The history of Biometric authentication dates back to the 1800s when the first biometric identification system was recorded in Paris, France. It was Alphonse Bertillon – a French police officer and biometrics researcher who devised a unique technique of identifying criminals through biological characteristics. Followed by Fingerprint identification in the 1880s by Edward Henry who instigated the Henry Classification System. Henry’s system was favored by law enforcement agencies, replacing Bertillon’s way of performing identification. 


Fast-forwarding to 2020, biometric authentication technology for customer verification is advancing rapidly. It is increasingly becoming a part of everyday business operations. Many hardware/ software companies are integrating biometrics in their systems for authentication say, for example, Apple inc. 

Biometric technology – Protecting global companies from Identity Theft

Global industries are using biometrics for customer authentication to eliminate identity theft and unauthorised access. The biometric industry is evolving to support businesses and effectively prevent crimes from happening in the best way possible. Over the past few years, customer identity theft has become one of the most common crimes. It takes place when identity thieves steal victims’ personal information for unauthorised financial transactions.  

After stealing customer identities, they engage in illegal purchases or apply for loans in the victim’s name which is threatening to global businesses as it puts a strain on sensitive customer data and business revenues. Losses due to frauds have increased by 13% in the years 2019 to 2020 respectively. Therefore, global industries have been deploying biometric authentication systems to prevent identity theft

Some major types of Biometrics

As mentioned above, biometrics usually fall under two categories: Biological and Behavioural biometric characteristics. Biological traits include individuals’ physiological and physical features, whereas behaviors include actions performed by individuals such as voice patterns. 

Fingerprint Scanners

Fingerprints scanners have seemed to be everywhere and used by everyone. They aren’t limited to businesses but smart devices are also deploying fingerprints scanning for unlocking devices. According to Spiceworks, fingerprint scanning is the most common type of biometric authentication which is used by almost  57% of global companies. They are a type of biological biometric system as fingerprints are secured with the individual’s live participation however, it can also be collected when left on an object, this system is used by law enforcement agencies to trace criminals. But new and advanced biometric identification techniques are replacing fingerprint scanning. 

Facial Biometric Recognition

 In facial biometric authentication, the live presence of individuals is ensured. Just like other biometric solutions, facial recognition analyses the unique facial features of individuals and matches them with the available databases for authentication. Having said that, facial biometric authentication is considered a more convenient way of identifying criminals among the crowds. Imposter crimes are on the rise, according to FTC, they ripped $667 million last year off of Americans. So, companies understand the true capabilities of facial recognition systems, therefore it is attracting global interest. 

Voice Recognition

Voice recognition is another biometric system that is extensively used for identifying and authenticating customers. According to studies, at least 2% of businesses use voice recognition to verify individuals.

Signature recognition

This includes the identification of an individual by analysing their handwriting. Signature recognition involves further two types namely, static and dynamic signature analysis. In static compares one scanned signature to either another scanned signature or ink signature. On the other hand, Dynamic signature uses behavioral characteristics that an individual displays while making a signature. Digital signature scanners are frequently used by retail stores and baking institutions.


DNA scans are primarily used by law enforcement agencies in order to identify suspects. It uses a segment of human individuals for verification purposes. 

Hand geometry

Identification through hand geometry analyzes and measures the shape of an individual’s hand. This type of identification is easier to use when there are a number of users accessing the system regularly. Also, the accuracy rate is comparatively high.

Iris and retina based biometric authentication

Iris based biometric includes authentication through iris scanning. Similarly, retina-based biometric analysis of the layer of blood vessels at the back of the eye called the retina. Iris scanners can work even if the person is wearing the glasses and it’s also easier to use. On the other hand, retinal scanning is considered accurate but it does not require an individual to look at a single point for verification and also not convenient if the person is wearing glasses. Therefore Iris scanning is more widespread as compared to retinal scanning. 

Additionally, biometric authentication can identify individuals through writing patterns, physical movements including the way individuals move, navigation patterns such as the movement of their fingers on mouse pads, last but not least their engagement patterns with technology. 


Advantages of using Biometric technology

One of the key benefits of using biometric technology is that it is reliable and keeps the imposters away. Biometric security is enhanced, and identity can be confirmed without documents (that may be stolen or forged) on the spot in real-time. A lot of businesses are widely accepting the comprehensive applications of online biometric authentication including fingerprint ID because of its future potential. 

  • Biometric technology is increasingly becoming popular for ID verification, specifically within financial institutions, and government agencies for its reliability and consistency. 
  • Additionally, it offers higher accuracy rates. Using physical traits is advantageous for authenticating end users.
  • It is considered safe because biometric traits can not be stolen or forged unless criminals go through extensive surgeries which are unlikely at times. 
  • Biometric technology is time and cost-effective and highly user friendly. 
  • Highly useful for criminal identification and forensics
  • Prevents unauthorised accessing of user accounts, mobile phones, and others
  • Passwords can be easily stolen or hacked. With biometrics technology, customers will not lose any data which can be used for criminal activities
  • Customer can rely on biometric for making secure financial transactions

Use cases of Biometric Authentication

Biometric technology is used by global industries such as Healthcare, Business, Education, Financial institutions, law enforcement agencies. A lot of countries are using biometrics for voter registration. Lately, the eCommerce industry is using biometrics for verifying vendors, and customers. Smart-card-based biometric authentication is said to decrease fraud by 80%. According to studies around 16,352 people fell victim to online shopping and lost £17m during lockdown amid the Pandemic. Some businesses are using voice recognition biometrics to give security services over the phone.

Similarly, banking institutions use biometrics to authenticate users better and ensure the safe flow of transactions. Biometrics is strengthening payment security. From online banking to digital wallets, biometrics technology is protecting customer’s financial assets. It not only fosters customer trust but also safeguards all or any privacy concerns. Leading global financial institutions are embracing biometric technology for customer authentication, eliminating traditional security methods, and non-compliance penalties to provide better customer experience.

The use of biometrics technology is providing a safe experience for passengers in the travel industry. Biometric technology is revolutionising the way people travel. Biometric authentication is required during the VISA application process in order to expedite the application and customer screening process consequently facilitating customer and airline security. The customer’s picture is captured by security cameras to match with the databases of suspects using facial recognition technology which can further help in tracking down terrorists and high-risk profiles through face detection.

Apart from these industries, biometric technologies are readily accepted and used by:

  • Law enforcement agencies
  • Voter registration
  • Healthcare
  • Employers/ businesses

Biometric Technology fulfilling KYC/ AML regulations

Biometric authentication is changing the customer identity verification landscape. Let’s see how this technology is influencing Know your Customer (KYC) and Anti-money laundering (AML) compliance. In this digital world, biometrics technology is a way to prevent identity theft and online fraud. This technology assists KYC and AML processes to deliver robust and intuitive identity proofing. 

As more and more institutions are using identity verification protocols, KYC processes using biometrics are rapidly gaining attention as it has proven itself by delivering convenience meanwhile complying with government regulations for preventing financial crimes such as money laundering, corruption, tax evasion, terrorist financing, and identity theft.

Banks are required by the law to follow KYC and AML policies put forth by local governments. The primary aim of KYC is to protect financial systems from criminals, who otherwise may want to use the system for fraudulent activities and laundering money. Talking about the past, banks did not pay much attention to verifying customers, as a result, they were charged with heavy penalties. So in order to avoid billion-dollar fines, financial institutions are putting an end to violating KYC and anti-money laundering norms. As reported by Reuters, HSBC had to pay $1.9 billion to US authorities for allowing it to be used to launder drug money out of Mexico, at the end of 2012. According to the FTC (Federal Trade Commission), almost 9 million Americans are victimized each year due to inefficient KYC.

Complying with KYC policies means reducing financial crime risks. KYC gives you an opportunity to actually know your customers, who they are, where their income is coming from, their background data including financial portfolios, and how much risk they pose to the institution. On the other hand, Anti-money laundering regulations help with risk assessment, customer background history is thoroughly screened against government global sanctions and blacklists to identify if they were ever involved in shady or illegal activities so that the proper actions can be taken. Moreover, KYC checks enable a secure environment for investors, and through know your business (KYB) processes clients can identify the legitimacy of the company they are conducting businesses with. So, apart from preventing crimes, KYC, KYB, and AML through biometric technology build trust between the parties for successful business relationships and seamless customer onboarding.


Challenges of Biometric technology

There is no doubt that biometric authentication is more important now than ever before and the adoption is becoming mainstream. Companies are adopting various techniques to identify people and assess their behavioral patterns. But by giving away your fingerprint, or your face, one is actually giving away important data that basically makes up a person’s identity. No one knows where the information goes and how it will be used. These concerns are not redundant in fact, they should be addressed in order to avoid significant future problems.

Biometric technology has a lot of benefits over traditional authentication systems but there are some risks and challenges associated with it too. It is crucial to ensure the safety of biometric data, but what if the data falls into the wrong hands? Biometrics frequently brings with it privacy and security concerns. MasterCard and HSBC are using facial recognition technology to verify the customer’s identities.  Ford is partnering up with a machine vision company to add facial recognition technology to its vehicles. Even though these innovations are remarkable, all the data may give unprecedented access to bad actors. Companies are storing customer’s fingerprints, facial features and all this storage of large-scale biometric data is risky and valuable to online criminals, at the same time. The reason why some companies are adopting the token system. Using tokenization, biometric data of people aren’t stored in the same place, which makes it difficult for hackers trying to steal and misuse. Also using a combination of biometric authentication for a single customer can confuse the hackers.

Even though biometric authentication is more of a paradigm shift for businesses around the globe. But proper and secure biometric authentication is considered to be more advantageous to global companies. 

Facial Biometric Verification amid Pandemic

Speaking of biometrics, contactless biometric authentication is becoming increasingly popular in times of the COVID-19 virus outbreak. WHO (World Health Organization) has demanded people to stay indoors and maintain social distance in packed places to obstruct the spread. Under such circumstances, fingerprint scanners are no longer useful since there are chances that they may carry the virus likely to transfer through physical contact. Therefore, contactless biometric technology such as facial recognition technology is making its mark.

Customer identification through facial recognition is helping companies and customers to enforce social distancing as facial biometric authentication puts an end to physical contact. Customers are seamlessly verified through face biometrics for secure and easy authorized access. 


As mentioned above, businesses have seen a substantial increase in online scams and breaches in the wake of the COVID-19 pandemic. This calls for stronger customer authentication techniques and there is no other better solution than facial biometric authentication technology.

Shufti Pro’s Facial Recognition Solution

The use of artificial intelligence and machine learning technologies makes facial recognition more accurate. Shufti Pro’s facial recognition systems prevent businesses from spoof attacks because of its anti-spoofing techniques. It is revolutionizing the way businesses or customers access sensitive information. Facial anti-spoofing techniques help prevent fraud and reduce theft. Shufti Pro’s AI-based anti-spoofing technology has the ability to detect and combat facial spoofing attacks through:

  • 3D depth perception
  • Micro expression analysis
  • Liveness detection

    The system uses deep learning to analyze the facial data and identify almost all kinds of facial spoofing attacks. Speaking of which, Shufti Pro detected 42 different spoof attacks in the year 2019. Facial biometric authentication enhances security by identifying:
  • 3D photo masking
  • Deep fakes
  • Face morphing attacks
  • Forgery, and
  • Photoshopped images

How does Shufti Pro’s Facial Biometric Authentication work?

Account logins through facial biometric remove friction and delays which eases the login process while adding an extra layer of security. Shufti Pro’s facial biometric authentication is done in 2 simple steps:

At the time of signing up, facial recognition technology ensures the live presence of the individual through liveness detection after the customer enrolls his face. The biometric markers are stored for future login attempts. The iFrame captures the video selfie of the user’s face and verifies existing presence within the system.

After the initial step, the biometric authentication service auto-extracts information from the identity document using the OCR (Optical Character Recognition) technology to ensure the user’s real identity for high-risk transactions and also to match the face with the face on the ID document by uploading an image of a valid ID card.

Ongoing KYC is performed to identify and authenticate all transactions performed by the account holder.

Shufti Pro has recently launched its Biometric authentication SDK. Facial Biometric authentication is quickly making its way into customer identification and authentication. Manual and traditional recognition techniques are becoming redundant due to their shortcomings and lazy ways. Shufti Pro’s facial biometric authentication is an ideal solution over traditional authentication methods for ease and convenience.


Key takeaways

Online frauds are evolving quickly and companies are facing challenges in finding or deploying more sophisticated ways to stay ahead of the curve. Biometric authentication is designed to protect systems from external threats. Password, knowledge, token, and out of band based authentication are the things of the past. Biometric authentication technology protects against frauds as it depends on biometric data unique to every individual customer. Facial biometric authentication uses an individual’s face for authentication which is one of the most secure forms of customer verification.

Shufti Pro’s facial biometric authentication requires user’s consent as end-users are supposed to enroll their face before proceeding further. Additionally, it uses the effective techniques of liveness detection to prevent facial spoof attacks by ensuring the remote physical presence of customers in question.

Passwords are no longer considered secure in this day and age. With data breaches every day, our passwords are sold on the dark web by criminals, purchased by other criminals for malicious intent such as identity theft and account takeovers. The reason why biometric authentication is preferred by global industries for ensuring identities, better customer experience, higher conversion, and lower drop off rates.


On-Premises Identity Verification – A Solution to Prevent Data Breaches

From virtual modes of communication to digitised solutions for operating efficiently, the perks of digitisation for businesses are hard to count. With the advent of technology, all the businesses are enjoying numerous advantages but so are fraudsters. Cloud storage is bringing convenience for not only organisations but criminals as well. It works like a goldmine for fraudsters to fulfill their malicious intent. These storages were designed to keep all the data secure. Unfortunately, these storages can be illegally accessed with the help of Artificial Intelligence and Machine Learning algorithms. Customer information stored during the verification process is not safe anymore on databases. Companies acquire very sensitive information during identity verification and store them in the back office for later use. But are these back offices secure nowadays?

Cyberattacks are on the rise and combating them is another big challenge for companies. Robust identity verification measures can prevent fraudsters from causing trouble from your platform, but how to secure information obtained during the process? On-premises identity verification service is one such way of preventing data breaches. Curious to know about data breaches and a credible solution for the issue? Read this blog to know more. 

What are Data Breaches?

A data breach is a cybercrime that occurs when cybercriminals gain access to a company’s database and violate sensitive information. This usually happens because the security measures of the organisation are not strong enough to prevent fraudsters from penetrating the cloud storage.

After acquiring information, the information can be used for synthetic identity fraud, account takeover, and creating fake profiles on social media. Generating forged documents for traditional verification purposes is not a big deal for criminals. The IBM reports state that the average cost of every lost or stolen data is $150 and millions of records are stolen every year. The huge financial loss for any company is hard to mitigate. Hence, a better solution is needed to prevent data breaches.


Some Popular Cases of Data Breaches

Every year, companies across the globe report data breaches and the lost trust of customers. The first data breach was in 2005 when DSW, a footwear warehouse, lost records of one million customers. Since then, renowned businesses have been under a data breach attack losing millions of records, customers, and money to fraudsters. Here are some of the famous brands that have suffered significant losses due to breaches. 

P&N Bank

The finance industry is not safe from financial crimes and Australian bank P&N faced a data breach when it was conducting a server upgrade through a third-party host service. The reports say that 96,000 customers were informed about the breach, but the exact number of lost data is still unknown. Information breached included names, phone numbers, account details, and balance details of the customers. 


Social media platforms are used everywhere nowadays and Instagram is getting popular every day. However, it experienced a data breach attack as well earlier this year. A third-party partner of the platform named Social Captain helped followers in increasing their followers. Unfortunately, the vendor exposed records of millions of users, and a bug was used to access Instagram profiles associated with the vendor without using any credentials. It is highly recommended by Instagram to never share your passwords with any third-party no matter what happens.   


The hotel giant, Marriott, has unfortunately experienced a data breach twice within the last two years. The first one was in November 2018 that impacted 500 million guests and the second one was in the first half of 2020 that impacted 5.2 million guests.

Marriott partnered with Starwood in 2018 and was unaware of the unauthorised access that fraudsters gained in 2014. This was the first data breach for Marriott. The second attack was a third-party data breach and phone numbers, account details, and other sensitive information were compromised.  

LinkedIn and Twitter

LinkedIn’s data breach was yet another successful attempt at fraudsters back in June 2012. The attack impacted 165 million LinkedIn users and the password-reset notification only indicated 6.5 million user accounts that were accessed. The actual number was unknown until 2016 when reports stated that approximately 165 million users were impacted.

Another popular social media platform, Twitter, was also under a data breach attack in 2018 and around 330 million users were impacted. Twitter notified all the users that there was some glitch that unmasked passwords and the internal network can access them through the internal log. The giant said that there was not a breach but reports and users showed suspicion. The actual number was never disclosed by Twitter and encouraged all users to update passwords.    

Read more about data breaches: Data Breaches in 2019 – A Year in Review

Impact of Data Breaches on Businesses


Data breaches have never ended well for organisations and the increasing number is another big issue that needs to be addressed. The US has reported 540 data breaches in the first half of 2020. God knows where these numbers will end on a global scale. One of the most terrifying effects of data breaches is the damaged reputation of the company.  Building customer trust is the priority of all businesses and a data breach can exploit trust in no time. Customers provide information for verification purposes with the trust that their information is secure with the organisation and all of it goes away in seconds. A report from PwC states that 85 percent of the customers do not shop from businesses that were under a data breach attack. Hence, protecting the platform is essential so that you can retain customers.

Amid the bad repute of the company, businesses also suffer from huge financial losses every year. According to reports from Juniper, cyberattacks cost businesses two trillion dollars in 2019. God knows how 2020 will end for companies when everything has digitised. Hefty fines from the government are another big loss.

Apart from the catastrophic damage, companies also have to face the loss of data like blueprints, designs, campaign plans, and other confidential information. 

How Can On-Premises Verification Help?

Verifying customers has been a necessity in different industries for a long time. It ensures that legitimate customers are onboarded and fraudsters stay away from the organisations. Banks, insurance companies, fintech firms, and several other sectors are under data breach attacks every year. This not only makes digital verification for customer onboarding a strategic priority, but there must be an effective solution for the data stored on the cloud storage during onboarding and verification.

Considering the need, there must be an on-premises identity verification solution in every sector so that no data is available for fraudsters’ benefits. Adopting an on-premises identity verification neither affects the accuracy of the results nor it consumes extra time. The benefit is that none of your customer’s data is stored in a database. You and the end-user can view the data only during the verification process. 

It All Boils Down To…

Sophisticated plans from criminals are making it challenging for organisations to avoid data breaches. Fraudsters are coming up with better strategies for their devilish plans. All businesses can do is either protect the data with enhanced security measures or choose on-premises identity verification that does not store any record. Shufti Pro’s on-premises identity verification solution ensures that you onboard legitimate customers and do not store any of their data that fraudsters can exploit. You can prevent huge financial losses, customer dissatisfaction, and bad brand image like other businesses by providing robust verification and on-premises that ensures all the benefits.

Get in touch with our experts to know more about on-premises identity verification.

Digital Currency - Replacing Fiat Money in the Modern World

Digital Currency – Replacing Fiat Money in the Modern World

Technological advancements are leading to better transaction systems in different states. Cryptocurrencies have already taken over the world and the majority of industries were moving to the crypto payment system. However, crypto is not commonplace for routine transactions in many regions of the world, which has encouraged the central banks to take centralised digital currency initiatives. Central banks of different states have come up with a better idea known as a digital currency. Also known as the Central Banks Digital Assets (CBDCs), digital currencies will soon become the new normal for trading. 

During the coronavirus pandemic, all the industries chose virtual means of collaboration. Unfortunately, the virus can be transmitted from money as well and an alternative for money was needed too. The process of introducing virtual money accelerated and now the digital currency is all set to roll and China is the first state to introduce digital money. Digital yen is also under consideration. Sounds fascinating that people do not have to carry wallets and the fear of street crimes can significantly reduce. But is it just rainbows and unicorns for virtual money? If you are eager to know more about virtual currencies, keep reading to explore the facts and figures.

What is Digital Currency?

Generally, digital currency is perceived as cryptocurrencies. However, there are two types of digital currencies – one which is regulated by regulatory authorities and the one which is not. The virtual currency (CBDC) relies on blockchain for any transactions and possesses all the characteristics of traditional money. Fortunately, there are no physical barriers to digital currencies. 

Digital Currency - Replacing Fiat Money in the Modern World

Impact of Digital Currency on the Global Economy 

The global economy is sunk in darkness ever since the COVID-19 pandemic hit our lives. Payment systems have been adversely damaged and virtual means are becoming the new normal. Reducing physical contact should also consider dealing with fiat money and digital currency backed by central banks is a great way of completely taking the virtual road to global progress.

Sounds a fantastic idea, but is it easy to enforce virtual currency on a national or global scale? Central banks of different nations have been studying digital alternatives for fiat money for a long time. Many countries are still not in favour of virtual currencies, for instance, Egypt, Iraq, and Morocco have banned any kind of digital currency – be it an alternative for fiat or cryptocurrencies. There is a high probability that differences in the trading system can bring an economic breakdown at a global level. Foreign investments can become a problem for many states, whereas some countries have to face hassles of conversion from digital to fiat money. Furthermore, nations with virtual currencies may not be able to fully expand due to the difference in currencies. All in all, the world economy can face setbacks and a decline in global GDP can be expected too. 

Risks Associated with Virtual Currency

Digital Currency - Replacing Fiat Money in the Modern World

Upgrading the money currently available in people’s wallets will upend the currency system of all countries across the globe. The increasingly warming idea of digitising national currencies might result in a war between digital fiat currency and the US dollar. Issuing digital currency means the countries get a complete hold of their currencies, which is threatening the great US dollar. The war between the world’s strongest currency and national digital currencies like digital yen and yuan can end up at a big risk for economies of all states. 

According to a 2018 report, 70 percent of the banks were looking into centralised digital currency. As of today, China has begun trials of the digital yuan and Japan has introduced a three-step plan for introducing digital yen. Its introduction will help the states but money laundering is expected to increase too. Furthermore, the risk of cybercrimes like ransomware and malware can significantly increase too. 

Money laundering is increasing every day, and analysts are predicting an increase in terrorist financing and money laundering with the introduction of centralised digital currency. Moreover, the financial institutions will be risking their reputation as soon as the central banks enforce virtual currencies. For instance, FINMA has regulated cryptocurrencies in the state but this does not ensure the reduction in identity theft, account takeover fraud, and other scams. Complying with the stringent KYC/AML compliance will get challenging and the need for enhanced digital biometric verification systems will increase as well. Digital KYC will be the new normal for all the financial institutions soon.

Digital Currency - Replacing Fiat Money in the Modern World

Benefits of Digital Money for the Corporate World  

If regulatory authorities figure out effective ways of combating the risks associated with digital fiat currency, the benefits of enforcing digital currency are hard to count. Here are some of the advantages that China, Japan, South Korea, and other states have identified before introducing virtual fiat money for the residents. 

Reduced Transaction Rates

The transaction fee is the biggest challenge that not only senders but the financial institutions face as well. Accepting a few dollars can cost the receiver a fortune and the sender is also in vain for paying a high transaction fee. The international payments can be smoothly completed with the introduction of CBDCs. How would you feel if your bank or fintech company does not have to pay two to five per cent of the transaction fee for receiving payments?  

Decrease in Chargebacks 

Banks are most concerned about chargeback frauds and research shows that friendly chargeback scams increase at a rate of 41 per cent. Combating chargebacks can be challenging but central bank digital currencies can significantly reduce the risk. For instance, trading in Bitcoin, customers cannot file for a chargeback. Similarly, the digital national currencies cannot allow chargebacks either, because tracing the origin of money might be tricky since the currency is based on blockchain.  

No Inflation Rate 

To keep the currency flowing in the economy, banks in third world countries increase the inflation rate. With digital currencies, there is a limit to issuing money which does not allow banks to increase the inflation rate. Hence, there is a high probability that many of the businesses prefer transactions in digital currency rather than fiat money. 

Faster and Accurate Transactions 

If you are a banker, you are well aware of the hassles for completing a transaction. Processing cheques, sustaining the cash flows, and assisting all the businesses associated with the financial entity is a tough job. Physical fiat money makes it even more troublesome, especially when it comes to international transactions. Digital currency streamlines all the processes and financial institutions can enjoy accurate transactions at a faster speed. 

Fraud Prevention 

Many governments are scared of the frauds that digital currency will embrace. However, it is a great way of preventing fraud. Fraudsters find sophisticated ways for their malicious plans every time the laws get stringent. With digital currency, the regulatory authorities are planning to add stringent customer verification which can help fight crimes. The digital currency will be centralised and dismantling blockchain will not be a piece of cake. 

Better International Trade

Virtual money will streamline processes for international transactions making it convenient for businesses to deal with international clients. For instance, your UK-based gambling website may face challenges for getting a French client onboard. However, digital money will not have any geographical restrictions according to some reports. This makes it convenient for any business to expand in other regions of the world. 

Better Compliance for CBDC Transactions

With so many perks of bringing centralised digital currency into action, the responsibilities for regulatory authorities like FATF are increasing. The Central Bank of China has announced the introduction of digital yuan by the end of 2020 and recently it issued 10 million digital yuan to test its working. Similarly, the Bank of Japan announced that it will be introducing digital yen by 2021. Introducing the currency is not the end, there are several requirements by the law enforcement agencies that banks and other entities have to comply with. 

Digital currency is centralised but based on blockchain, which means its transactions will resemble crypto exchanges. Hence, the regulatory bodies of all the states, FATF, FinCEN, etc., have to design more stringent rules and regulations so that businesses do not face an increase in cybercrimes. CBDC transactions need robust verification measures as explained by the FATF and FinCEN to filter fraudsters before identity theft, account takeover fraud, and chargeback scams rapidly increase. 

The AMLD5 is in action and many states have registered for it already. Now, EUs sixth anti-money laundering directive is also in the pipeline which will increase challenges for the financial institutions and all other industries dealing with money. Complying with these directives can be tough without robust KYC checks. 

Read more about AMLD6: EU’s Sixth Anti-Money Laundering Directive (AMLD6)

It All Adds Up To…

Digital currencies can significantly influence corporate operations and increase international trade as well. However, the risk of trading in digital currencies can increase risks of cybercrimes and other criminal activities, especially money laundering and terrorist financing. Combating these crimes may be a hassle without digital identity checks. Banks and other financial institutions are fearing from the expected stringent know your customer and anti-money laundering compliance will increase liability for customer verification. Nevertheless, the finance sector and other online industries have Shufti Pro’s innovative KYC solutions to save the day. 

Learn more about KYC and financial institutions: Fathoming Financial Inclusion, Innovative KYC Solutions, and Integrity


Shufti Pro Turns Three – A journey of building trust globally

October 31, 2020, marks the third anniversary of Shufti Pro and three successful years of building trust globally. Three years back, it all started out with a vision to make future cyberspaces fraud-free and rise as an industry leader in the identity verification market through the use of enhanced AI technologies. Today, after three years, Shufti Pro’s identity verification services are expanded across multiple businesses in 230+ countries and territories, making Shufti Pro a global identity solutions provider. It is the dream come true all because we took the risk and worked together to chase it, not letting the obstacles and naysayers hold us down. 

Shufti Pro is the first company that initiated the synergised fusion of AI (Artificial Intelligence) and HI (Human Intelligence) in the digital identity verification industry

In the past three years, Shufti Pro has strived hard to provide state-of-the-art services to businesses across the world. The core driver behind Shufti Pro was the enhanced customer experience through quick and reliable verification within seconds. To provide reliable results, it is trained using 900 AI models. It won’t be an understatement to say that it has achieved this goal of performing the online identity verification within 30-60 seconds and with an unmatched precision of 98.67%

Shufti Pro’s award-winning solutions

Even recognizing the efforts and up to the minute solutions of Shufti Pro, it has picked up various business awards and competitions. Earlier this year, Shufti Pro’s video KYC solution won Lulu Money’s Video KYC for Customer Verification Challenge, which was organized by Fintech Galaxy at MEFTECH 2020, Saudia Arabia. It’s a great achievement for the company to beat 26 competitors from all around the world.

Apart from this competition, recently, Shufti Pro picked up two business excellence awards for its outstanding product and services. It was declared the winner by Best in Biz Awards 2020 International under the category of best consumer service of the year. Apart from it, the second Business Excellence Award 2020 was also for the best product/service category. 

These two business awards are proof that Shufti Pro is delivering the best customer experience through its outstanding verification and AML screening solutions. To achieve this milestone, from company executives to employees, every department has been quite vigilant and the support team is 24/7 ready to address customer queries. 

Shufti Pro is ‘your’ product

Over the past three years, Shufti Pro has undergone many technological changes, all with the purpose to come up with trailblazing services to give an amazing customer experience. It has always focused on customer service be it the customised services or pricing plans, Shufti Pro has everything that the businesses possibly require. From our KYC verification suite, the businesses can select the services that best fit their needs.

In addition to our customised verification solutions, Shufti Pro now offers on-premises solutions for data-sensitive clients all over the world. Those organisations or businesses who don’t want their end-users’ data to go into third-party service providers can always get on-premises identity verification software. With Shufti Pro’s Android SDK, iOS SDK and React-native app, businesses can have their customers verified through multiple platforms.

 Shufti Pro offers KYC and AML solutions to 230+ countries including egypt, papua new guinea, APAC region, ST. Kitts and Nevis and other territories with support of 3000+ documents and 150+ languages making it a global solution 

When Shufti Pro was created, the founders dreamt to take this product to a global level. To achieve this, our services offer 3000+ document support in 150+ languages to provide services to other countries. When first started in 2017, first-year Shufti Pro was able to capture clients from a few countries. Now after three years, we have clients from all over the world belonging to various industries including banks, financial institutions, real-estates, crypto firms, social media, food industry, travelling, education and many others. These businesses have end-users from all across the globe. To say Shufti Pro has verified user identities globally won’t be an understatement.


Shufti Pro’s customer acquisition rate has grown tremendously, with end-users from all over the world. In fact, during this pandemic, Shufti Pro experienced increased demand. Given the need for digital fraud prevention we offered 10 million free verification for healthcare and relief organizations working at the frontline to contain the coronavirus. 


Shahid Hanif, Co-founder of Shufti Pro expressed his gratitude to employees and clients for being a part of the successful journey of the company.


ShuftI Pro is turning three on 31st October. We started as few but now we are many. It’s all because of the dedication and creativity of Shufti Pro team and the trust of our customers all these years that have taken us to an entirely new top. We have not only grown in numbers but also in skills, talents and resources. We envision to keep providing state of the art KYC and AML technology for businesses around the globe. Happy business anniversary!”

How to protect your online gaming platform from ID frauds?

How to protect your online gaming platform from ID frauds?

Gone are the days when online gaming was only restricted to LAN parties. With the development of smartphones and high-speed internet, online gaming has experienced a major revolution. It attracts millions of new players every year contributing around 11% of the internet traffic. With this size, the financial impact of online gaming is staggering. A report by Javelin predicted that online wagers including online casinos, sports betting, and other such platforms will reach around $1 trillion annually by 2023.


With its growing popularity, an increasing number of gamers are spending real money on in-game purchases, which from the maker’s viewpoint are a primary source of revenue for them. But such spendings also exposes them to fraud, especially ID fraud.

Regulatory authorities around the globe are trying to address this issue by making gaming operators follow strict verification regulations, and with that, the spotlight has now turned to digital ID verification.

We will talk about how ID verification is essential for the gaming industry in later stages, but first, let’s have a look at the challenges and fraud risks the gaming operators have to face while delivering a seamless experience to their users. 

With growth comes challenges & risks

The revenues of the global online gambling market are expected to cross $74 billion by 2023, but this massive flow of money is attracting criminal factions with an intent to exploit the industry’s smooth operations. 

To continue providing seamless gaming to their users, operators have to confront certain challenges. They have to ensure quality customer experience, combat an increasing ratio of online frauds and fulfil the ever-growing regulatory requirements imposed by authorities. 

Moreover, gaming operators have to ensure that they are allowing verified, age-appropriate users, to indulge in online gaming and protect minors from gaining access to age-restricted content. 

Lack of appropriate checks for verifying the age of users can cause serious problems for them in the future. The number of children in the UK with gambling issues has massively increased over the past few years, totalling 50,000.

online gambling kids

To address these issues, regulatory bodies have directed operators to have a reliable identity verification process in place which guarantees that criminals are not accessing their platform to perform fraud transactions and minors are not accessing the inappropriate content on their platforms. 

This makes gaming operators both legally and ethically responsible for making sure they are onboarding legitimate and age-appropriate players on their platforms. 

Identity fraud – A greater threat than ever before

Identity theft fraud is considered to be one of the major threats to the online gaming industry. To carry it out cybercriminals use stolen identities to claim bonuses, open new accounts and place fraudulent bets. It doesn’t just stop here.


Getting infected by identity thieves is harmful to a gaming company’s reputation. Such platforms will quickly find their user base shrinking as players get tired with being targets of scam campaigns and feel insecure while joining such platforms. 

The digitised global space that online gaming operates in experience a high volume of cross-border traffic. With 2.2 billion gamers online, around 60% of the traffic is cross border, which makes it a challenge for operators to regulate the online gaming industry and to put a halt to cybercrimes. This further makes it difficult for them to meet geographic compliance requirements and other legal restrictions.

Some common online gaming frauds

Credit card fraud

Credit card fraud is common across all online businesses including online gaming. The criminals try to place their bets by using fraudulent or stolen credentials to charge up their accounts. Once the credit card company or the bank finds out about the illegal transaction the business has to face chargebacks and fines. 

Money laundering

Like any other business, online gaming is not safe from money launderers as well. Since gambling platforms deal with huge sums of money, it makes it easier for criminals to use these platforms to hide their illegal gains.

Account takeover fraud

In account takeover, fraud criminals try to hide behind real accounts to perform illegal activities like posting spam and scamming players online. Fraudsters attempt to hack accounts of real users and later use them to send spam messages to random players with fake offers.

Can online ID verification be an effective solution?

With the increasing scrutiny by regulators gaming platforms have to endure hefty fines in case of non-compliance. For instance, the Gambling Commission in the United Kingdom imposed a penalty worth $10 million on a gambling company for not having adequate KYC procedures for player verifications.

The regulatory authorities around the globe have issued certain requirements for gaming operators to implement identity verification procedures to verify each and every user they onboard. Such measures also help in fulfilling the age verification regulations for online gaming platforms. 

Having a sound identity verification system, gaming operators can not only secure their platforms from identity theft scams but also prevent chargebacks and fines that originate due to credit card frauds. Having an online identity verification system in place can allow gaming companies to create a better authentication system for their users’ security. These companies can avail ID verification services in several ways including;

  • Face verification
  • Document verification
  • Age verification
  • AML (Anti-money laundering) screening checks

Players demand fast yet secure gaming experience

There are plenty of online gaming platforms present out there in the world. This has increased the competition between platforms and with that, players now demand a fast and secure gaming experience without any kind of delay. Performing identity verification is the key to security, but it increases the onboarding time and hence increases the chance of gaming platforms losing potential customers. But there is a solution to this problem as well.

With the advancement in technology, companies like Shufti Pro, have developed enhanced identity verification systems powered by artificial intelligence and machine learning to deliver secure KYC services to businesses. The online gaming platforms can avail their ID verification service that is easy to integrate for any organisation and performs verifications within seconds. 

Quick & easy verifications with Shufti Pro

Shufti Pro is one of the leading ID verification software that provides its services to businesses from a number of different industries, and online gaming is one of them. You can perform real-time verifications with Shufti Pro through its document verification, facial recognition and AML screening checks. Shufti Pro’s ID verification system is designed on a combination of Artificial Intelligence (AI) and Human Intelligence (HI). With its universal language support and can verify users from over 230 countries. such as (but not limited to: Venezuela, Uzbekistan, Turks and Caicos, Turkmenistan, Trinidad and Tobago, Sudan, Singapore, Puerto Rico, Mongolia, Kuwait, Kiribati, Ecuador, Dominican Republic, Burundi, Belize,  Afganistan , Nepal, Guatemala, Fiji, Comoros, Cape Verde, Aruba and others. 

Read More: An inside look at the need for AML in the e-gaming industry

The online gaming industry can obtain various benefits from an automated ID verification system like Shufti Pro. It can help such platforms to reduce identity theft cases and enable them to decrease the number of chargebacks and penalties, which will ultimately increase their profits. 

Furthermore, through Shufti Pro’s document and face verification features gaming operators can verify the age of their users and can eliminate underage gambling. By increasing the security checks and robust verification systems, gaming businesses can increase the levels of trust among their customers and provide them with worry-free gaming experience.


KYC in banking: How American banks can fight identity thieves?

In the present globalized, fast-evolving sphere, revolutionizing KYC (Know Your Customer) is crucial than ever for banks. These days, your customers may be any individual, anywhere in the world. Beyond being an authorized entity, authenticating the identity of these new clients, ensuring that they are who they claim to be, and evaluating whether they are a worthy match for your corporate are vital to your business’s well-being and virtuous prosperity.

Determining where the money is coming from is also necessary since it is equally important to eliminate money laundering and terrorism. The precision and safety of such policies has lately become a problem and is particularly appropriate now when the world just unexpectedly went online due to the COVID-19 pandemic. 


Only online identity verification services based on the KYC verification process have the latent to protect against these frauds. Credit card accounts are also in excessive jeopardy of being exposed to digital crooks. The eruption of technology and the rise of online banking services has developed an increased ratio of digital frauds and malicious transactions. Due to a lack of verification services and dependence on conventional authentication methods, fraudsters are getting an upper hand in accessing user identities and making fraudulent transactions which leads to chargebacks, non-compliance fines, and lost market value.


The importance of KYC compliance

Know Your Customer (KYC) is the procedure by which banks validate that prospective clients are authentic both before opening an account and directing transactions as well as preserving an account. It involves making sensible efforts to define the accurate identity and beneficial proprietorship of accounts, source of funds, and the nature of the client’s business which in turn helps the banks to address their hazards sensibly. 

The initial know your customer law in the United States was passed in 2001 as the Patriot Act to reduce the risk of terrorist financing. The Patriot Act established additions to the bank secrecy act of 1970 which was a key source of legislative guidelines for the banking sector. The 9/11 attacks increased government attention in passing regulations for banks, making KYC an obligatory part of banks’ undertakings since then.

The banking sector requires evidence of the provided data in the form of documents and photocopies of ID documents. 

How KYC works in banks & financial institutions 

In order to shorten and strengthen CDD requirements and come across KYC in the financial sector, the FinCEN defined four basic essentials for a customer identification program. They include:

  1. Recognizing and authenticating the identity of clients.
  2. Recognizing and authenticating the identity of beneficial owners of authorized entities (i.e., the regular persons who possess or control legitimate entities).
  3. Accepting the nature and purpose of client associations to develop a customer risk profile.
  4. Conducting ongoing monitoring for doubtful dealings and, on a risk basis, sustaining and updating client information.

Main drivers of KYC programs: 

The banking sector has to execute a robust investigation and identity verification before client onboarding to reduce risk related to money laundering. They ensure it with different stages of the CDD process and CIP dependent on the risk profile of a potential client:

 1.      Customer identification program (CIP)

In the US, the customer identification program directs that any person involved in financial dealings need to have their identity attested. It is intended to manage money laundering, malicious attacks, terrorist financing, identity thefts, and other illegal activities

The minimum regulations to open an individual financial account are distinctly determined in the customer identification program:

  1. Name
  2. Data of birth 
  3. Address
  4. Identification number 

While collecting this data at the account opening process is vital, since the industry needs to verify the identity of the account holder “within an equitable time”.

Methods for identity authentication comprise of


2.Non-documentary methods 

3.Combination of both

These methods are the center of the customer identification program as with other anti-money laundering requirements, these processes shouldn’t be checked inconsistently.  They must be simplified and organized to offer continuous guidance to the workforce, managers, and for the benefit of regulators.

2.      Customer due diligence

CDD is the process to initiate trust in a client and evaluate associated risk. Customer due diligence can aid banking and monetary organizations to alleviate threats presented by money laundering efforts of politically exposed persons (PEPs), terrorist administrations, or crooks.

Customer due diligence can be implemented at three stages: 

  1.   Simplified due diligence: when the risk of money laundering is low and the entire due diligence process is not compulsory. 
  2.   Basic due diligence: Basic data acquired from all customers for identity verification and evaluation of the risk related to it. 
  3.   Enhanced due diligence: High profile clients are dealt with enhanced due diligence in which additional data is collected to deliver an in-depth understanding of customer activity to diminish associated risks. 

Achieving KYC in banking

Not every individual will be interested to show how much money they are producing, even if they are doing it legitimately, particularly when their profits appeal to high taxes enforced by the government. They can execute high-value transactions, which stays hidden from the government’s tax collection organizations.

These individuals can use banks or financial organizations to wash their black money with money laundering tactics. This measure results in loss of income and ultimately delayed the development of the nation. Performing know your customer ensures complying with regulatory requirements by enabling a robust and easy on-boarding process for new customers. 

KYC can result in a superior level of faith, active monitoring of customer conduct as per their risk profile, and robust fraud prevention. 

It all boils down to robust KYC verification 

A robust know your customer solution for banks not only delivers omnichannel provision but vitally has exemplary expertise in order to quickly and accurately identify an incoming banking client. Shufti Pro video KYC ensures secure client onboarding for financial institutions by carrying out a live identification procedure that is faster and assures high security. Its facial recognition expertise uses AI and HI to execute client verification in just 5 seconds.

Banks in search for a KYC service provider can take help from Shufti Pro to verify the identity of a new user with the support of:

  • Facial authentication
  • Address Verification
  • Document Verification
  • AML screening
  • Phone Verification / 2 Factor Authentication

It offers 15 days free trial for all its KYC and AML service providers so that enterprises can recognize high profile clients who have substantial financial risk associated with them.

Find more relevant resources:

How American banks can fight identity thieves?

why KYB is inevitable

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. 

Worldwide cost

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. 

compliance practice

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. 

annual report

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%.

average conversion rate

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.

tax refund

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. 

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