The Top 10  Most Difficult Countries for Identity Verification

The Top 10  Most Difficult Countries for Identity Verification

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    5 RegTech Applications That Will Govern the Financial Regime in 2021

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    RegTech, short for Regulatory Technology, is the subset of FinTech which bridges the gap between businesses and regulators through innovative solutions. Businesses are investing in RegTech in both ways, making their in-house solutions or taking services from a third party. Fines by regulatory authorities soared sky high in 2020 as businesses were fined USD 10 Billion. RegTech helps the businesses to remain compliant with the regulations and gives them a better market reputation.

    Here are the five applications of RegTech that every business should know in 2021.

    1. Regulatory Reporting

    Under regulatory reporting, businesses have to provide abstract data to regulatory authorities as specified by them. Regulatory reporting is very critical for businesses these days, one of the reasons can be the continuous pressure of regulatory authorities. The regulators vary by industry, for instance, the Financial Conduct Authority (FCA) regulates financial markets while the communication sector has the Office of Communications (Ofcom) in the United Kingdom. 

    Data management is the primary task of regulatory reporting, some years back it was very frustrating for businesses since they had to record data in hard form and manage it manually. This causes redundant and inconsistent data that is challenging to analyse. The traditional record keeping process was tedious and irritating because the manager had to go to the legal department and then take all the required documents. Likewise, the legal department has to collect all data from other departments.

    RegTech brings comprehensive software powered by advanced technologies like artificial intelligence, blockchain or machine learning. Businesses use these solutions to enhance their quality of data, which ultimately reduces operational costs also. Digitizing the regulatory reporting process helps businesses to focus more on their services.

    2. Risk Management

    Risk management and its assessment is the primary concern for not only financial but every business nowadays. The negligence can result in a fine by regulatory authorities or dissatisfied customers. Risk management is of more importance in 2021 as businesses face more sophisticated fraud attempts. Nevertheless, criminals also know how to use innovative technologies and what are the security gaps in the system. Besides fraud, market growth, new technologies, business partnerships and added regulations are the risks to the financial industry. 

    Any uncertainty that could affect a business in future is called risk and dealing with it is said to be risk management. The current risk management solutions give an enhanced representation of data and indicate risks more accurately, they work in the below described flow;

    1. Identify the potential risk – from thousands of certainties, the software finds what is a risk and when will strike with the business
    2. Analyse its impact – to which extent it could affect the business, for example, a misspelt customer name is low-risk but an incorrect identification number is a high one
    3. Acceptance or mitigation – if dealing with risk takes more effort (cost and time) then its possible impact would mitigate

    3. Identity Management 

    Identity management is the set of policies and technologies to verify the identity of individuals, it is also known as Identity and Access Management (IAM). Account sign up, sign in, performing transactions or online cart checkout are the use cases of identity management. Simply, it is the confirmation that a customer is really who he claims to be, just like you unlock your phone screen through facial recognition. The phone verifies that the current person is the same whose facial data is saved in the database. 

    The Know Your Customer (KYC) regulations reinforce businesses to verify the identity of all new customers and keep a record of verifications. This is also a part of customers’ accounts and data security because criminals can take them over through social engineering or hacking. 

    Identity verification is done using AI-enabled software without having a physical interaction with the customer. The solution takes images of government-issued identity documents and captures a live selfie. First, the authenticity of documents is confirmed; the selfie is matched with the photo on the ID. Conducting online identity verification gives foolproof security to businesses. 

    4. Compliance 

    The objective of RegTech is incomplete without compliance. RegTech guarantees to cut compliance costs, and make the process smoother and quicker. Additionally, it reduces the customer-side difficulties and decreases the chances of compliance failures.

    The financial industry has to comply with KYC, anti-money laundering, and data protection laws. Compliance can be difficult if it is not achieved using RegTech applications. Under AML compliance, manually screening a customer’s name with the watchlists is nearly impossible. While an AML software not only screens, it also gives the risk level to customers. Enhanced due diligence gives the updated status of a customer’s corporate relationships. 

    The General Data Protection Regulation (GDPR)  has an impact on the whole world regarding data security and privacy, although it is in Europe only.  Businesses around the globe look forward to the GDPR checklist explicitly. RegTech applications make compliance with GDPR easier as the data is encrypted and then saved. Some experts also suggest using blockchain for data storage in future. 

    5. Transaction Monitoring

    Verifying customer identities and watchlist screening is not enough to combat money laundering today. Businesses have to keep an eye on customers’ activities, i.e. transactions. 

    AML transaction monitoring lets businesses use customer activities on a regular basis. Combining this with the background check gives a bird eye view of the customer profile and can predict a future move. The software analyses the transaction patterns and points out doubtful ones having similarities with the money laundering transactions. These are further reported in Suspicious Activity Reporting (SAR). 

    What Shufti Offers?

    Shufti is a RegTech provider offering identity verification, AML screening and transaction monitoring services around the world. Businesses can ensure complete compliance with all the global regulations by using Shufti’s services. Shufti verifies and screens a customer in real-time, enhancing transparency and data security. It also verifies and screens business through the Know Your Business service.  

    Want to know more about AML/KYC compliance and how it benefits your business, talk with our experts.

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