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Geolocation Technology and its benefits for KYC Verification

Ashley Williams
December 04, 2018
3 minutes read
1940

KYC verification has come a long way from simply authenticating the official identity documents of end-users. The need to verify customers placed at remote locations required KYC service providers and ID verification services to adopt technologies that can easily track the geographical location – or geolocation – of an end-user even before a KYC check starts off. KYC verification has a lot to benefit from Geolocation technology as it can help KYC software to not only track the location of verifying end-user but adds an additional layer of security in fraud prevention. But first we tell you how geolocations help identity verification and can be integrated into a Know Your Customer solution, let us explain to you what is geolocation and how it works?

What is GeoLocation?

GeoLocation is the practice of finding the geographic location of an object. Most of the time a smartphone or personal computer is used to track the location of the object or person in question. Interestingly, unlike many geo-positioning systems that are mostly used to provide geographic coordinates (horizontal & vertical coordinates), the information collected by Geolocation technology is much more actionable.

Apart from geographical information, Geolocation services provide information about the country, time zone, zip code, area code, address, proxy information, and network information. Geolocation collects a variety of data to determine this information via data sources including OP address, Wi-Fi addresses, radio frequency identification, Global Positioning System and GSM/CDM cell IDs.

How Does Geolocation help in KYC?

A typical KYC provider can use geolocation technology to help its customers in providing a specific set of identity verification services, in addition to identifying that whether they belong to same country or location that they claim to. KYC compliance becomes easier and KYC solutions are easier to process because of geolocation technology. Identity theft protection gets a shot in the arm while fraud prevention becomes nearly effortless with the help of geolocation technology.

Fraud prevention via geolocation technology

Online fraud prevention can become easier if the online sellers and vendors can identify the location of the person. Even if a real person is momentarily trying to access a service portal from a new location, the system automatically detects the change of location and requires online users to verify their identity.

With ID verification and many other KYC services available at the dispense of Shufti Pro customers – one of the most renowned KYC provider – verifying the identity of incoming users become entirely hassle-free.

KYC compliance made easy

In many online businesses and web services, it is essential that incoming user belongs to a certain location, in order to get registration. Whether it is an ICO registration process, a gambling website or even a gaming platform, compliance regulations made it necessary to not allow citizens from certain territories. Moreover, in some cases, it is also imperative for the security of a venture to not allow users from certain countries. Geolocation backed KYC software – such as Shufti Pro – can help navigate these murky waters to avoid entrance of users from restricted countries and regions.

Disclaimer: No warranty is herein provided that the information contained in this document is accurate, up-to-date, and/or complete. In no circumstance(s), does such information constitute legal or any other advice. Any person who intends to use, rely, pass-on, or re-publish the information contained herein in any way is solely responsible for the same. We suggest to verify the information and/or obtain expert advice independently if required.

Latest News

News
Money Laundering Becomes Another Cause of Poverty, Says UN
What is GeoLocation?
How Does Geolocation help in KYC?
Fraud prevention via geolocation technology
KYC compliance made easy
According to the latest UN’s report, over 10% of the world’s wealth could be hidden in overseas banks. The UN calls for global banking reform in its report.

Billions of people around the world have become a victim of poverty due to the tax abuse and corruption leading to money laundering. The UN’s report is asking for a global investigation.

The financial integrity for sustainable development panel of the United Nations is urging the governments to reform the tax rules and the banking system to help end poverty by tackling this emergency. It is said that while the governments were facing rigid financial stress due to the pandemic, criminals were busy hiding their illicit wealth offshore.

Leaders of the world, governors of central banks, businesses and representatives of the society agreed that the criminals were involved in the laundering of assets worth 2.7% of global GDP per year.

Ibrahim Mayaki, the co-chair of the panel and former prime minister of Niger, said: “Closing loopholes that allow money laundering, corruption and tax abuse and stopping bankers, accountants and lawyers from enabling crime are steps in transforming the global economy for the universal good.”

The High-level Panel of International Financial Accountability, Transparency and Integrity (Facti) say in this final report that the corporation is required between the countries to put sanctions on the enablers of these financial crimes.

The report also calls for progress towards digital companies and strong measures to increase the transparency of the ownership of the company and public spending.

Dalia Grybauskaitė, the co-chair of Facti and former president of Lithuania, said: “Our report rests on two simple ideas: restore public finance by fixing a broken system and use the trillions of dollars released to eradicate poverty, recover from Covid and tackle the climate crisis.”

These requirements are required due to the coronavirus pandemic as it blew holes in the financial system of countries around the world.

Recent Posts

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Shell Companies and Money Laundering: How to Combat Them?
What is GeoLocation?
How Does Geolocation help in KYC?
Fraud prevention via geolocation technology
KYC compliance made easy
Shell companies are notorious for all the right reasons. These entities often called ghost companies are frequently used by fraudsters to launder black money. Shell companies are business entities without any actual premises, employees, or operational assets. They are created by registered agents to conceal ownership information from other businesses. This gives them the anonymity to hide ill-gained funds, avoid tax payments, and bypass AML regulations.

When it comes to developing B2B relationships, businesses should keep a vigilant eye on their partner entities. Verifying important details like corporate documents and addresses can save honest entities from associating unwanted ties with fraudulent companies. Business Verification, referred to as Know Your Business (KYB), and Anti Money Laundering practices help address this problem by taking down shell companies registered only on papers.

This blog describes how shell companies are used in money laundering, what role global authorities have played in preventing them, and how it can help enterprises in the long run.

How do Shell Companies Launder Money?

Sell companies usually claim cash transactions on behalf of their customers to launder money. Multiple transactions increase anonymity and reduce the chances of tracing the original recipient. Money launderers then deposit funds into the company that are transferred to the criminal’s account by creating false invoices.
Global Efforts – Crackdown of Shell Companies

Global regulators and financial authorities have played an active role in the fight against fraudulent companies hiding their identity. In order to combat financial crime through shell companies, some efforts made by law enforcement departments are listed below:

Corporate Transparency Act (CTA) – USA

According to guidelines stated in the Corporate Transparency Act, businesses operating in the United States have to provide FinCEN – Financial Crimes Enforcement Network – with the information regarding the beneficial ownership of their company. This law was introduced in 2019 to prohibit all anonymous shell companies run by criminals for money laundering and illegal proceeds. The Transparency Act defines beneficial owners as someone:

Having a 25% or more share in the company’s revenue

Is responsible for controlling the business entity

Who Receives benefits from the business’ assets

Person with Significant Control (PSC) – UK

Authorities under the UK government define beneficial owners as PSC – a Person with Significant Control. As per the laws, a person is not allowed to run a business if they fail to record details about a company’s PSC during incorporation. Below are identifiers that help identify PSCs, according to the UK:

An individual with more than 25% of the company shares

A significant authority (more than 25% voting rights) in the company

An administrator having the right to appoint and remove executive officials

With the PSC reform in place, companies in the UK need to disclose “beneficial ownership” information which will help identify shell companies helping money mules launder dirty money. The PSC registry, having all the essential company information, stops fraudsters from obscuring their identity behind these illegitimate entities.

Combat Shell Companies with…

Business Verification

Business verification often termed as Know Your Business (KYB) is a corporate due diligence process which a business performs to verify other partner entities. It enables enterprises to devise policies and procedures to detect suspicious activities and prevent money laundering. With KYB checks, corporations can make sure they are conducting business with real and legitimate entities, and not another shell company.

KYB verification for corporate entities also helps them comply with the CTA, and Anti Money Laundering directives by the EU. By cross-checking against business filings, networks, and financial statements of a company, an automated business verification allows an enterprise to stay AML compliant.
Risk-based AML Program

Business entities are required to comply with recommendations of the FATF and other global regulations to prevent money laundering. An AML compliance program based on proper risk assessment for customers and partner entities can address the regulatory requirements. These programs help identify the risk associated with shell companies that are frequently involved in financial crime.

What Should the Program Include?

When it comes to onboarding business associates, a company’s AML program should focus on Ultimate Beneficial Ownership (UBO), nature and amount of transactions and business activities. The compliance officer should connect data points to verify the stakeholders and transactional flow of the company.

Red Flags

Below are some red flags which a risk-based AML program should consider when verifying corporate entities:

Is there any difficulty in obtaining ownership information about the company?

Do the company’s transactions align with its business profile?

Any payments listed without a proper purpose or date

Transactions involving large sums of money with other shell companies

The company performs frequent transfers to multiple beneficiaries

Watch list Screening

Beneficiaries of shell companies are often placed on adverse media lists due to the amount of risk they pose to a business. This can cause a customer’s risk profile to change allowing firms to conduct additional screening of these users. Politically Exposed Persons (PEPs) list includes individuals with a higher AML risk. Ongoing monitoring of PEP status can help enterprises to identify and take down potential financial crime.

Ongoing Transaction Monitoring

The red flags defined in the AML program can help corporations identify companies offering illicit services. Shell companies often involve unusual transaction patterns which could be detected through a transaction monitoring solution. Ongoing AML monitoring of corporate entities also helps identify high-risk companies which could possibly be involved in money laundering and other cybercrime.

Address Verification

Verifying a corporation’s address can help businesses find out if it’s a shell company or not. Since these entities only exist on paper and do not have any physical premises or personnel, they are easy to spot. An address verification solution powered by artificial intelligence can quickly check for possible hidden information including addresses and corporation dates to identify ghost entities operating for illicit purposes.

To Sum It Up …

Although shell companies are not always created with an ill intention, their ability to hide ownership identity makes them suspicious. Fraudsters exploit this aspect to their benefit for cleaning money acquired from illegitimate gains. While regulators across the globe continue to implement Anti Money Laundering laws, corporate entities are faced with compliance obligations. A robust mechanism for AML compliance to verify and monitor business associates can help enterprises achieve the all-important trust in a B2B relationship.

Geolocation Technology and its benefits for KYC Verification

What is GeoLocation?

How Does Geolocation help in KYC?

Fraud prevention via geolocation technology

KYC compliance made easy

Global Efforts – Crackdown of Shell Companies

Corporate Transparency Act (CTA) – USA

Person with Significant Control (PSC) – UK

Combat Shell Companies with…

Business Verification

Risk-based AML Program

What Should the Program Include?

Red Flags

Watch list Screening

Ongoing Transaction Monitoring

Address Verification

To Sum It Up …

Let’s prove your

customer’s identity

with Shuftipro.

Let’s prove your customer’s

identity with Shuftipro.

Sweden

Cyprus

United Kingdom

Dubai

Geolocation Technology and its benefits for KYC Verification

What is GeoLocation?

How Does Geolocation help in KYC?

Fraud prevention via geolocation technology

KYC compliance made easy

How do Shell Companies Launder Money?

Global Efforts – Crackdown of Shell Companies

Corporate Transparency Act (CTA) – USA

Person with Significant Control (PSC) – UK

Combat Shell Companies with…

Business Verification

Risk-based AML Program

What Should the Program Include?

Red Flags

Watch list Screening

Ongoing Transaction Monitoring

Address Verification

To Sum It Up …

Let’s prove your

customer’s identity

with Shuftipro.

Let’s prove your customer’s

identity with Shuftipro.