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KYC and AML Compliance can help cryptocurrencies to earn legitimacy

Ashley Williams
July 11, 2018
4 minutes read
3432

Cryptocurrencies are currently limited in use by virtual currency enthusiasts or by lottery bidders who are in to for the easy money , promised by cryptocurrencies’ volatile prices. Genuine KYC practices and AML compliance measures can help cryptocurrencies earn much needed legitimacy in the eye of not only national regulators but also in the eye of general populace. To be honest, right now cryptocurrencies are haunted by the reputation of a “monetary tool for cyber criminals”. Last years, ransomware attacks and the demand of hackers to be paid in bitcoin did no good to the reputation of cryptocurrencies. Conventional and status quo forces in financial world are already paying big bucks to downplay the utility and scope of cryptocurrencies. Reliable and easy to use KYC services can help cryptocurrencies to garner the repute like conventional means of transaction. AML Compliance will also give the financial regulator a break from continually cracking down on individuals and exchanges dealing in cryptocurrencies.

Why Cryptocurrencies need KYC and AML Compliance?

The potential of cryptocurrencies is hugely substantial with a decentralized economy where each application or blockchain based venture can have its own specific cryptocurrency to perform transactions and buy assets & items. Cryptoxchange make it even easier to pay from one currency to another

The surge in interest meant many cryptocurrency exchanges, where coins are traded, were overwhelmed with demand. Many of the biggest closed their doors to new customers as they grappled with a backlog in customer verification. While crypto remains a largely unregulated space, regulators around the world have signalled they are watching it closely. Crypto companies have been proactively following the kind of ID checks and money source verification that are commonplace in the world of regular finance in a bid to head off any future regulatory troubles.

AML Compliance for cryptocurrencies

Thanks to blockchain technology, crypto-currencies inherently possess the potential to actually reduce AML risks when compared with fiat currencies. The blockchain is an online public ledger, where each transaction is supervised, validated and recorded as a complete transaction history. Public ledger viewers and crypto-miners are immediately notified of any transfer from one holder to another. Furthermore, unlike counterfeit hard-currency, which governments spend significant sums trying to combat, crypto-currencies are almost impossible to forge as each carry their own unique characteristics, which are verified from end-to-end by miners. Without verification of all transaction phases, including the departure wallet, the destination wallet, the currency type and amount, the transaction is blocked instantaneously without any human supervision. In this sense, the digital trail could better serve AML regulations than existing fiat paper trail.

In order to perform a much more effective KYC and utilise AML Compliance services, cryptocurrencies must have to turn to reliable ID verification solutions. As we have seen in recent pasts, even the liberal financial regulators have started clamping down and fining crypto exchanges for being involved in money laundering activities. If crypto enthusiasts and bigwigs in virtual currency sphere want to rid their products from unwanted financial criminals and there can be no better alternative then Shufti pro. It is an end-to-end ID verification SaaS product utilising the mechanics of Artificial Intelligence. KYC services from Shufti Pro will help crypto exchanges and management of ICOs to ascertain the identity of users that sign up for their virtual currencies or show interest in them at the time of ICO. AML compliance solution will help them to get rid of financial risk posing investors, no matter which part of the world they belong to.

Shufti pro has an industry best processing time of 30-60 seconds when it comes to KYC services. Documents printed in every language of the world can be verified by Shufti pro and its services are available in every country of the world. AML Compliance by Shufti Pro is performed with the help of back ground checks using a mega databank that contains data from 1000 Whitelists and Sanction Lists. In addition to that, Shufti Pro databank includes profiles from 3000 databases maintained by national, international and regional watchdogs.

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AML & KYC Compliance: 5 Ways AI is Supporting the Fight Against Financial Crimes

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.

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Multi-Tier Security - Another Line of Defense Against Bank Account Scammers
Why Cryptocurrencies need KYC and AML Compliance?
The banking sector has been witnessing a significant rise in criminal activities is a major concern of security authorities these days. The latest reports revealed that banks have been violating KYC and AML regulations and there were skyrocketing penalties in 2020. Protecting banks and customers is necessary and identity verification is one of the best ways of doing so. However, conventional methods like manual document verification do not suffice for the needs. There must be more robust and automated systems like digital identity verification and video KYC that can enhance the efficiency of the process.

A single line of defence does not work when it comes to technologically advanced fraudsters. There must be layers of security to filter them no matter how hard they try to surpass ID checks. Hence, multi-tier security is what the banking sector needs. Multiple layers of security checks and identity verification methodologies will make it impossible for fraudsters to enter banks.

What is Multi-Tier Security?

Multi-tier security refers to multiple layers of identity verification to enhance security in organisations. Fraudsters are developing sophisticated ways of fulfilling their malicious intent and a single layer of security cannot help companies. Therefore, there must be multiple layers of ID verification that can prevent fraudsters from entering the business.
A Summary of Bank Scams and Frauds

Over time, many different types of frauds and scams have struck the banking industry. Due to advanced technology, not only banks are streamlining their processes, but criminals have also figured out techniques to execute their plans. Many new breeds of scams have surprised organisations, especially banks. Let’s take a look at some of the fraudulent activities.

Account Takeover Fraud

Account takeover (ATO) refers to the fraud in which criminals get illegal access to bank accounts and use them for illicit activities like money laundering and chargebacks. As technology advances, fraudsters have also become sophisticated in committing account takeover fraud. There was a 43 per cent increase in account takeover fraud during the global lockdown in 2020. The numbers are expected to increase this year as well due to rapid digitisation.

New Account Fraud

A new breed of frauds struck the world a few years ago by the name new account fraud. With time, the rate of this fraud has increased and defeated all other kinds of scams. For a new account fraud, fraudsters use stolen, forged, or synthetic identities to open a new bank account, get a new credit/debit card, or loan money from the bank. According to Javelin Strategy, 3.2 million customers were affected by this fraud alone in 2018.

Identity Theft

Identity theft has been a threat to businesses for a very long time. The numbers are continuously increasing and banks are the primary target. Unfortunately, identity theft has taken various forms as well, including child identity theft, medical identity theft, and social identity theft. This enables criminals in making purchases, opening new bank accounts, and enjoying numerous other benefits with false names.

Data Breach

Data breach is a social engineering technique that fraudsters use to acquire customer information. The stolen data is later used for bank account scams, identity theft, and numerous other illegal activities. The identities stolen from a data breach are also used for new account fraud. Around 8,000 data breaches were reported in 2019. In the first half of 2020, 540 data breaches were reported only in the United States according to Statista.

Biometric Authentication – The Additional Security Layer

Biometric authentication is the additional layer of security that not only enhances the level of security, but it is also a rigid measure that fraudsters cannot dodge. Fooling biometrics is not a piece of cake for criminals because biometric authentication requires the live presence of the individual for identity verification. Voice, face, palm, iris, pupil, and retina are some of the biometric traits of an individual that are required for biometric verification.

Biometric verification employs various artificial intelligence models and the following techniques are used for authentication:

3D depth analysis

Micro-expression analysis

Skin texture analysis

Liveness detection

All these techniques ensure the live presence of individuals and any spoof attacks or deepfakes can be identified within seconds.

How will Multi-Tier Security Help Your Bank?

Digital identity verification is a multi-tier security measure that your bank needs. This system has multiple methods of verifying identities that prevent fraudsters from entering the business. Here is how the process of multi-tier security works:

First, the individual has to register on your bank’s website for the identity verification process

Along with the registration details, government-issued ID documents are also submitted

Then, the information submitted is verified with the government-issued ID document

Once the documents are verified, biometric authentication comes in action and face verification checks are performed

Customers have to submit their selfie or video during verification which is matched with the image on the ID document

Lastly, consent verification checks are also performed in which the customer has to submit a handwritten or typed consent note

Conclusion

All in all, verifying identities with the manual method is not an adequate option in the digital world. Digital identity verification is an automated process of verifying identities with layers of security to increase the efficacy of the process. One of the strongest layers in this method is biometric authentication that ensures the live presence of the customer for verification. Fraudsters cannot bypass these checks through any of their techniques. Due to the robustness of this technique, bank account scammers fear from the additional layers of security to verify identities and transactions. Identity theft, account takeover fraud, new account fraud, and data breaches are some of the criminal activities that have increased over time. Now, banks need a multi-tier security system to ensure the security of the customers as well as the organisation.

Get in touch with our experts and learn more about the digital ID verification system and biometric authentication.

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KYC and AML Compliance can help cryptocurrencies to earn legitimacy

Why Cryptocurrencies need KYC and AML Compliance?

AML Compliance for cryptocurrencies

Recommended For You:

AML & KYC Compliance: 5 Ways AI is Supporting the Fight Against Financial Crimes

A Summary of Bank Scams and Frauds

Account Takeover Fraud

New Account Fraud

Identity Theft

Data Breach

Biometric Authentication – The Additional Security Layer

How will Multi-Tier Security Help Your Bank?

Conclusion

Let’s prove your

customer’s identity

with Shuftipro.

Let’s prove your customer’s

identity with Shuftipro.

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KYC and AML Compliance can help cryptocurrencies to earn legitimacy

Why Cryptocurrencies need KYC and AML Compliance?

AML Compliance for cryptocurrencies

Recommended For You:

AML & KYC Compliance: 5 Ways AI is Supporting the Fight Against Financial Crimes

What is Multi-Tier Security?

A Summary of Bank Scams and Frauds

Account Takeover Fraud

New Account Fraud

Identity Theft

Data Breach

Biometric Authentication – The Additional Security Layer

How will Multi-Tier Security Help Your Bank?

Conclusion

Let’s prove your

customer’s identity

with Shuftipro.

Let’s prove your customer’s

identity with Shuftipro.