COVID-19 Pandemic – What it holds for businesses?

The year of the Rat, 2020, didn’t get a propitious start because of the deadly coronavirus outbreak. Emerged as a type of influenza in China, it turned into a fatal epidemic within days taking away the lives of thousands of people. Coronavirus, officially known as COVID-19, is gradually taking over the world emanating as a pandemic. To date, over 479,915 corona cases have been reported in 196 countries and territories around the world, out of which 21,577 people have died; as per worldometers stats.  

Lockdown amid COVID-19 – Impact on businesses and economy

Corona pandemic is a sensitive topic these days that has caused an unknown panic and fear among individuals. Being an epidemic, it has taken the world into its clutches. Governments are taking necessary measures to fight this deadly situation. Cities are being locked down, travel restrictions are put in place, and people are forced to confine themselves to their homes. Above all, businesses are being closed leading to disarray among global trade, tourism, investment, commerce, and supply chains.

The coronavirus outbreak isn’t just a human tragedy affecting thousands of people globally, it is leaving a negative impact on the global economy. The business stats from around the world paint a bleak picture of the impact the corona outbreak is leaving on their businesses. In a statement to The Guardian, Dave Griffin, the managing director of Chauffeur Services Direct, claimed they have lost nearly 80% of their bookings amid corona lockdown. He stated that after the corona pandemic, their weekly turnover has slashed to about £500, contrary to £3,000-4,000 a week. The reason is that people are advised to stay isolated, firms are implementing work from home strategies and people aren’t traveling much.

Moreover, with the governments urging people to work from home, gig economy workers such as cleaners, event staff, and delivery and taxi drivers are facing the worst situations and seeing their work wither away because they are not getting any paid leaves from the company. The majority of the workers are on a zero-hours contract and hence, are out of work currently. 

With the Covid-19 rattling the global economy, and every industry, including the supply chain, are being disrupted. Organizations are confronted with a well-understood reality that businesses won’t go as usual. According to the New York Times, the investors are reporting the fall in the U.S. stocks for a second straight day on Friday. Additionally, airline, energy, and tech companies’ shares had also lowered the market on Wall Street. The S&P 500 index closed lower than one percent, which was the worst day of the month. Oil and gas prices are no different.

Analyzing the current situation, most companies are not sure about the cost of delay in reopening their businesses. However, according to the survey, 10 percent of the companies claimed that they are losing around $71 million per day. Apart from it, now organizations are disclosing their losses amid the coronavirus outbreak. 

Contactless technology – the need of the hour

Coronavirus outbreak is taking its toll on global businesses. To avoid the spread of this novel disease and protect themselves, people are advised to maintain social distance and confine themselves to their homes as much as they can. Moreover, people are advised not to touch anything outside and keep washing their hands to hinder the virus from attacking. Amidst these precautionary measures, businesses are badly affected because of the disruption in their business operation.

For instance, people are avoiding going to stores to buy things and using cash or ATMs, employees are forced to work from home, biometric attendance is being hindered and much more. Above all, con artists are ready to exploit the situation and fulfill their malicious intent. In all this, businesses are the ones who are most affected. In order to efficiently handle the situation, contactless secure technology is the need of the hour because completely shutting down the operations is not even an option.

Work from home

The complete lockdown of cities has pushed organizations to implement the work-from-home strategy. For regular organizations, it’s not easy to go remote within days. Everything has to be properly planned and managed before allowing remote work. The major concern of businesses is the security of data, and employee attendance and performance. With the trouble makers all set to misuse this opportunity, companies need a solution that can not only secure the business operations but also facilitate employees in carrying out their tasks efficiently. 

Contactless payments

People have started reconsidering the cash that they handle every day as coronavirus continues to spread globally. According to some experts, the COVID-19 can latch onto the cash the same way as it survives on other surfaces including handrails, doorknobs, windows, gates, etc. Similarly, using cards for payments may not be a good idea as well as stated in one study, credit cards carry more germs than cash and coins.

People who took every possible preventive measure amid the corona outbreak are ready to embrace contactless technology in the form of digital wallets and contactless payments. These payment methods allow customers to pay through a single tap without coming in contact with other people or systems. They are the faster alternatives to cash and chip-and-PIN payments; requiring little to no physical interaction.

Contactless verification

One of the biggest challenges that organizations are going to face is the hindrance in employee and customer verification. For instance, financial institutes generally verify their customers through physical documents, organizations verify and track their employees’ attendance through fingerprint scanning, airports have different security checks in place to check travelers and passengers that involve physical interactions. All these business operations are being restrained as a result of the coronavirus outbreak.

This makes contactless verification a significant need for the business during this critical corona lockdown. Whether it’s about customer verification, employee authentication or client onboarding, touchless verification can prove to be an effective solution for the companies, not just that it’s safe but it is secure as well that can prevent digital frauds keeping the con artists at bay. 

Businesses incorporating contactless technology to deal with Corona outbreak

The COVID-19 lockdown has enveloped the world, cutting off the major business operation and badly impacting the organizations. To deal with the ongoing situation, businesses are going to take advantage of technology. After years of reluctance, individuals and businesses are now incorporating touchless technology in the form of digital wallets, face verification, digital KYC and digital ID authentication. These tech solutions are a necessity for businesses. In this COVID-19 pandemic, only those organizations are going to survive who would reengineer their business processes as per technology.

Here are the few businesses that are implementing contactless technology to successfully carry out their business operations during the corona crisis.

Financial institutes incorporating KYC alternatives

With the coronavirus outbreak, financial institutions have to undergo a major loss because of their extra reliance on their employees and traditional customer onboarding processes. Though many institutions have allowed their employees to work from home, what about the onboarding process? How are they going to ensure the secure customer onboarding meeting the regulatory KYC and AML compliance? Banks and other financial institutes now have even more responsibility to identify the con artists who might be exploiting their systems. 

In lieu of the current situation, the first Canadian bank has recently introduced digital identity verification to efficiently carry on their operation during the lockdown. Moreover, the institutions are incorporating KYC alternatives for the successful onboarding of customers. These alternatives include Shufti Pro’s video KYC, Digital KYC verification and AML screening solutions. 

 

“Amid the COVID-19 outbreak, we can’t sit quietly and see businesses shutting down right and left. Our AI-powered KYC verification solutions are the right fit for businesses looking forward to on-board secure clientèle. Our contact-less products aim to ensure that when everyone is panicking, fraudsters and terrorists don’t take advantage of the situation – Victor Fredung, CEO Shufti Pro

Retailers incorporating cashless payments

With WHO’s instructions for the individuals to maintain social distance and avoid contact with people and other surfaces outside, customers are being confined to their homes and only go out in case of emergency. Even in such scenarios, they are avoiding physical contact with other people. Analyzing the critical situation, the retailers are already saying no to cash and accepting contactless payments. Moreover, the cities’ lockdown has forced retailers to shift their operations online and provide their customers with an e-commerce facility. This makes the whole shopping process entirely contactless; from adding things in the cart to check out. 

Undoubtedly, it is an effective measure to prevent corona spread, but it is proving an opportunity for the fraudsters to exploit digital wallets and earn some extra cash. Just digitizing isn’t enough, the security of customers’ data is equally essential now. With the FTC warning individuals about potential coronavirus scams, proper measures must be kept in place to curb these frauds. For instance, verifying payments through face verification, as Amazon’s “smile to pay” feature is working.

Touchless verification at airports

Public places, especially airports are posing potential coronavirus threats to individuals. The reason is the unhygienic contact of travelers with the devices at various checkpoints, be it a ticket counter or airport entrance. Most airports have biometric scanners in place to authenticate people which is touched by almost every person raising concerns for coronavirus.

Understanding the severity of the situation, touchless biometric authentication is becoming more streamlined and essential for airports and other public places. Implementing touchless verification not only deals with the current COVID-19 issue but also enhances airport security and customer experience. People won’t have to wait in queues for their turn.

Educational Institutes

With the unprecedented situation caused by the COVID-19 pandemic, governments are taking measures to cope up with the novel outbreak and safeguard the well-being of the students. As a result, the educational institutes are advised to close down the institutions for the time being. In this current situation, many institutes are opting for online education to provide the students with quality education. This means every activity will be performed online, from attendance to lectures and exams. 

It’s a well-understood fact that some troublemakers would try to take advantage of the situation and violate the policies through cheating in exams; for example, getting their paper solved by someone else. To deal with such issues, institutes are integrating digital verification services in the form of face verification to authenticate the students in real-time and prevent any unfair circumstances.

The way forward

Analyzing the current scenario, to successfully control the pandemic and getting back to normal life is going to take time. Till that time, sitting quietly and doing nothing is not the solution. Among the safety of the people, organizations need to take certain steps to explicitly deal with worsening business conditions during the COVID-19 pandemic.

Verify on the fly: Touchless airport security clearance using biometrics

Around one hundred and seventeen years ago, the Wright brothers designed, built and flew the first successful airplane. The global population at that time was 1.6 billion but today the world population is almost seven times. There has been a tremendous increase in the number of travelers as well as the number of airports around the globe. According to the World Economic Forum (WEF), cross-border travel will rise by 50% in this decade to reach 1.8 billion international arrivals by 2030.

Additionally, increasing requirements regarding data privacy and customer satisfaction foster the need for advance global solutions to ensure simple, safe and reliable verification of passengers. Passengers have to go through the cumbersome process of planning & scheduling, check-in processes, baggage management, and security clearance, which most of the time reduces the level of passenger satisfaction.

Today’s technologically advanced customers prefer a seamless authentication process whether they are signing up on social networks, opening bank accounts, purchasing something or traveling for business.

Airports and airlines need to adapt to the challenge of intense security while providing customer satisfaction to the population that prefers a seamless customer journey. This need to find a balance between security needs and travel demands can create problems in the long run especially if current processes are still going to be in practice with hefty security measures. Airports and airlines spend a considerable amount to increase security standards every year. In 2018, $3.9 billion were spent on security with additional focus on identity management.

Most of the airlines fulfil security requirements through manual ID checks at the entrance/exit gates. Security imperfections have been an issue associated with the airports and airline industry for quite long. According to Newzealand Air, around 550 of its customers show up for flights with expired documents and about 10 percent sign up online with incorrect passport information during online check-in. There are cases where illegal immigrants and criminals cross-travel due to flaws in manual identity verification procedures or human negligence.

Improving the security, efficiency and traveler experience at airports

Technological advancement is paving ways for the seamless customer journey and enhanced airport security. For instance, online ticketing and e-boarding passes replaced the long waiting queues to get boarding passes. Additionally, the use of biometrics to verify identity is also another breakthrough for security enhancement at airports. Many airports around the world are already implementing biometrics to identify travelers.

Biometric verification at the check-in eases the customer journey and enhance the security while reducing the errors and long waiting times to get passenger identity verified with manual document checks.

Document and biometric identification eliminates the need for manual ID checks or employing special staff to check and screen traveler identity. By utilizing online ID verification, airports and airlines could enhance the security and use human resources for other critical security tasks.

Online identity verification using biometrics is already helping online businesses and financial institutions to securely verify their customers’ identities. Biometric authentication using kiosks at the airport is helping airlines and airports in reducing costs and managing time. Moreover, it also provides seamless yet enhanced security that can bring a whole new revolution in the aviation industry. However, it is only considered as the first step to build an enhanced air traveler journey.

Building a seamless traveler’s journey

Building a fully automated airport security system requires technological and human resources to be used in collaboration. Shufti Pro is contributing to make airport security seamless and fully automated. While providing online identity verification and KYC services to digital businesses, we are rendering touchless biometric authentication services to the airports and airlines. Including three different biometrics and ID document checks, Shufti Touchless Kiosk will enhance the security and customer experience.

Going touchless solves many issues including the unhygienic contact with devices at crowded places. Biometric scanners are often touched by a lot of people, which with concerns over hygiene, sometimes becomes an issue. Physical contact with biometric sensors is no less dangerous than touching a doorknob at crowded places. In some of the countries, rising concerns over hygiene issues due to outbreak of viral diseases such as avian influenza, Severe Acute Respiratory Syndrome (SARS) and the most recent one Corona Virus (COVID- 19). Since most of these diseases spread from person to person by touching communal surfaces in crowded places, touchless biometric authentication is becoming more streamlined. Shufti Touchless Kiosk not only deals with this issue but also focuses on security and customer satisfaction.

How to improve airport security using touchless biometric authentication?

So far we have identified that security, customer experience, cost and time management, manual errors, and unhygienic contact are the issues that need to be addressed. Biometric authentication systems that could minimize these issues could help in improving airport security.

Shufti Touchless Kiosk

Shufti Touchless Kiosk is designed to address these issues. It uses 3 different biometric (Face, Palm, Voice) modalities to make the verification process more stringent.

Facial Recognition

The facial recognition system is capable of identifying, verifying, validating an individual using a digital image or a video from a video source. The facial recognition system uses biometrics to map the facial features of a person from a photograph or an image. The face is considered as the most popular and secure biometric feature, second to fingerprints, to verify the identity of a person. Using facial verification provides security and reinforce positive customer experience. Additionally, passengers didn’t have to make any contact with the device to authenticate identity.

Palm Recognition

Palm recognition is an authentication method that uses different unique biometric traits on the palms of people’s hands. Mostly palm-vein recognition and palm handprint recognition with a variety of other techniques are used to verify or authorize a person to use certain services. Utilizing palm recognition technology adds an extra layer of security on top of facial recognition, enhancing security and promoting touchless verification.

Voice Recognition

Voice recognition works by digitizing the voice of an individual into different digital segments and matching it against the already captured/produced template of the same individual’s voice. Voice recognition is considered as soft biometrics as it doesn’t require any contact with the device.

Verify on the fly

Shufti Touchless Kiosk, with three different biometric modalities and real-time authorization in 5 seconds, instantly verifies passengers’ identity. Passengers don’t have to wait in long queues for their turn to get documents and identity verified by the staff which most of the time could take a lot of time depending on several factors.

Airports and airlines could revolutionize the identity access and management at airports by enhancing security, providing a seamless experience to the passengers and implementing cost-effective solutions that are time efficient as well.

Politically Exposed Person - An unsaid threat to Businesses

Politically Exposed Person – An unsaid threat to Businesses

A politically exposed person or PEP is the one who has been assigned to perform prominent public functions or the one who has a high profile role in society. Due to their position, they can commit money laundering offences and other related corrupt activities like terrorist financing. This thing has already been confirmed by many case studies and analysis reports. There is a proper list available that has all names of PEPs known as the PEP list. Such people are a high risk for the financial sector as they are more likely to become involved in financial crimes like money laundering and financing of terrorists than other people. PEP status highlights additional risk involved, so businesses must apply additional AML/CFT measures when establishing a business relationship with these persons. 

PEP status does not predict criminal behaviour but signals the businesses to be more vigilant. Businesses must conduct proper monitoring to ensure that they do not miss a change in PEP’s risk profile. PEP monitoring requirements are not indicative of criminal behaviour but are just preventive in nature. The evident potential risk factors associated with PEPs justify the application of additional preventive measures when it comes to establishing business relationships with PEPs. In order to avoid reputational and regulatory damages, organizations should understand how to recognize a politically exposed person (PEP) and their associates. 

Defining Politically Exposed Persons

This term first emerged as “Senior Foreign Political Figure ” in the wake of an Abacha Affair which was a money-laundering scandal in Nigeria, this case jolted global efforts to secure the abuse of financial institutes by the public figures. 

PEP, according to FATF Recommendation is defined as following

“Individuals who are or have been entrusted with prominent public functions in a foreign country, for example, Heads of State or of government, senior politicians, senior government, judicial or military officials, senior executives of state-owned corporations, important political party officials.”

According to EU Third Anti-Money Laundering Directive:

“Natural persons who are or have been entrusted with prominent political functions and immediate family members or persons known to be close associates of such persons.”         

Three Major Types of PEPs:

The AML and CFT Act identifies three major types of PEPs which are as follows:

Domestic PEP

A person who has a prominent public position or has a role in a government body.

Foreign PEP

Someone who holds a prominent public position or a role in some other country is considered as a foreign PEP. 

International organisation PEP

A person who has a high position in an international organisation, such as the United Nations (UN), the World Trade Organisation (WTO) or the North Atlantic Treaty Organisation (NATO).

List of PEPs- A Detailed Insight:

Financial institutions and businesses can categorize PEPs as:

Government Officials

Current or former government officials that are in domestic or foreign government positions including heads of states, individuals working in executive, administrative, legislative, military or judicial institutes in various elected or unelected roles.  

Political Party Officials

Officials that are appointed to senior positions in major political parties at home or in foreign countries. 

Senior Executive:

Individuals who are serving in senior executive roles, for instance, directors or board members in government owned or foreign organizations.

Family Members

Family member, the immediate one, of a political or government official, or of a senior executive. For instance, spouse, parents, children, siblings, or spouses’ parents or siblings. 

Categories of PEP

Categories of PEP

 

The Subjective Nature of PEPs:

To define politically exposed persons there is no single international standard so far. Subjective judgment has to be made in order to decide if an individual is politically exposed by taking into account the associated risks. These may be influenced by their seniority and time spent out of the office if they were ever in an eligible PEP position. In the same way, there is no defined objective on whether an individual qualifies as a family or a close associate. 

FATF Recommendations for PEPs:

There are confirmed risks associated with PEPs that justify stringent measures to be taken to put a halt on financial crimes such as money laundering, terrorist financing, and others. Businesses are required to take preventive measures before establishing a relationship with such persons. Businesses to perform a proper PEP list screening whenever a new customer is onboarded to check the criminal history and associated risks. FATF requires countries to ensure that financial institutions implement measures to prevent the money laundering through financial institutes by PEPs and to detect potential misuse whenever it occurs. The requirements are preventive and to be on the safe side. Moreover, businesses cannot refuse business relationships with PEP just because the client is in a PEP list. FATF measures extend on a broader spectrum to fight against financial crimes such as money laundering and not to put PEPs behind bars. 

Identification of PEPs:

To comply with AML regulations and to trace and tackle PEPs, businesses need to have a proper procedure in place. Any business entity should know when to check for a PEP and why to check for it. PEP record should be integrated in the system of every business so that the onboarding customer is screened against it and to nullify the associated risks and criminal activities. In this regard, strict Customer Due Diligence along with PEP screening must be performed before establishing a business relationship with any customer.  

Legal Entity Identifier (LEI) — what it means and how it helps financial institutions?

Legal Entity Identifier (LEI) — What it means and how it helps financial institutions?

The need for trusted digital communication in this age is crucial due to increasing cybercrimes. The digital world is prone to several challenges among which data protection is the one more prevalent and disastrous. With the flow, the incoming regulations come up with the need for stringent security measures for the protection of customer data, digital surveillance, business identification, and a clean clientele. Legal Entity Identifiers (LEIs), therefore, are in place, that help businesses introduce transparency in the system as well as onboard a clean customer base.  

Today, financial companies are active in introducing various financial services and products in the market without disclosing the relationship and associations with the companies. The ambiguity in company bonds, their names, and affiliations can lead to several unfortunate regulatory issues. Therefore, an independent UK’s financial regulatory body, the Financial Conduct Authority (FCA) was established that regulates the financial enterprises, provides services to consumers as well as maintain integrity among the financial markets in the UK to ensure transparent trading. 

In 2011, the LEI system was developed in response to the financial crisis in 2008. Supervised by the LEI Regulatory Oversight Committee (LEI ROC), central banks and other financial regulators, the Global Legal Entity Identifier Foundation (GLEIF) was put in place to support the global adoption of LEI. In December 2012, LEIs were issued for the first time and till September 2018, about 1.2 million entities registered around the world.

LEI 20-characters are divided into three parts. In the number, 0-4 characters contain the identification number of issuing organization, 5-18 contain a company identification number, and 19-20 are the check digits. The LEI helps financial institutions, policymakers, and regulatory authorities to trace the connections in the financial system. It provides a unique identifier for the entities that participate in financial transactions. It is accessible in the publicly available updated databases. LEI generates the following substantial benefits for financial businesses:

  • Clear regulatory reporting 
  • Accurate identification of adverse party exposures 
  • Increased operational efficiency
  • Free of charges database management 
  • Improved business risk management 

It also generates efficiencies for financial companies in internal reporting, risk management, and in collecting, cleaning, and aggregating data. In addition, the LEI is expected to ease companies’ regulatory reporting burdens by reducing overlap and duplication with respect to the multiple identifiers reporting firms must manage.

What kind of legal entities can register an LEI number?

The companies that want to register with an LEI are required to contact the LEI issuing organization. Companies then need to provide the required information to issuers and pay the fees. The information is validated by them against an authentic source, for example, business registers and if verified, LEI is assigned. To register an LEI number, most commonly the issuers ask the company to provide the name and address of legal entity as listed in the official business registers, country and subdivisions codes, date when first LEI was assigned, and date of latest updates in LEI information. 

The following are some legal entities that can register an LEI number: 

  • Financial institutions
  • Registered companies
  • Registered subsidiaries
  • Non-profit organizations
  • Sole proprietors
  • Credit rating agencies
  • International business branches
  • Funds and trust

An international branch office belonging to the same country in which there is the head office of an organization does not need to register again because one LEI is issued per country.

Who needs LEI?

The use of LEI is in the process of implementation by regulatory authorities such as EU, Canada, the US, and the Asia Pacific. LEI is required by the following EU regulations as well as directives:

  • Market Abuse Regulation (MAR): Financial instruments issuers and the reporting of entities involved in suspicious transactions
  • European Markets Infrastructure Regulation (EMIR): Brokers, beneficiaries, CCPs, and counterparties
  • Securities Financing Transactions Regulation (SFTR): Groups involved in financial transactions, securities and beneficiaries 
  • Prospectus Regulation: Securities issuers that are admitted for trading purposes in the EU regulated market as well as offered to the public
  • Markets in Financial Instruments Directive II (MiFID II) and Markets in Financial Instruments Regulation (MiFIR) 
  • Alternative Investment Funds Directive (AIFMD): Real-estate funds and managers
  • Capital Requirements Regulation (CRR): Credit institutions and banks
  • entities
  • Solvency II: Insurance groups and firms, financial resources and pension funds
  • Credit Rating Agencies Regulation (CRAR): Credit rating agencies
  • Central Securities Depositories Regulation (CSDR): CSDs and their participants

How does LEI help financial institutions?

The banks and financial institutions are facing challenges while monitoring high-risk entities. Especially the borrowers that are located out of the state or country and have borrowed a huge loan becoming a high-risk entity for the bank. Tracking these borrowers is difficult as they do not have a unique identifier. When the registry started growing up, legal firms and sole proprietors started borrowing huge amounts from the banks, if that amount is above the one specified by the banks, the entity is obliged to register an LEI number to help institutes trust them and trace the ultimate beneficial owner. 

The borrower companies whose clients are not located in the region they operate in, for example, credit rating agencies, banks, and other financial institutions, they can access the publicly available database to gather credible information related to the clientele. Therefore, it deters the risk of fraud the legal entities can bring for the financial businesses. Moreover, verification of beneficial owners can be done that on the other hand is a benefit as well as a regulatory requirement. This helps financial institutions actually know who they are dealing with.

The global business infrastructure is getting complex so is the tracking of fraudulent entities. To combat the risk of fraud, demand for business identification is growing. Therefore, LEI helps businesses identify the legal entities in the publicly available updated databases to perform identification in a clear and quick manner. LEI is becoming a business development and growth tool internationally.

How machine learning changed facial recognition technology?

How machine learning changed facial recognition technology?

We are entering a new era of fast and secure authentication clubbed with a perfect storm of digital transformation. The convergence of AI and biometrics is a part of this transformation and as with many technological breakthroughs, this transformation is not down to the advancement in a single technology. 

The implementation of face recognition has seen many iterations starting from its origin in the 1960s when it was manually implemented with a RAND tablet (a graphical computational device). The technology was incrementally refined during the last century. However, adoption of facial recognition on a large scale became possible, thanks to the breakthrough of deep machine learning in the early 2010s. In this article, we will try to elaborate how machine learning has changed facial recognition technology and the impact it has on the development of robust authentication systems.

The facial recognition market is expected to grow to $7.7 billion by 2022 and it’s because the technology has all kinds of commercial applications. From airport security to healthcare and customer authentication, face recognition is now widely adopted around the globe. 

What part does machine learning play in face recognition mechanism?  

Deep machine learning or deep neural networks are about a computer program that learns on its own. The fact that it is called “neural” or “neural network” comes from the basis that the technology is inspired by the human brain’s properties to transform data into information. It is a variant of the more general concept of machine learning, which in turn is part of a more comprehensive concept called artificial intelligence.

With deep machine learning, an algorithm serves training data and delivers results. But in between input and output, the algorithm interprets the signals – i.e (training data) – in a number of layers. For each new layer, the degree of abstraction increases.

Say, you want to build a deep neural network that can differentiate different faces or that can determine which faces are identical. Training data should then be a large number of images of the faces. The larger the dataset, the more accurate the network, at least in theory.

A computer does not “see” a face in the image, but several values ​​representing different pixels. With the pixels as a background, the deep neural network learns to find patterns. For each layer passed in the network, some patterns become more interesting (stronger signal between the “neurons” in the network) while others are nonchalant (weaker signal). During training, the “weights” of the various signals are varied to produce the desired result better and better.

The first, second and hundredth time the algorithm performs this procedure, the results are usually not as good, but eventually, the network can achieve impressive results. In a way, one can say that the network has learned to abstract and generalize, from raw pixel values ​​to the classification of different people’s faces.

But that is perhaps not what we humans think of when we use terms such as generalization; it is rather the network has worked out some metrics that are unique to each face. If the pre-trained network is served a new image on a face, the network can match its measurement values ​​to the faces on other images. If the network generates roughly the same values ​​for different images, it is likely the same person on both images.

It is called deep machine learning because such a model can use multiple – sometimes a hundred layers. This is symbolic; humans cannot understand how the computer program finds patterns. It operates in different layers.

Although the algorithms are developed and refined as they are, there are two other reasons behind the breakthrough of the deep neural networks: access to large datasets and cheap computing power, especially in the form of graphics cards that were most often associated with computer games.

It may also be borne in mind that the method described above for classification purposes is only one of many but is commonly used. 

Anti spoofing techniques for face recognition

While converging machine learning algorithms with face recognition makes it more accurate and fast, there is another feature that makes machine learning a must-have for face authentication – Anti Spoofing. This innovative technology shows a lot of promise and has the potential to revolutionize the way we access sensitive information.

Even though face recognition is promising, it does have some flaws. Simple face recognition systems could easily be spoofed by using paper-based images from the internet. These spoof attacks could lead to a leak of sensitive data. This is where the need for anti-spoofing systems come into play. Facial anti-spoofing techniques help prevent fraud, reduce theft and protect sensitive information.

Presentation attacks are the most common spoofing attacks used to fool facial recognition systems. The presentation attacks are aimed to subvert the face authentication software by presenting a facial artefact. Popular face artefacts include printed photos, replaying the video, 2D and 3D facial masks.

AI-based anti-spoofing technology has the ability to detect and combat facial spoofing attacks. With features like 3D depth perception, liveness detection, and microexpression analysis, our deep learning based facial authentication system could accurately analyze the facial data and identify almost all kinds of spoofing attacks. Shufti Pro detected 42 different spoof attacks in 2019. Among these 3D face mask attacks were in high volumes – almost 30%.

Machine learning-based presentation attack detection algorithms are used to automatically identify these artefacts to improve the security and reliability of biometric authentication systems.

Machine learning-based face verification systems rely on 3D liveness detection feature for successful detection of spoofing attacks including 3D photo masking, deep fakes, face morphing attacks, forgery, and photoshopped images. Liveness detection verifies whether a user is present or is using a photo to spoof the system.

What to expect in the future for facial recognition?

The human face has already become a perfect means of authentication and will have more impact on the digital transformation in the future. By using the face as an identifier, we are already able to open an online account, make online payments, unlock the smartphones, go through checking control at the airport or access medical history in the healthcare sector. 

In general, facial biometric technology has widespread potential in four categories: law enforcement and security, online marketing and retail sector, health sector, and social media platforms. AI-empowered face recognition technology has the potential to become predominant in the future. 

One of the future implications of technology is identifying facial expressions. Detecting emotions with the help of technology is a difficult task but machine learning algorithms have the promising potential to automate this task. By recognizing facial expressions, businesses will be able to process images and videos in real-time for better monitoring and predictions hence saving the cost and time.

Although it’s hard to predict the future facial recognition technology with the rapid growth and adoption of technology, it will become more widely adopted across the globe with more sophisticated features.

Identity verification in social Media - Lighting up the dark side

Identity verification in social media – Lighting up the dark side

Social media is a word every one of us can relate to. With every passing day, it is penetrating into our lives more than ever, completely transforming the way we communicate and interact with each other. The way we are using social media platforms is leaving a major impact on our life. Undoubtedly, it is overcoming the distance constraint by bringing people closer giving them space to connect. However, with the expansion of social media, the risks around people are also growing rapidly.

As the number of active social media users is increasing, more information is getting placed online. This has unveiled the untold threat of hackers, cybercriminals, and malicious interlopers mining your personal data for any personal or financial gain. Most of the time these bad actors intend to steal the consumers’ data and carry out indecent activities such as bullying and harassment.

Data is the New Currency

Living in a data-driven world, the rapid adoption of digitization is giving away a lot more than we think. All thanks to the prompt explosion of the internet that the global number of active social media users is estimated to be 3.196 billion; which is up 13 percent from the previous year and this growth of users isn’t going to stop anytime soon. Among all the platforms, Facebook is leading the market with 1.86 billion active monthly users.

These figures provide insight into the readily available data of users on social media. The users’ profiles on these networking sites pose a serious threat to their identities. These threats include multiple security concerns, data privacy risks, data breaches, digital frauds, and identity theft, etc.; the reason why social media platforms are arguably under scrutiny.

Not just social media, but any channel that incorporates personal information is under risk that the data will be exposed unintentionally and accidentally, for example, through a data breach, or intentionally by imposters and cybercriminals. The disclosed data can be sold on the dark web which is later on used for identity theft, impersonation, and carrying out fraudulent activities such as opening credit, taking a loan, etc.  To say data is the new currency for cybercriminals won’t be an understatement.

Impersonation and Account Hacking

Hackers, spammers, cybercriminals are increasingly targeting social channels because of the presence of billions of users. Due to advancement in technology, getting into someone’s account is no more of a difficult task. Phishing attacks, social engineering tactics, brute force attacks are some of the most common ways of assisting cybercriminals to target and access the user profiles. 

The compromised social media accounts are heaven for imposters, and hell for the victims because once they get into your account, they can easily impersonate you and can perform any activity they want to. Social media accounts are more appealing targets for these criminals for they are linked with multiple other and are more effective to spread hate, malware and viruses, and scam people as compared to conventional email.

It’s the human psyche that we tend to trust the messages that are received from friends instead of some stranger. People are careful in opening links that they get from third parties, however, they are more likely to fall prey to impersonated accounts perceiving it to be their friends’ profiles. Even worse, the user profiles reveal a lot of personal information, for example, name, date of birth, location, etc., that cybercriminals can leverage for identity theft.

Identity theft can be further used to open bank accounts, credit cards, take loans in the victim’s name. Imagine receiving notice from the bank to return the loan which you didn’t even recall taking. It means someone is abusing your identity for his personal benefit and financial gains.

Cyberbullying and Harassment

The anonymity on social media is one of the major reasons for cyberbullying and harassment. Everyday we come across a harassment incident making news headlines. Though bullying has always existed, social networking channels have paved new ways for the predators to bully, harass, stalk and blackmail people online while staying anonymous and without the fear of being caught.

Making fake profiles on social channels like facebook, twitter, Instagram, etc. is not rocket science. By entering fake credentials, one can easily create a profile and perform whatever activity without any supervised monitoring or verification. Social media threats are not always from strangers, but it can be from someone we know seeking vengeance. Imagine waking up one day and witnessing your private information shared on some other profile. It’s like a privacy nightmare.

Such negative incidents leave a lifetime impact on the mental health of an individual which are often associated with anxiety, depression, low self-esteem, and even suicidal thoughts. A study reveals that the students who experience cyberbullying are two times more likely to attempt suicide. Moreover, suicide has become a leading death cause of people age 10-34 years.

Minors are no longer Protected

The widespread use of smart devices among children and their curious nature to explore everything online has pushed them into a dark pit. Minors are actively seen making social media profiles that are exposing them to the dark side of the tunnel. The existence of stalkers, pedophiles, predators and other criminals on the social media channels is nothing new, however, the unsupervised account monitoring and ease of creating profiles have led to a negative encounter with minors.

Over the past few years, many incidents of minor abuse have been reported. Though social media is not for children, yet a huge proportion of active users are under the age of 18 years old. The reason is the lack of proper age and identity checks to ensure that only authorized users can create profiles. This has grabbed the attention of the cybercriminals presenting them another opportunity to exploit children’s identities. A study states, the minors bullied online are nine times more likely to fall for digital frauds and identity theft.

How Identity Verification helps

The convenience of creating fake profiles on social media platforms are pushing the social channels into the dark pit. Taking advantage of this limitation, cybercriminals and fraudsters are coming up with multiple tactics to exploit the consumers’ data and use it for their personal and financial benefits. Not just them but predators, pedophiles and other bad guys out there are fully taking advantage of social media platforms to carry out their immoral activities like harassment and bullying.

The root of all these dark activities is the inability of social networking channels to verify the customer profiles at the time of creation and further putting verification and authentication checks to ensure that the account is accessed by authorized users only. Digital identity verification serves as a strong defense against such troublemakers and facilitates social platforms to get rid of the bad guys making social media a safe source of entertainment for users.

Moreover, based on the principles of artificial intelligence, ID verification solution exhibits age verification service to hinder the presence of minors on social media. It is not just a moral obligation of the business to ensure minors’ security and safety but also to efficiently meet regulatory compliances regarding minors’ online protection and user verification.

Age verification regulations

Age verification regulations demanding better compliance from businesses

“Youth is the hope of our future.” Jose Rizal 

It is no secret that the youth is a valuable asset and if not nourished properly it has the ability to negatively impact the future of a country. We can’t lose this valuable asset to unimpeded use of harmful products and services that affects their physical and mental health. Therefore, age verification regulations are implemented on the businesses. 

Due to the regulatory requirements, and lack of efficiency in manual verification, businesses are opting for next-generation age verification services, which are a fusion of Artificial Intelligence (AI) and Human Intelligence (HI). 

These harmful products that may tarnish our future are alcohol, tobacco products, gaming/gambling, adult content, and even prescribed drugs. All these products are not new in society but the technical advancements and open internet access have exposed the youth to a lot of un-controlled avenues. This uncanny behavior of youth management has led to a devastating impact on youth. A report by the Centers for Disease Control and Prevention (CDC) estimates that on average alcohol is the primary factor behind the deaths of 4,358 young people under age 21 each year. Nicotine consumption has also increased significantly, the 2019 National Youth Tobacco Survey stated that 5 million youth are using E-cigarettes, not to mention this number was 3.2 million in 2018. 

On the other hand, researchers have found that online video games affect the mental health of the children raising negative emotions in them such as vengeance and violation, which makes them socially isolated. 

These findings are pointing towards a bigger problem that could be controlled only with proactive risk prevention measures. That’s why regulatory authorities are in the bid to control this problem one way or the other. A few commonly used methods to control these risks include parental controls, alcohol education at schools, rehabilitation centers, setting age barriers on the sale and purchase of certain goods and services. 

Parents, retailer’s and online merchants selling age-restricted goods and services are the primary entities that can make a significant difference in controlling this huge problem. Parents can mitigate the risk with better parenting, as for the retailers and merchants, they can play their role by complying with age verification regulations. 

Businesses that are liable for Age Verification

  • Online gaming/gambling website 
  • Alcohol sellers
  • Nicotine and tobacco-based products sellers
  • Digital platforms
  • Prescribed drugs sellers 
  • Medical services providers 
  • E-commerce platforms selling age-restricted goods

Tobacco industry

Tobacco goods include a range of goods such as cigarettes, smokeless tobacco, hookah tobacco, cigars, pipe tobacco, electronic nicotine delivery systems including e-cigarettes and e-liquids. 

The U.S has passed the law for age-restricted selling of all the above-mentioned products. On December 20, 2019, the President signed legislation amending the Federal Food, Drug, and Cosmetic Act, and raising the federal minimum age for sale of tobacco products from 18 to 21 years. 

Also, it’s illegal to sell nicotine products to people under 18 years of age in England and Wales. 

In Scotland, any person under the age of 18 years is prohibited to use or sell nicotine vapor products and tobacco, under the Nicotine Vapour Products (NVP) law implemented on 1st April 2017. The Scottish NVP law requires the businesses to require the buyers appearing to be younger than 25 to show their IDs. 

They are required to verify the IDs by matching the face on the ID card with the face of the customers. And also verify the age through the DOB on the Card. In case of doubt, the merchants can refuse the sale.

Alcohol 

Alcohol is reported to be one of the primary reasons behind the deaths of minors, as getting alcohol using fake ID cards is no more difficult. 

The legal drinking age in most countries is 18 years, with a few exceptions such as North America where the legal age for alcohol consumption varies from 18 to 20. 

In the U.S a person under the age of 21 is considered a minor with regard to alcohol consumption. Selling to these minors is prohibited as per the underage drinking policy of the United States. Non-compliance leads to monetary fines and penalties. 

The 21st Amendment to the Constitution allows each state to make their own laws regarding the sale and distribution of alcohol within their own borders

Digital platforms

The UK government is very considerate in protecting minors and keeping them away from harmful content and products.  It has recently implemented the digital Economy Act 2017, where certain online platforms are required to perform online age verification on their visitors. The UK is the first country to take such an initiative. 

Gambling

In the UK, the Gambling Act of 2005 is implemented. As per the law, onboarding and promoting the age-restricted products to minors (below 18 years of age) is prohibited. The gambling law is implemented on gambling, gaming websites, lotteries, betting, etc., while traditional games such as football pools and National Lotteries are exempted from this law, where the minimum age for verification is 16 years. And the reporting entities are required to incorporate robust age verification checks on their stakeholders, to reduce minor players’ exploitation on such platforms. 

The UK requires the gambling websites to at least verify the name, address, and age of their players before onboarding them.

In U.S also the minors below the age of 18 years are not allowed to gamble online platforms or the casinos. 

It is evident from the above discussion of age-verification regulations that it is mandatory for certain businesses to verify the age of their customers before selling them any goods or services. The general age threshold is 18 years in most of the regions, and ID card screening along with face verification are the preferred means for age verification. 

Age verification is more than regulatory compliance, it is the corporate social responsibility, and a future-oriented measure to ensure retainable growth. 

How Online Age Verification Solution Helps

An online age verification solution uses artificial intelligence to verify the age of a person through legal identity documents such as ID cards, passport, and driving license. It also uses face verification to ensure that the person presenting the ID card is its original owner and not an identity thief. This solution can verify the age of a person within seconds, providing seamless customer experience, so there is no fear of losing legitimate customers. 

To wrap up, age verification is vital and more than a regulatory obligation, it ensures growth without the fear of non-compliance fines, or fraud. 

Identification, Verification and Authentication - Cut from the same cloth

Identification, Verification and Authentication – Cut from the same cloth

The modern era of technology has brought so many frauds to light. The digitized world has urged business to take measures to stay at a safe side. Increasing ratio of data breaches, compliance regulations, and identity theft have made it an uphill task for businesses to establish trust online. But due to these reasons it’s more important than ever to have a sound verification system. The ubiquity of users on the internet has significantly raised the number of digital frauds. Due to many available digital identity solutions manual checks have long been forgotten.

From the start of the identification of an individual to the recurring authentication procedure to validate that the person trying to access the system is the same person you think he is. Identification, verification, and authentication play a crucial role in keeping online channels free from fraudsters, to comply with KYC/AML regulations, and to provide enhanced customer experience. In this blog we’ll be discussing the differences between identification, verification and authentication in context of online identities. 

What is Identification?

Identification means the procedure of someone claiming to be a certain person. They can identify themselves with their names. It is simply like we assign different names to the folders in our computer and then differentiate or identify each folder by its name. For instance, when a user goes to a bank to open an account he can identify himself with his name, email address, or phone number on form. Same is the case with online shopping, when purchasing something online by entering your credit card detail and billing address you are giving an identification of you. 

Using identification process alone is like asking someone what is your name or who are you and considering the information as truthful and taking the answer as face value. Identification alone is never adequate in this world of fraudsters. Having someone declare their identity without actually verifying it is nothing more than a suffice. How can we be sure that the person who is on the other side of the computer is who he says he is? That is where verification comes on the stage. 

What is Verification?

Verification is something more than just asking who you are. It takes another level and validates if you are actually who you say you are. This step provides a high degree of confidence that the identity is accurate. Identity verification process is basically building bridges between who someone claims to be and who he really is. It establishes a trustworthy link to embed into the onboarding or account opening process. 

The process starts with the verification of government issued ID cards/ documents. With the use of document verification experts and latest technologies like OCR for automated data extraction and machine learning one can confirm that the provided document is authentic and valid. It can be validated if the document is fake or tampered. So verification is the next step to actually ensure that the provided information is right and accurate. 

It takes effort to verify someone’s identity to a high degree of certainty. If a business does not have stringent standards to verify an identity they can rely on traditional methods of verification such as knowledge-based verification. But such information is less reliable these days due to the prevalence of private data on the dark web. Such businesses lacking proper verification solutions are at the risk of falling into the pit of fraudsters as they do not know who they are actually dealing with. At the time when businesses want to provide a frictionless onboarding process, they may cut corners and want a low barrier to entry. Social media accounts, for instance, ask the user only to provide email address, username, password, and phone number for good measures. This information is not sufficient unless it is properly validated. 

The verification requirements are more stringent for online bank account opening though. In the financial sector there are numerous regulatory acts to prevent scammers from opening false bank accounts for criminal activities like money laundering and terrorist financing. Businesses are beginning to make a shift to biometric technology to verify customer’s identity at the time of onboarding to comply with regulations. Only by clubbing identification with verification can you be confident that you know who you are dealing with in the future.

What is Authentication?

Verification is a one time process, but once verified identities should be authenticated each time the individual is accessing the system. If you know someone you can authenticate him by looking at him but in this digitized world most of the transactions occur online or with people we don’t know personally so businesses need to put a system in place to authenticate the fact that person is who he says he is and not an imposter. Such a system validates that they are the same person who registered for services. Authentication is as simple as providing  credentials such as a password which is associated with a certain username.

There are certain number and quality factors incorporated to strengthen an authentication system. The higher are the factors employed and levels the more efficient is the authentication system. For instance for a social media login you have to provide username and password (things that you know) but for bank account you need to go through a form of authentication (things you have). So the level of authentication differs with different services. 

However the first two types of authentication are no longer counted as valid due to the availability of excessive amounts as a result of massive data breaches. So the most authentic system requires you to validate things you are by verifying identities paired with biometric technology using facial recognition, fingerprint scanning, iris scanning, or voice recognition as proof for your authentication.

In a nutshell, these are like stages to actually answer the question that the person is who he says he is. Digital identity verification solutions are paramount to assuring the authenticity of digital identities across public and private sectors and to put a halt on pervasive scams like identity theft, data breaches and other digital scams. These solutions should be a part of both authentication and onboarding of clients.

OCR technology for businesses - Its applications and benefits

OCR technology for businesses – Its applications and benefits

Optical Character Recognition (OCR) technology provides a business solution that automates data extraction from an image file or scanned document containing written or printed text. The extracted text is then converted into a machine-readable form that is further used for data collection, processing, and analysis. 

OCR is a widespread technology used in various business operations to streamline the process of data extraction from the documents. It is capable of reducing the overall time it takes in manual data extraction and entry. 

The technology started prevailing in the early 1990s while digitizing the historic newspapers. It then came through several startling improvements that today it is able to sleekly extract the data from documents and automate the global business processes. With constant advancements in the past few years, OCR technology has reached a remarkable accuracy of more than 90%. 

User access to information is improved with advanced OCR technology that can extract data from a variety of text formats/templates such as invoices, contracts, ID documents, financial statements, receipts and many more. These digital files can be searched from a repository to find the required document, viewed, edited, and repurposed to send the information to other systems.

OCR technology gaining grounds at the business level

Automated OCR technology has abridged business workflows and operations. Businesses can employ technology to reduce the resources as well as save time in data collection and management. With high accuracy and robust OCR technology, businesses can extract data from multiple electronic or paper document formats. As the world is moving towards digitization, businesses around the globe are adopting innovative solutions in their workflows that could reduce the human effort, speeding up the processes and aligning well with the customer needs. 

The following are some benefits that OCR technology brings for the businesses;

  • Reduced manual identification: Businesses need to identify each onboarding individual. They can use OCR technology to automatically extract the customer details and verify it.
  • Reduced cost: Automated document verification reduces human effort and therefore reduces the cost while providing improved services to customers.
  • Substitute manual data entry operations: The business operation that includes the collection of customer information can employ OCR technology to feed the identity document to the system and get all the customer information from the document in seconds. 
  • Save human resources: The number of employees to manually enter the customer details in sheets can be reduced by integrating OCR services to their system. Hence, human resources can be minimized. 
  • Boost up the business workflows: With automated data collection and processing, businesses can speed up their processes that can ultimately boost the business revenue. 
  • Reduced error-rate: Businesses can reduce the error-rate as a result of manual data entry. AI-powered OCR system intelligently extracts the user information while mitigating the errors. 
  • Improved business productivity: Robust data collection process eventually improves business productivity. The resources that previously used to perform operation manually can be utilized in other useful work. 
  • Automated content processing: OCR technology extracts the information from documents and fills it in the fields accordingly. For example, it will extract the name from an ID card and fill it in the system storage against the field of ‘Customer Name’.

AI-powered OCR technology employs strong underlying algorithms and techniques that make it possible for businesses to compete in the digital world with respect to robustness and accuracy. For example, the banking industry has a lot to do with the paperwork. To comply with the regulatory requirements such as KYC/AML procedures or to ensure a clean customer base, there is a need for document verification. 

Now the digital world demands digital solutions and so online banking emerged with a variety of online services. In this industry, identity verification via documents is the primary step that helps onboard honest individuals to participate in the legitimate financial system. Now the challenge of online document verification can be met using OCR technology. The online user aiming to open an online bank account would require to upload an official identity document, for example, an ID card for identity verification. OCR technology embedded in the document verification will extract the data from the user-uploaded document by identifying its format. 

Using various algorithmic techniques, the data will be extracted and verified. An automated data extraction process reduces the overhead of manual data entry in the banking industry. The information is stored and can further be used for other purposes. 

Use-Cases of Optical Character Recognition for Businesses

Conversion of a printed/scanned paper into machine readable form – An operation of many businesses. Before OCR, only one option that businesses had was to re-write/type the text that was a time-consuming process and prone to errors. The labor-intensive tasks are now replaced by automated OCR technology in businesses around the globe. The old texts are easy to access, search engines are using OCR to index the documents, number plate recognition can be done automatically. Other than these, the following are use-cases of Optical Character Recognition (OCR) technology:

Information retrieval

A searchable PDF format is one of the use-cases of OCR. The business systems that use OCR software convert the image-only PDF files and paper documents into searchable files. Unlike normal PDF files, these digital searchable files have an invisible overlay that contains searchable text. For this, OCR technology is used that acts as a digital system to find out the keywords, phrases, names, and other required information from those files. 

Greater security with cloud storage

The paper documents are hard to secure from any unauthorized access. They can be stolen, misplaced or damaged easily. With cloud storage, it is easy for the companies to secure data in an efficient manner, providing a controlled access and protecting it from the breach. OCR technology helps extract data and store it on the cloud. 

Small, medium and even big-sized enterprises prefer cloud storage to physical storage space. Cloud-storage makes it easy for smart devices and companies to access the data anywhere, on any smart device. OCR technology helps companies store the extracted data efficiently to the cloud where the users can access, read and edit the data easily. 

Reducing costs

Advanced OCR solutions help businesses reduce the cost of hiring a professional for data entry. The OCR system is integrated into the whole system infrastructure and it extracts each receiving information. The manual data entry by professionals is replaced by an automated system. For example, to submit the utility bill online, the user just needs to upload the previous paid bill and the system will automatically extract the data from it. Now the need for active professionals on their seats to look for each request is entertained using OCR technology. Moreover, the cost of shipping, copying, and printing is reduced and companies can manage all the data in digital form rather than keeping a pile of documents that occupy large spaces.

Time Optimization

Business operations save time by utilizing OCR technology in their data extraction processes. With a better accuracy rate, OCR software reduces the error rate and optimize the time it takes to complete a task. Moreover, it paves the way for the company towards productivity and greater revenue generation. 

Digital Identity Verification

The online businesses aiming to ensure a clean customer base are either required to perform identity verification to secure businesses or comply with regulatory requirements. Digital document verification against government-issued identity documents can help online businesses filter out bad actors. OCR technology is used in document verification in which an online user uploads an ID card, passport, driving license or credit/debit card, etc. to verify a person. With OCR, the information is extracted automatically and verified within seconds.  

Automation

Online businesses scan the hard copy of the invoice of their customers after importing them into their system. The extracted data is validated automatically to check its credibility and accuracy. The slip can be categorized accordingly and moved to the accounting system. In this way, the whole system is automated after analyzing the content and moving it to the relevant set. 

Shufti OCR has got your business covered. With its remarkable accuracy of more than 90% and fast real-time results, Shufti Pro helps businesses automate their data extraction processes. In mere seconds, the banking industry, e-commerce, digital payment services, and many more can pull out the user information from any type of document by taking advantage of OCR technology. This reduces the overhead of manual data entry and time taking tasks of data collection.

Establishing trust in Open Banking through Identity Verification

Establishing trust in Open Banking through Identity Verification

Over the last few years, open banking is becoming an emanated global trend. This rising trend is driving a significant change that how individuals and businesses are going to consume financial services since the industry is shifting towards a data-driven digital economy. Businesses are struggling to provide more reliable opportunities to customers that can efficiently overcome the new challenges posed by the new digital ecosystem.

The expanding customer-centric regulatory frameworks are pushing organizations to leverage the latest technology innovations and offer comprehensive control to customers over their data and identities in the digital sphere. The fully integrated digital ecosystem demands seamless navigation of businesses as well as individuals across the ecosystem without worrying about onboarding experiences.

Open banking is undoubtedly a beneficial innovation and like traditional banking, integrating effective and seamless Know your customer (KYC) and Anti-money Laundering (AML) process remains a primary focus of the industry. The main challenge to industry-wise KYC initiative is to balance between security standards and the customer experience and establishing trust in the open banking sector.

Shortcomings in the Traditional Verification Process

Identity has traditionally been verified through the physical provision of documentation that confirms a person or a business. Historically, the acquisition of goods or services required face-to-face interaction and, therefore, the presentation of verification documentation didn’t create a significant burden. The evolution of digital channels has resulted in increased remote availability of goods and services, but the corresponding identity verification process has largely been left behind. The failure of identification services to digitize in line with evolving digital channels has led to issues that must be resolved if the promise of an increasingly digital economy is to be realized for customers and financial institutions.

Challenges in Open Banking

These challenges lead to a lack of trust in open banking, also banks are still reluctant to embrace the digital shift due to high-rates of cybercrimes in open banking. 

1- Need for detailed Information of Customers 

Open banking relies on big data, collected from the customers. Even if manual customer onboarding is practiced, customers are required to provide a lot of information, and legal identity documents that are hectic and demotivates customers, who demand more from the technologically advanced banking industry. And if online information is collected the risk of fake customers or identity thieves is high. 

2- Lack of Standardized Verification Mechanisms 

Open banking is the collaboration of banks and tech companies to provide better customer experience. As this concept is still new there is no standardized process to execute open banking systems. Ultimately it has an impact on economies of scale and customer retention. At times the project turnover is not as expected, due to lack of standardization which is present in typical banking operations. Banks have no predefined and centralized system for customer security during open banking data sharing. 

3- The Risk of Digital Service providers 

Banks are not the only one that has challenges, the digital service providers also have several challenges to handle once they have access to customer data. Data collection through the integration of data transfer APIs is the very first step, the digital service providers can’t rely completely on the data provided by the bank. They also need to practice security on their platform. For this security, they need some equally competent solution that would not affect customer experience. 

4- Lack of Customer Awareness 

Customers are gradually accepting the advantages of open banking. Older people are less likely to allow such data sharing, but the case is different with Millenials. Therefore customer education regarding the scalability and pros/cons of open -banking is vital. 

This is also one of the challenges of open banking. Banks and digital financial solutions need to invest in customer education to get the most out of open banking. They need to show some sort of visible security measures to gain customer trust. 

5- Bad Customer Experience 

Customers allow for open banking to get a better online experience and to streamline their financial activities. So it is evident that they demand more from their banks and tech companies who use their data to give a customized experience. This enhanced customer experience gets tarnished with long on-boarding processes and weak security measures of online data collection and sharing. It also becomes a hurdle in gaining customer trust. 

Competition is increasing and providing enhanced customer experience is the key to success. The onboarding process is vital to gain retainable customers, and manual verifications leaves a bad impact on the customer onboarding experience.  

6- Demanding laws for Digital Banking 

The technological advancements have boosted the profits of banks, but it is controlled with stringent regulatory obligations. Banks and digital financial solutions are bound by a list of compliance obligations, under customer due diligence, cyber protection laws. 

KYC (Know Your Customer), AML (Anti Money laundering) and data protection laws are the primary concerns of reporting entities. Fulfilling these laws in online spaces requires highly competent solutions because manual verifications fail advanced cybercrimes. 

7- Increased Cybercrime 

Banks and their third party affiliates, both are exposed to cybercrimes. Banks face the risk from their customers and businesses. Customers might give wrong information or use a stolen/synthetic identity to onboard, while the business might be a fraud. Not every prospect is reliable and a business opportunity might turn to be the biggest liability in the form of a data breach. 

In case a business misuse the data of the bank’s customers, the regulatory authorities will question the banks first and it will affect the market value and credibility of a bank. 

Online KYC is the Solution

All the above-mentioned challenges are keeping many financial institutions from embracing revolutionizing banking advancements. Online KYC/AML and KYB screening are the solutions for these problems. 

Online KYC screening solution screens the customers in real-time through their identity documents. Banks can utilize from its enhanced version which is video KYC. It performs online KYC through a live video call with the customer. Video KYC expert verifies liveness, and the identity documents and face are verified through artificial intelligence. It is the substitute for in-person verification and allows high security that banks need to practice in case of remote customer onboarding. 

AML screening solution screens the customers against the global sanctions list, blacklists, and PEPs lists. It ensures that criminal entities are not onboarded. 

KYB or Know Your Business screening verifies a business entity in real-time by collecting the information related to that entity from reliable sources and also screens it against blacklists and watchlists. Ultimately enabling banks to build transparent B2B relationships. 

These solutions are designed to counter all the challenges mentioned above. 

1- The enhanced Customer Experience (friendly interface) 

The interface is developed while keeping in view the diversity of the customers and businesses that connect with banks. Easy to use interface enhances customer experience as the necessary information is collected within seconds with easy to perform steps for the end-user. 

2- Global Scalability

The primary motive of open banking is to increase the scalability for financial services. These AI-based solutions have the ability to perform KYC/AML and KYB screening on business entities from any part of the world. So the businesses need not worry about the secure onboarding of international clients.

3- Aligned with Data Protection Laws enhances Customer Trust

Data protection laws are quite strict for banks and businesses that benefit from data sharing. For instance, GDPR and CCPA require the reporting entities to practice vigilant security measures to ensure the security of customer data. 

AI-based identity screening solutions are aligned with the data protection law to provide peace of mind to the banks, while they’re entering the digital revolution through open banking. It is a big relief as data is the primary asset of open banking and compliance with the data protection laws enables banks to fully utilize it. 

To wrap up, the world has evolved digitally and the need for adopting revolutionary technologies promises a prosperous future of the banks and businesses. Banks and digital businesses can achieve huge benefits from this fusion, but securing it with digital identity screening solutions ensures unparalleled growth and profits.

Top 6 Trends in Anti-Money Laundering for 2020

Top 6 trends in Anti-Money Laundering for 2020

To enhance the scope of AML compliance, new regulations were brought into force throughout last year. In this demanding regulatory atmosphere, financial institutes are expected to adapt to the needs of evolving and competitive financial ecosystems. The key concept of 2020 for AML compliance is the investment in the collaboration of credible data, human intelligence, and advanced technology. So far many achievements in this regard proved to be just a tip of the iceberg but 2020 is expected to be a fruitful year to witness real enhancements in this field. AML practices are required by businesses across the globe to perform customer due diligence.  It is not an uphill task as it may seem. It is an investment of a few thousand dollars to demit the loss of millions. 

AML Regulations for Businesses

Anti-money laundering (AML) screening has been employed by financial institutions to detect suspicious transactions and analyzing customer data. AML is to filter customer data, classify it according to the level of suspicion and inspect it for errors like any sudden and substantial increase in funds or a large withdrawal or many others. AML screening is used to detect money laundering, terrorist financing, and tax evasion, etc. The businesses are required to conduct proper AML due diligence to comply with AML regulations. Global organizations need to keep check and balance and devise a proper AML program. Relevant customer data is screened through official and non-official high-risk watch lists to identify potential risk customers. Moreover, businesses must have the legal documents of their distributors and resellers to verify that they are complying with global AML regulations.

6 Trends in AML to Watch out for

According to the European Banking Authority(EBA), AML is the top priority for the EU in 2020 as money laundering and terrorist financing are the main threatening risks. To address the issue EBA will form a new committee to ensure a collaborative approach towards the problem by working on a superimposable implementation of different policies. The aim is to investigate the breaches of AML regulations and take necessary actions. Following are some trends of AML to watch in 2020:

Get ready for more information on Ultimate Beneficial Owners

The many creative ways criminals use shell companies and offshore structures to hide their laundered money have become public knowledge after Panama Paper leaks. To counter this, this year we expect ultimate beneficial ownership legislation to become a vital feature of the financial crime landscape. Global focus on UBO transparency will ramp up this year as a consequence of many legislative actions from last year. Steps are taken in the UK to introduce the ultimate beneficial ownership register for businesses by the end of this year and we are expecting to see further progress in all these jurisdictions. 

Regulatory Regimes get an Overhaul

In 2019 money laundering scandals were never far from the headlines. For instance, the Danske Bank scandal which exposed the threatening level of suspects that flowed unchecked through European banks in past years. This year European authorities will be less lenient and more assertive with enforcement when dealing with financial crimes. As the UK is committed to being a leader in fighting financial crimes and delivering effective financial regulations, this year the enactment of sanction and AML bill will give the UK the power to introduce its own AML legislation bill. Except for the UK, the US will maintain its regulatory financial footing by introducing new Fintech regulation. 

Standard AML rules for Crypto-businesses

As global cryptocurrency adoption continues, 2020 will be the year that such organizations get serious about AML compliance. Crypto poses AML risks for years and authorities have wrestled a lot for it. Now is the time that exchanges and mining will take a considered approach allowing for trade and investment under tight restrictions. The uneven landscape of cryptocurrency has prompted the development of the global regulatory framework.  The EU’s Fifth Anti-Money Laundering Directive AMLD5, implemented on 10 January 2020, will blow AML obligations for cryptocurrency exchanges which are to be compiled this year. All this enlightens that influencing big moves are expected in the global regulation of cryptocurrencies to prompt the industry to adopt new monitoring tools. So such exchanges will have to adhere to AML compliance this year as there is no other way. 

FinTech drives Demand for Automated AML

In 2020, a large number of firms will move to automated AML checks to scale faster in this increasing consumer adoption and subsequent transaction volume in this competitive FinTech climate. Manual AML generates a  massive amount of false positives which makes it difficult to onboard customers and process payments. Among so many false alarms there are high chances of missing the actual money launderers. So businesses are adopting digital solutions for AML and KYC to check who they are dealing with. This automation takes less time and is cost-effective. 

6AMLD is in the Next Big Change

Another AML directive by the EU is in the pipeline this year. This time the EU is keeping up with changing the international regime and targeting for uniform AML and CFT practices across the member countries. The new directives are to be integrated into national laws of member states by December 2020 and the reporting entities are required to fully implement the laws by June 2021. This new directive is well-drafted to close any loopholes left in AML and CFT regulations previously.

Enhanced Transaction Monitoring Solutions

This year, financial regulators will place an increased focus on the monitoring of AML risks which will include a push for businesses to adopt proper transaction monitoring processes. Regulators will expect businesses to have an effective system in place to monitor transactions. NYDFS Part 504 legislation will drive this requirement as a general move towards controls measured by the quality of outcomes. To help financial institutes configure a range of monitoring scenarios and analyze data more efficiently genuine suspicious activities need to be separated from false positives. In this regard, the availability of new transaction monitoring software platforms will become essential in 2020. Firms will gain a competitive advantage if they identify suspicious behavior patterns while cutting operational workloads.

Why online alcohol industry needs robust age verification solutions?

Why online alcohol industry needs robust age verification solutions?

“Can I see some ID?” The question brick and mortar booze stores ask or at least should ask to verify that the buyer is of legal age. These ID check laws are stringent in almost every jurisdiction. For instance, selling age-restricted products to minors is a punishable crime with a penalty of up to 20,000 pounds, as well as, causing significant reputational damage to the owner. Retailers responded by placing age verification checks at checkout.

However, with increasing sales and purchases happening over the internet, how these strict age checks should be carried out? This is becoming a challenging obstacle for online retailers of liquor products. It’s quite obvious that regulations apply to the sale of liquor both online and offline. But the problem for online retailers is arguably greater as the customers could hide their identity behind the anonymity that internet offers.

Even though there has been a considerable growth of age checking in the offline environment, which has contributed to a notable restriction in the illegal and underage sales of alcohol, it is becoming clear that online alcohol sales are a potential area of vulnerability for the retail sector. The dilemma is that most of these online sellers didn’t implant verification checks. Some of the major retailers do have some safeguarding restraints but the digital world is enormous and borderless. The current checks aren’t enough and more needs to be done by all retailers to ensure that underage alcohol sale is restricted. 

What should the retailers do?

Online retailers need to make sure that they are not selling age-restricted products to the people under minimum legal age. The minimum age requirements are different in every jurisdiction, however, the online retailers should follow the most widely used minimum age requirement all over the world. 

This means the retailers should set up effective age verification systems capable of identifying and verifying the age of customers to ensure they are above the legal age to purchase alcohol. When accessing which systems or checks could be more suitable, businesses should consider all legal requirements and exercise due diligence to avoid committing an offence. These legal requirements are not only a retailer’s defence in consumer protection regulations but they are also an ethical duty of the retailer. 

These systems should be regularly observed and updated to identify any issues or to keep pace with the advancement in technology. Ordinarily speaking, there is no definite answer to what constitutes taking all feasible anticipations and exercise all due diligence possible. 

Conventional age authentication checks unlikely to satisfy due diligence

Many online retail stores place simple checks and transfer the responsibility of verification to their customers. The simple age confirmation checkboxes are the most common type of restraints set up on the websites. Here are some of the checks that are, unfortunately, not enough to verify the age of purchasers.

  • Relying on the customers to confirm their age
  • Using simple disclaimers to make an assumption
  • Using an accept statement for the users to confirm that they have read all the terms and conditions and are eligible to purchase their product.
  • Accepting payments through credit card without verification that the card belongs to the person making purchases.
  • Placing tick boxes to ask customers to confirm that they are of legal age

More convincing age verification checks

Age verification in the rapid pace digital world is a challenging and cumbersome task for both customers and businesses alike. Here are some of the possible precautions that retailers could implement to comply with age verification regulations. 

Age verification on delivery

One simple age verification check could be that retailers rely on delivery drivers to request the age proof at the time of delivery. However, relying on the third party courier delivery services may not be a proper way as the third party could deny the responsibility for age verification.

Collect in-store policy

Another scenario where businesses could perform stringent age verification is by introducing the collect in-store policy. This strategy may work for some of the retailers having both online and street presence but for businesses offering products online only this strategy will not work.

Online age verification services

In this tech-savvy environment, online age verification solutions have become more convenient. With these solutions in place, businesses can now implement multiple layers of checks to verify the age of the customer. 

Online age verification is a secure way to verify and validate the age of customers making purchases online. Using government-issued identity documents to verify the age of customers, both businesses and customers can help build a safer online market place for age-restricted products such as alcohol. By using AI-based identity verification solutions, businesses can verify the identity of a user more securely and in real-time without extra delays. This not only serves as a stringent verification check but also enhances the customer experience. Without interrupting the customer journey businesses could comply with all regulatory requirements around age-restricted products.

With increasing legal and ethical implications, it is necessary for businesses to employ a more technologically advanced age verification solution that serves multiple purposes at the same time. AI-based online identity verification solutions could help online alcohol retailers to restrict under-age users in real-time without creating obstacles for legitimate customers.  

Video KYC Onboarding

Video KYC Onboarding: Fintechs meeting KYC compliance with video identifications

The Financial industry is introducing a digital revolution globally. The term Fintech corresponds to ‘financial technology’ that promotes digital payment systems, asset management, fundraising, personal and business loans, money transfers, and investments. Just the way physical banks and financial institutions work, Fintech operates with customers digitally. The globally digitized world demands everything online. Therefore digital banking in the form of the Fintechs is prevailing rapidly so is the demand for digital/remote identification. 

Digital identity verification is incorporated by the Fintech industry in which they perform ID documents and biometric verification of online identity to comply with KYC and AML regimes. Determining the loopholes in previous methods, video identification of KYC is performed online that employs strong algorithms to verify an individual remotely against a video. Video KYC deters the risk of fraud by ensuring that a real person is showing up a document in the camera.

Video KYC is a convenient and quick process in which a KYC expert onboard the customer and conducts identity verification. It is a secure method that helps Fintech businesses in attaining a clean customer base. Moreover, KYC/AML compliance becomes easy when it comes to verifying the customers in a digital world. 

In the video KYC process, live KYC is performed and the end-user is guided in real-time to show the identity document to the camera for documents verification. Also, a few questions are asked from the end-user just like in-person KYC screening. 

Real interaction with Customers:

In video KYC a real interaction is done with the online customers to identify and verify them. The user is asked to show the identity documents as well as answer a few questions. During the conversation, customer behavior will be noted by the KYC expert. The liveness detection is also done during all this process that is done by both KYC experts as well as facial recognition technology. 

Cooperative audit:

The accounts that are opened after the video KYC become operational after a cooperative audit. The banks would need to perform an audit with respect to system security and KYC application as recorded in the form of video. The information is then verified and an account is created. A cooperative audit helps allow only trusted customers to become part of the financial system. Otherwise, if any fraudulent element is found, the application is rejected.

Video KYC Secures Digital Payments and Crypto Industry

Digital thieves are innovative. They hold fake identities and use them to conduct malevolent activities online. By using stolen real identities and their information, the customers try to fool the online identification process. Video KYC acts as a defense line that protects the system from participation of bad actors. The digital currency services providers and similar institutions such as crypto businesses are required to verify customers before onboarding them. With video KYC, financial sectors and ICO providers can perform a thorough KYC process online. 

The crypto businesses require transparency in their systems as per regulatory objections. The solution is identity verification of customers digitally that can better be met by exercising video identification of customers in which the liveness detection of the customer is performed along with document verification. Therefore, the risk of financial crimes such as money laundering and terrorist financing can be mitigated through on the spot video KYC.

How Video KYC works?

The video KYC process undergoes the following steps: 

  1. Your customer will be required to fill in the registration form that is present on your website.
  2. After registration, the KYC expert connects with your customers for live identity verification. 
  3. The customer will be guided for the process of identification through a video. The liveness detection will be done to ensure the physical presence of a customer at the time of verification.
  4. KYC experts will take consent from the customers to collect data for identification purposes. The process will proceed if a customer agrees to the consent. 
  5. Your customer will be asked to show the ID document that could be an ID card, passport or a driving license. 
  6. KYC expert will ask your customer to show both the front and backside of the document, tilt it in front of the camera to see the holograms in the document to verify its authenticity.
  7. KYC experts are trained that not only identify the spoofing elements in the document but also analyze the customer’s body language and behavior.
  8. To eliminate the chances of human error, video KYC employs facial recognition technology that ensures the physical presence of customers through liveness detection checks. 
  9. Once the face and document are verified, the video identification process is done and results will be sent to the back-office.

How video KYC benefits Fintech businesses?

For Fintech businesses, regulatory compliance can be ensured by keeping a balance between digital security and customer experience. The following are some benefits of video KYC for Fintech businesses:

Saves time and money:

Video identification is quick as well as a cost-effective solution that Fintech businesses can use to perform digital identity verification of their customers. 

Improves Digital Security:

Video KYC deters the risks of fraud and bad actors that use fake identity credentials and documents to ensure entry in the digital financial system. The video identification checks the human body language and verifies the information in real-time to prevent digital scams. 

Complying with KYC requirements:

With video identification, Fintech businesses can meet the requirements of regulatory bodies to prevent financial crimes. 

How video KYC benefits digital customers?

The following are some benefits that video KYC provides online customers:

Faster identity verification:

Digital identification through video replaces the physical visits of the customer to banks for KYC verification. Hence the identity verification is faster and smoother for customers to perform. 

Improved customer experience:

The customer can verify its identity by showing up identity documents to the camera and answering a few questions asked by the KYC expert. After collecting the user-provided information, it will be verified. 

The Fintech businesses are getting digitized with splendid digital services for their customers. The need for online identity verification lies in these businesses that can be well met by integrating the system with an identity verification method such as video-KYC. In this method, the customer will be connected to a KYC expert who will ask the customer to verify its identity by providing a government-issued ID card as proof of identity. Moreover, KYC experts ask some questions to which the customer needs to answer and during the process analysis of the customer’s body language is also done to prevent the risk of fraud. 

 

 

Biometric Identification revolutionizing the world in 2020

Biometric Identification revolutionizing the world in 2020

Every day we come face to face with new technology innovations that leave us awestruck. From the past few years, the world is witnessing technology change that is not only impacting the industries but also defining the new lines about how we communicate and interact with each other. One such technology bringing revolution is biometric technology. Biometrics is defined as the unique and intrinsic physical and biological characteristics of a person that verifies their identity.

The history of biometrics 

The concept of biometrics has been there for centuries, the only difference is in the advancement in their use. Back in the 19th century, Bertillon was the first one to use specific anatomical characteristics for the identification of reoffending criminals. This technique has proved to be quite successful for years, however, it was not much reliable that soon turned it into a thing of past.

Afterward, this budding use technology was reacquired by a British officer, William James, who was put in charge of road construction in Bengal. He made his subcontractors sign the contract through fingerprints –  the early and most common form of biometric authentication. This fueled up the use of biometrics in different industries and countries. In 1901, the UK Metropolitan Police started the use of biometric identification.

In 1902, the New York police and French police also followed their suit. Later in 1924, the FBI adopted biometrics for identification. Apart from fingerprints, the concept of behavioral biometrics – a measurement of unique patterns – isn’t new either. For instance, back in 1860s telegraph operators recognized each other through Morse code which means the distinguished pattern they would send dot and dash signals. 

Trends in Biometric Identification

Identifying individuals based on their unique physical, biological and behavioral characteristics is the fundamental principle of biometrics. The use of biometrics is rapidly growing especially in terms of security and customer experience. Every industry is now incorporating biometric technology for the successful growth of the business. Biometrics first started as fingerprint recognition which is still considered the most common and extensively adopted biometric identification method.

At first, fingerprint scanning was associated with the voting system but now for a few years, it has been promptly used by the organizations as user authentication systems. From offices to schools, the institutions use fingerprints for marking attendance and allowing access to authorized people only after identity authentication. This is just one use case, multiple others are already exploring business operation through biometrics. In 2013, when the iPhone introduced a fingerprint scanner, people found this feature a thing from the future and hence it gained popularity among other brands. 

Fast forward, fingerprint scanning isn’t the only form of biometric identification. In 2018, with the launch of ‘FaceID’ in iPhone X, using facial recognition technology, biometric authentication seems like a mandatory requirement of smartphones. This highlights the increasing trend of biometric identification and verification. The race isn’t about differentiating between different types of biometrics but to focus on the biometric adoption for better security and customer experience. 

As per the study by Spiceworks, 90% of businesses will be using biometrics by 2020. 

Biometrics and Identity –  Who you are?

Biometric identification is a fastly-growing phenomenon, particularly in the identity verification market. From a general perspective, biometrics are often combined with other technologies to gain competitive advantage, for instance, AI-powered biometric verification systems to confirm the user identity and facilitating organizations in curbing fraud and making the business secure and free of imposters.

The identity of an individual has been verified using three common factors that include

  1. Something you know, like a username and password, pin codes or some secret information.
  2. Something you have, for instance, a bike belongs to one who has its keys. In terms of technology, we can say a verification code or a one-time password.
  3. Something you are, means unique characteristics – a face, fingerprint, voice, iris, etc.  – of an individual.

From these three authentication ways, the first two are not secure and reliable. The reason is the technological advancements through which cybercriminals and fraudsters are finding ways to access and steal user credentials; for instance, phishing, social engineering, and brute force attacks. If the identification data is compromised, then how to ensure that the person on the other end is an authorized person, not some imposter.

However, in the case of biometrics, they can’t be stolen, forgotten, exchanged or forged that makes them accurate and secure to verify the identity of individuals. The biometric identification methods are evolving with time. The ‘old school’ identification and authentication methods are being replaced with voice recognition, retina scans, facial recognition, and fingerprint identifications.

Every method of biometric identification is unique and reliable depending on the utilization of emerging technologies. It won’t be an understatement to say that individual identification through biometrics is progressing at a commendable rate and soon can become a global standard.

Major use cases of Biometric identification

Biometric systems use physical characteristics to verify the identity of individuals. And these characteristics can be in any form from fingerprints to face biometrics. These biometric systems are being employed by multiple organizations across the globe. Initially, it was meant to facilitate law enforcement and government agencies such as the FBI and CIA to identify criminals and threats to national security. 

The digitization of the world is driving businesses to integrate biometric systems to survive the competition layer. Here are some significant use cases of biometric identification and verification.

Biometric Access Controls

Biometric access control systems are effective in keeping imposters and unauthorized individuals at a bay by preventing them from accessing a system, networks or some facilities through biometric authentication. In the world of technology, logical access control is accounted as a corresponding factor for user authentication. Moreover, these systems facilitate organizations in meeting ‘identity and access management’ policies.

Contrary to passwords, pin codes, and access cards that can be stolen, forgotten or compromised, biometric authentication is secure and reliable since it’s base on who you are instead of something you know or possess. Similar to the mobile industry, other companies have started using fingerprint scanning and facial recognition in their authentication systems.

An integral part of KYC

Know Your Customer (KYC) check is one of the obligations imposed on every business dealing with money whether a bank, money exchange or e-commerce. As per the KYC regulation, companies need to verify and authenticate the customer’s identity during the onboarding process and for conducting customer due diligence. This is a fundamental for combatting digital fraud, identity theft, financial crimes, and money laundering.

Integrating biometric identification checks, organizations can streamline the KYC process making it faster and more efficient. Moreover, the automated verification through biometrics makes the onboarding process frictionless hence, improving customer experience.

Multi-modal biometrics for security

Biometric technology comes with a wide range of practices and techniques that can easily penetrate into different domains including state security, identity verification, and customer convenience and experience. Multimodal biometrics are generally used in forensic identification and identity management sectors. The multimodal biometric systems combine various biometric sources such as fingerprints, iris, and face, for more accurate identification minimizing false positives and increasing security and customer convenience.

The way forward

Biometric adoption is on the rise; as per Global Market Insights, the global biometric market is expected to grow up to $50 billion by 2024. This figure provides a significant insight into the impact of biometrics on the industries. In the near future, to say biometric identification is going to be a global standard for customer verification won’t be wrong.

Enhancing security in the cryptocurrency world with KYC verification

Enhancing security in the cryptocurrency world with KYC verification

Almost 20 years after the legislation on combating money laundering, regulators around the world are working to create global standards for the Know Your Customer (KYC) rule. These standards are applied now, in particular, to the financial and technological sectors and cryptocurrencies. The technology sector, which began with idealized anonymous peer-to-peer payments, now takes into account the security of traditional finance, which means compliance with KYC regulations.

Even though technology in some aspects has stepped far forward, the attitude of cryptocurrency to KYC was sometimes dismissive, and in some cases criminally negligent. The attitude is changing, but the debate over how the KYC rules and cryptocurrency interact is only flaring up.

What is Know Your Customer verification?

Due to the digitization of the international financial system and the increasingly stringent regulation of the industry, regulatory compliance is on the rise. What used to be a secondary area that occasionally caused a headache for investment bankers and traders is now becoming an important centre for big data processing.

KYC is the process of checking who your customers are, either they are who they claim to be or someone else. In the period from 2000 to 2010 in most jurisdictions: in the USA and Canada, in most European countries, South Africa, Russia, India, Singapore, South Korea, China, and Japan legislation was passed for KYC and AML regulation (anti-money laundering laws). As a result, banks and related financial institutions began to comply with the requirements of anti-money laundering legislation.

Cryptocurrency exchanges are currently considering fiat ramps as the main component of their product. Such changes have led to dependence on banks and payment systems, requiring the same level of compliance that they adhere to.

For almost all organizations involved in payments, KYC rules are designed to prevent criminal activities such as fraud, money laundering, terrorist financing, the use of stolen funds, bribery, corruption, and other suspicious financial transactions. Today, most of the KYC rules are associated with strict regulatory compliance, often in the name of protecting consumer rights. But ultimately it is a risk management process.

Often, large companies themselves manage their own KYC rules, this is done by the staff. Small companies, by contrast, outsource verification processes to third parties. Regardless of who is involved in KYC, the process usually does not change. Clients must send identification documents: address, bank statements, and sometimes explain the source of their funds.

Keeping confidential documents is as important as using them. In the pre-cloudy era, banks had to duplicate documents to insure themselves against the loss of a document. Files were copied and stored on various unrelated servers.

Thanks to Amazon and other cloud storage providers, institutions and third-party verification providers now encrypt AES-256 KYC guidelines and securely store them on cloud servers like Amazon S3.

KYC in cryptocurrency

In the early years of Bitcoin and the first cryptocurrency exchanges, the KYC rule was practically not known. Users could make transactions without revealing their identity, often without even creating an account.

Now, most major exchanges and crypto-financial services providers are facing pressure from government agencies and have taken appropriate measures to implement the KYC principles. Users expressed their dissatisfaction, but they are already faced with these processes and accept them in their daily lives. Cryptocurrency is still regarded as an anarchist financial instrument within its community. And yet, when it comes to shareholders, business needs to play by the rules to attract investment and achieve faster growth. 

Despite the work being done to eradicate illegal or unethical behaviour and legitimize the industry, more than two-thirds of cryptocurrency exchanges last year still did not adopt sufficient and adequate KYC principles. 

Those who continue to work without applying the KYC rule will be constantly at risk, and most likely they will have to work in obscure or secret jurisdictions that protect themselves from lawsuits. This approach is unlikely to fill users with confidence. Ultimately, they will gain access to “dark money” and a small number of law-abiding, privacy-conscious consumers. As a result of this, the expansion of the exchange will become virtually impossible.

Decentralized Exchanges (DEX) was once seen as the next wave of cryptocurrency exchanges. It is understood that anonymous peer-to-peer trading can solve many problems with centralized exchanges, including the need for KYC rules. Large exchanges have already implemented their versions of DEX, but they have selectively chosen the advantages of decentralization: lower infrastructure costs increased security and user-controlled tools. 

Cryptocurrency is a world-class game. If you want to conquer new markets, you must demonstrate achievements in the field of corporate responsibility. Selective disintegration is the best answer to this challenge. Finding a suitable provider that can ensure uninterrupted operation with minimal cost and guarantee data security is the real challenge that the industry is facing.

The future of KYC

We are currently witnessing the advent of RegTech 3.0, a regulatory technology that digitizes a wide range of regulatory compliance processes. RegTech technology is designed to reduce costs, improve consumer protection and identify risks long before regulatory authorities intervene. This technology uses a combination of new technologies, such as artificial intelligence, machine learning, RPA (robotic automation of technological processes and production) and biometrics, but at the same time signals significant changes in the strategic direction. Instead of an isolated review of consumers and their behaviour, regulatory compliance is now seen as a valuable source of data.

Self-governing identity is another concept actively explored by researchers in the blockchain world who are looking for an alternative to centralized identity on the Internet, where verifiers, not verified ones, are under control.

But for the time being, machine learning and biometrics are considered as the potential technologies to enhance online security and verify the identity of customers. With tangible results in the form of customer satisfaction and data security, investment in better technologies is recognised as a key to an efficient financial ecosystem. By using artificial intelligence for real-time and swift KYC verification, the crypto industry can get a real push. 

AI face recognition for total automation

AI face recognition for total automation

Face recognition is everywhere but still we’re unable to say goodbye to document, maybe because we’re still far away from total automation that we wish to achieve with this technology. 

A research stated that the global facial recognition market is expected to grow at Cumulative Annual Growth Rate (CAGR) of 16.6% reaching a record-high value of USD 7.0 billion by 2024. This growth is quite justified as we see face recognition everywhere in our day to day life. 

Nations such as U.S., U.K, EU, China, etc are leading the convoy of these technological advancements where one’s face will replace the identity documents. Face verification solutions are used everywhere, from our mobile phones, and Facebook, to crime control agencies and airports. But this awesome technology has unique limitations and benefits for different industries where it’s used, that will be explored in this blog. 

Let’s explore some use-cases of face recognition. 

Travel is becoming document-free

An increasing amount of airports are using face verification solutions to verify the identity of their passengers. As airports are commonly used for huge crimes such as human trafficking, money laundering, and drug trafficking. The documents are losing their touch which leads the airports to use advanced technologies for passenger screening. Passenger security and their travel experience are equally significant and face verification satisfies both these requirements. Accuracy rate as high as 98.67% is achieved with facial recognition and results are delivered within 15-60 seconds.  It enhances customer experience, reducing the time consumed for security processes. 

Given these valuable benefits of face recognition technology, it’s predicted that 97% of airports will roll out this technology by 2023. But this is not the end of the story, because the airports are lacking in using this technology throughout the passenger flow in the airports. Maybe because they lack resources that Hartfield-Jackson Airport holds. This airport in Atlanta uses a multi-faceted facial recognition system that scans the passengers to verify their identities at various check-points in the airport. This airport provides an ultra-modern view of what the future holds for the travel industry. 

Businesses utilizing facial recognition

Businesses are always in a bid to deliver the best to their customers, especially the ones that operate in totally private sectors, with no government players. Industries such as e-commerce, Fintech, Regtech, identity verification, and blockchain are trending as they’re carving the future of how businesses will be conducted in the future. 

These industries are the primary users of next-generation technologies due to nature of their products and services. The identity verification industry uses it in customer due diligence and identity screening solutions. These solutions use face verification along with document screening to ensure fool-proof security and seamless consumer onboarding. Fintech and blockchain ventures are using the solutions of the identity verification industry to onboard their remote customers without any false positives. 

Other than that, some tech giants such as Google, Facebook and Amazon are also using in-house face recognition systems. Mobile phone producers are also using face recognition to give a better experience to their consumers. All these unconventional use-cases of this technology have made it a household term. 

Face recognition for crime control

Crime control authorities are always in a bid to bridge the loopholes in social infrastructure which may lead to criminal activities. FBI uses facial recognition to identify the suspects, and if a match is found in the database of criminals, it can be used as the proof l to pursue a lawsuit against him. 

Also, the police department in some states of the U.S uses face recognition technology to identify the criminals in the recordings of public cameras. The police departments are still working on this initiative as the social activists have found privacy related loopholes in it. 

What are the hurdles in the growth of face recognition technology

Regulatory authorities have not given a free hand to the entities in using this technology. There are some restrictions on the use of public data. 

The Anti-surveillance ordinance signed by San Francisco’s Board of Supervisors banned the city agencies to use face recognition technology in 2019. Other states that ban the use of surveillance camera recordings to find the suspect are Somerville, Oakland, and San Diego. 

The best solution to overcome these hurdles is to use the technology with care and to handle the customer data with care. 

Customer data and privacy is the primary concern of the regulatory authorities hence the reason the laws such as GDPR and CCPA are introduced to control the use of customer data by the private sector. 

So far the private sector is the one that is least affected by the hurdles in the use of facial biometrics, compliance with data protection regulations and cautious usage of customer data will lead to the projected growth of the facial recognition industry. 

To wrap up, businesses from every corner of the world are onboarding remote customers and initiating business relations with global business entities. Face recognition solution enables them to onboard customers and to allow secure login to them in the future. As the businesses have a bigger and clear field to play, fully utilizing the potential of this technology controlled with data protection practices will lead to retainable growth. As for the public sector and government agencies, the future is bright one they have developed reliable in-house solutions.

More posts