Effect of the Amendment to the FINMA Compliance on IDV Service Providers

In the first quarter of the year 2018, the Swiss Financial Market Supervisory Authority rolled out an amendment to their existing policies regarding Digital Identification and Verification services opted by all the organizations within the Swiss region. The major changes pertained to the Online and Video Verification milieu and due diligence procedures.

We, here at Shufti, carried out an in-depth analysis and self-assessment of our technology and procedures. This article sheds light on how Shufti runs in accordance with the updated FINMA regulations.

FINMA updated their Customer Due Diligence requirements for client onboarding via digital channels to reflect advances in technology. The consultation period for the changes to the circular ran until 28 March 2018. This allowed a sufficient room for maturity to financial institutions so they can update their documentation, technology, and procedures to comply with the new regulations.

What did the amended regulations say?

The amended circular takes into account the development in technology through neutrality and effective money laundering prevention mechanisms. The FINMA circular, dated 13 February 2018 highlights the following:

1. The video identification process no longer contains the provision regarding the single-use password known as the Transaction Authentication Number (TAN).
2. Instead, at least three randomly selected visual security features of identification documents must be checked.
3. For online identification, FINMA no longer requires a transfer from a bank in Switzerland to ensure compliance with due diligence requirements. Instead, under certain conditions, a transfer from a bank in a Financial Action Task Force (FATF) defined member state is now permitted.
4. Additionally, liveness detection is required as a further security measure when checking photographs.

Shufti, being a dynamic, easily customizable and scalable solution, immediately took steps to make the steps for its identity verification procedures completely transparent and comprehensible.

How does Shufti comply?

Being an online identity and document verification solution, serving clients globally, Shufti aims to remain top of the line when it comes to complying with the updated regulations and/or amendments. To ensure that no legal issues arise for our customers regardless of their location, we have taken the necessary steps to transform our services.

As an outsourced verification service provider, Shufti ascertains the identity of the individual through the identification document itself and the photograph present on it. The identity is ascertained through reliable and independently sourced government-issued documents, where the document will be scrutinized for a minimum of three optical security features’ checks. Shufti’s computer vision system performs the following checks on the identity document:

• MRZ code
• Holographic-kinematic features
• Form-related features

The information entered by the client is compared to that shown on the identification document by the individual along with the Selfie image of the customer/end-user.

In addition, Shufti offers Live Video Verification to the customers, where an end-user appears in front of a web camera, displaying their face followed by their Identification document. The Shufti engine programmatically incorporates liveness detection measures, through which the presence of a ‘real human’ is assured. These include 3D Depth Perception, Image Distortion Analysis, Image Facial Mapping, Micro Expressions, and Image Texture Detection. All of these combine to form a mechanism that remotely detects human presence without being spoofed. There are provisions for ‘selfie upload’ and that too go through the same Liveness Detection based scrutinization.

Shufti’s easily modifiable system is ready to accommodate any changes requested by the customers pertaining to the technology or processes. Without compromising the service quality and ensuring true value for money, we strive to provide industry best identity verification and KYC solution.

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