Kyc Banking

4 Ways KYC Banking Regulations are Shaping the Future

Know Your Customer (KYC) regulations are vital for the banking system. Money laundering, depositing proceeds of crime/corruption or funding terror activities, are some common ways of abusing banks. KYC Banking regulations are complex, they also vary from country to country. Criminals constantly work to outsmart the system, therefore, the regulations have to evolve rapidly. This article looks at the evolution of KYC and what to expect in the future.

Why KYC Compliance is so Difficult!

The costs of complying with KYC regulations are high. Major financial institutions spend around $500 million every year on KYC compliance. This also lengthens the time for onboarding new customers – months in many cases. These extended wait times cost the banks dearly and frustrate clients. Customers expect swift and effortless services. If the process is long the customers do not hesitate to walk. 

Banks need to speed up the compliance process. Modern technology is helping achieve that. KYC services integrated into the banks’ normal compliance process can shorten processing times. 

Modern Trends in KYC 

Let’s look at four trends in the KYC process in banks, and how modern tech is ridding us of paperwork;

  1. Financial Crimes will Trigger Stricter Regulations

When media exposes corruption lurking in the shadows, it serves as an impetus for more stringent financial regulations. This effect multiplies if a notorious politician is involved in a money laundering or tax evasion scandal. Panama and Paradise Papers leaks, the Russian Laundromat scheme, Danske bank revelations in Estonia, and many similar ‘gates’ have contributed tremendously towards tighter regulations.

2. More Transparent Ownership 

FinCEN CDD Rule and the 5th Money Laundering Directive (5MLD) require banks to identify and verify the beneficial ownership. Nonetheless, banks rely too much on collecting ‘beneficial ownership information’ from clients through age-old paperwork. This takes up too much time and involves frequent back and forth movement of forms. Naturally, many data inaccuracies slip in the process this way.

Many countries are creating public records according to 5MLD with the help of technology. Remove the paperwork, manual entry, and verification, and the processing time reduces significantly. Data Science that uses Artificial intelligence (AI), machine learning, and other technologies, are making their way into the compliance process through RegTech (regulatory technology). 

3. Data Science will improve KYC 

Banks have a huge amount of data, which is difficult to manage. Siloed or lose KYC processes create duplicates, mistakes, cause low quality and delays. Among other solutions, APIs, third-party services, and robotic process automation are leading to better KYC research. In the future, this process will further improve. Data Science will utilize artificial intelligence systems and machine learning to collect, process and communicate data. This trio is improving KYC, the future looks promising.

4. Streamlined Process through Automation

Currently, there are plenty of services helping banks automate KYC compliance. In the future, managing data without artificial intelligence would be akin to going to a sword fight without the sword. For example, a state of the art solution for KYC compliance is an anti-money laundering AML check at the inception of the account. Artificially intelligent verification can check across all major black and greylists plus politically exposed persons PEP list in seconds. Then, it can accept or reject the application accordingly.  

Criminals are getting smarter. They have to, since they must devise new ways to cheat the system. The regulations have to match if not exceed such wicked schemes. Regtech is helping banks to catch criminals. Technology is offering better flexibility and compliance for banks. Often times people misunderstand KYC, assuming that it is one absolute and complete system applied in every financial institution in exactly the same way. That is not true. Every business needs a strategy to ensure that technology actually helps it rather than complicates its operations.

Banks are using Artificial Intelligence for Compliance

Onboarding is key to a banks’ progress and sustainability. Automation, data science, machine learning, and artificial intelligence solutions are making KYC Banking more efficient, despite constantly shifting regulations. 


Online Facial Recognition

Speed Up customer Onboarding with Online Facial Recognition

Banks are spending loads to digitize their operations. The competition is mounting, plus, people are downloading non-banking apps to buy and transfer money. This is forcing banks to compromise and share customer data with Fintech companies. But speeding things up can create security problems. Online facial recognition can help banks take customers onboard much faster without compromising security.    

What is facial recognition software?

It is a biometric software that uses facial recognition to ‘map’ a person’s face. It stores facial features as mathematical data called the faceprint.

Usually, such software uses deep learning algorithms to match a live or digital image with the saved faceprint (learn the basics of how facial recognition software work).

Google’s Image Search

With the Google image search engine, you can find matching images online. Simply go to the image search bar, click the camera icon and upload your desired image. Searching this way will show you the matching or similar images.

Facial Recognition can help Banks Get More Customers

Financial regulatory authorities want banks and similar firms to onboard only those individuals that they know.

This knowledge has a technical meaning. For instance, banks should know the profession of a person that wants to open an account or invest in a company. If illegal money is stored or transferred or invested through them, they are responsible.

Know Your Customer

Know Your Customer or KYC is a compliance process that helps banks to officially know their customers.

Although the specifics of KYC vary from industry to industry, however, the main features are;

  • Customer Acceptance Policy
  • Customer Identification Procedures
  • Monitoring of Transactions
  • Risk management

Conventional KYC requires a lot of paperwork. By making KYC electronic (e-KYC), banks can streamline the otherwise lengthy process. Naturally, the online verification of biometrics will be extremely useful here.

Which Banks are using Online Facial Recognition for Customer Onboarding?

In early 2019, New Zealand’s ASB ran a pilot project to onboard new customers online. They removed the obligation of visiting a branch. Not surprisingly, they used biometric facial recognition technology.

ASB’s technique was basic. The bank matched customer’s pictures with their uploaded driver’s license.

Spain-based France’s Boursorama Financial Services Group plans to run a similar process through its subsidiary Self Bank. The difference from ABS will be the use of video-conferencing. The basics (biometrics and electronic signatures) will be the same.

Besides big names, a huge number of Fintech firms have been using online verification for some time.

How does facial recognition Help in KYC Compliance?

Customer identification is the core of KYC. Physically, the facial recognition is performed the way the security at the airport; they match your face with the picture on your passport.  

Technology does the same but faster. You might open an account at a bank using just your phone. This would require you to open its camera and show your face, then, upload a government-issued ID.

Recognizing facial patterns, in-depth 3D sensing, detecting liveness and texture, machine learning algorithms will match your face with the one on your passport, driver’s license or other official documents.

Will online facial recognition reduce processing time?

Yes. The conventional mode requires so much paperwork. Online verification might reduce the processing time to mere minutes, especially if banks are using contemporary artificial intelligence algorithms.

Looking forward…

We want things fast. Imagine your browsing speed slows down by a mere second, you will feel it. The same goes for banking services. We want transactions today, purchased items delivered the same day if not within the next hour.  

Banks should and will be using digital face recognition in the near future on a massive scale. This will not only help accelerate onboarding new customers but it will also assist the existing customers to log in to their accounts securely.

Banks need to speed things up while maintaining due diligence. Those that will efficiently manage both will excel, the rest will bite the dust. This is why banks are either readily buying the budding Fintech companies or developing software in-house that can assist with ID data and biometrics.

Identity Verification APi

ID Verification API – Smooth Integration With Online Systems

The financial services (FS) sector has the highest ever recorded abandonment rate of 83.6% amongst other sectors. This indicates the need for FS firms to transform their processes and systems. Market leaders in the industry have managed to set certain standards for onboarding procedures. For others, it is necessary to transform their systems and processes in order to stay in the race. Customers nowadays look for faster, more convenient yet safer services. One of the best ways to achieve such milestones is to integrate modern technology in banking procedures. An identity verification API is an all in one system that can improve, compliance as well as onboarding procedures for FS companies.

Another concern for financial institutions is regulations and compliance. In the past couple of years, regulatory bodies have been overactive in curbing money laundering activities. That, in turn, has resulted in increased scrutiny for banking institutions. Online identity verification systems cannot only fulfil compliance requirements for FS firms but can also transform their onboarding processes. Some of the ways in which an identity verification app can transform financial services are;

Easing Customer Onboarding with Identity Verification API

Client onboarding procedures can be extremely drawn out for banks and financial institutions. With automated identity verification solutions, banks can

  • Optimise onboarding with a faster due diligence process.
  • Enhance the process of CDD and EDD, allowing them to assess the risk associated with each customer.
  • Make onboarding faster but also increase the rate at which banks can take on new clients.
  • Increase convenience for customers, thereby increasing customer satisfaction levels.

How Identity Verification API Enhances Security in Financial Services

Not only can a KYC API facilitate customer onboarding, but can also enhance security for banks. Digital KYC procedures can help them identify and verify individuals within seconds. This largely reduces the risk of identity theft and credit card fraud. Proper AML screening can help banks avoid getting involved in money laundering activities. Moreover, it can also enable them to meet their compliance requirements more effectively.  

Making Compliance Procedures Simpler

As global financial regulations become more stringent, compliance becomes a complicated process. Long drawn out compliance processes tend to frustrate clients. FS firms need to implement a tech solution that can not only meet compliance regulations effectively but make convenience and speed a priority in customer onboarding. An identity verification API can effectively address both issues and ease both compliance and onboarding for banks.

In a fast-paced and competitive environment, the biggest challenge for FS institutions is to simultaneously approach the need for trust and compliance along with convenience and speed. Approaching both milestones can be tricky. However, with intelligent user experience (UX) choices and advanced technology, both parameters can be addressed adequately. An identity verification API solution can enhance compliance as well as onboarding for FS firms.

Kyc for icos

How KYC for ICOs can Make Cryptocurrency Great Again?

Give people a mode of money transaction free from banks. That was the thought behind cryptocurrency. And blockchain technology – that powers the majority of cryptocurrencies – was the perfect tool to achieve that.

But things have not gone as planned. Mention Bitcoin in a gathering and you will surely hear voices of fake KYC Of ICOs and Ponzi schemes.


Start 15 Days Free Trial of Shufti Pro KYC Services Now!

What went wrong with Cryptocurrency?

The deregulated nature of Bitcoin worked well in attracting money. But it created another problem. When something is not regulated people exploit it. Scammers and double-dealers started jumping on the bandwagon of ICOs with the intention of fooling people into giving their fiat currency.

On the flip side, those that were looking to park their illegal money hit the jackpot. ICOs that genuinely wanted to create value in the world through their coins got the short end of the stick.

The financial regulation bodies started cracking down on kyc ICOs and exchanges. ICO’s could not take investors onboard without taking the risk.

According to a statement by the securities and exchange commission;

“A number of concerns have been raised regarding the cryptocurrency and ICO markets, including that, as they are currently operating, there is substantially less investor protection than in our traditional securities markets, with correspondingly greater opportunities for fraud and manipulation”

So, what’s the solution?

A tried and tested solution is Know Your Customer or KYC compliance.

What is KYC ?

KYC stands for know your customer, it is a process that lets companies know their customers. It includes the verification process that prevents fraudulent individuals from abusing their services. Banks have been successfully using KYC services for years.

Different financial regulatory authorities have made it mandatory for banks to comply with KYC verification to make sure that the person they are dealing with is not a fraud.

Banks check and verify personal information through several means including document verification. They also readily appropriate credible third-party identity verification services or KYC service providers.

Documents such as government-issued ID cards and driver’s licenses help smoothe the process of investing.

What is AML?

AML – the anti-money laundering act – prevents people from laundering money. ICOs can put this in place as well to ensure that the people buying their tokens are not on any black or greylist.

KYC and AML regulations put a barrier to entry by checking the identity documents. FINRA Rule 3310 governs the AML compliance of companies.

Advantages of Implementing KYC for ICOs

  • Deters scammers from engaging in ICOs
  • Fights money laundering
  • Protects investors’ assets
  • Fewer legal, tax and credibility issues
  • A healthy relationship with banks

Funds raised by ICO or token sales can attract black money. But KYC and AML compliance can restore people’s faith in the blockchain based economy. Cryptocurrency exchanges can also put these compliance measures to ensure that the ICOs are genuine. Then the token economy will truly benefit the population at large.

facebook cryptocurrency

Why is Libra Cryptocurrency The Most Trending Thing Right Now?

The universe of crypto revolves around an aversion to a central financial authority. The financial crash of 2008 made people skeptical of central banks. And the rising popularity of cryptocurrencies vindicates it. But now Facebook has announced to launch its own crypto coin, the Libra Cryptocurrency, which is not as decentralized as the more conventional cryptocurrencies.  

Overview of Facebook Cryptocurrency

Facebook has announced that it will launch a cryptocurrency, Libra. People could send each other money over Whatsapp and Facebook Messenger, and purchase items online with it.

The reason for launching it – as mentioned in Libra’s Whitepaper – is to bring 1.7 billion people into the financial ecosystem which are not currently part of the conventional banking system.

With Facebook’s reach, it seems possible.

But it is important to know that Who is actually backing Libra?


Libra is primarily backed by the Switzerland-based Libra Association. It is also supported by the likes of Mastercard, Visa, PayPal, Stripe, eBay, Uber, Lyft, Spotify and Coinbase, among others.

Despite this strong alliance, there is a problem, trust, or the lack thereof.

If you do not trust the central bank and the federal reserve system then why would you trust Visa and MasterCard that are backing Libra coin?

This duality is obvious in Libra.

On one hand, it is using blockchain technology but it is not an open ledger, yet. This, perhaps, is to keep the network secure considering the security breaches of cryptocurrency exchanges we have witnessed in recent years.


Mark Zuckerberg on the Security of Facebook Libra Cryptocurrency

Mark Zuckerberg, the CEO of Facebook, understands security concerns. In a recent Facebook post, he specifically addressed this issue, “Privacy and safety will be built into every step… Libra will be regulated like other payment service providers,”.

The prevalent nature of Whatsapp and Messenger creates suspicion regarding the privacy and security of online transactions. Zuckerberg added;

“Any information you share with Calibra will be kept separate from the information you share on Facebook.”

What is Calibra?

Calibra Virtual Wallet

Calibra is the e-Wallet or virtual wallet for the Libra coin. According to the official Facebook news source it will be available on Whatsapp, Messenger and as a standalone app.

Since there is a significant emphasis on the security of Libra’s functionality, it is unlikely for it to operate without KYC compliance and AML compliance.

Here is what using Calibra look like;

Libra CryptoCurrency App

How Libra Cryptocurrency is Different

  • Permissioned blockchain

Here is an excerpt from Libra’s Whitepaper;

“It is built on a secure, scalable, and reliable blockchain […] It is backed by a reserve of assets designed to give it intrinsic value, and it is governed by the independent Libra Association tasked with evolving the ecosystem.”

One way to look at Libra is that it is similar to Bitcoin as it is a digital currency that runs on the Blockchain, and offers smart contracts, much like Ethereum. Many are considering Libra more similar to Ethereum than Bitcoin.

Libra’s structure contains all the main features of Ethereum; the account model, generic language, gas, on-chain scaling with sharding among others.

  • The Good

We have already seen so much chaos in the world of cryptocurrencies that a name such as Facebook seems like a good addition. The breach of users’ private data through Facebook did not deter its two billion users. On top of that Libra is a stable-coin. 

  • The Bad

Security is a major concern. The real reason behind the potential abuse for Libra is crooked developers. Facebook intends to allow anyone to build apps on Libra’s platform in the future. The escapade of Cambridge Analytica which resulted in the breach of 87 million people’s personal data is still fresh.  

What Libra Means for the average Facebook User

If you are a happy user of payment system such as PayPal or Skrill, Libra might not mean much for you. But those people are not Facebook’s target audience.

The real market for Libra are the people sending money to their loved ones from abroad. This also includes the 1.7 billion people that are currently outside the realm of traditional banking. That perhaps is the biggest target market as far the cryptocurrencies are concerned.

Identity Theft Protection

ID verification prevents 8 Security Issues of businesses


The biggest concern for businesses, in terms of safety, nowadays is online or cybersecurity. As data breaches across different companies become increasingly common, online security becomes a major concern for enterprises storing large amounts of user data. The estimated cost of a single data breach will reach $150 million by 2020, costing $2.1 trillion annually. In January 2019 alone, a total of 1.76 billion identity records have been compromised due to such data breaches. In the light of such gaping security concerns, companies must ensure the safety of their user data. Robust security measures including data encryption, two-factor authentication and identity theft protection need to be practised by businesses.

As the internet proliferates the fabric of the world, consumers and businesses become more and more dependent upon it. Securing data online is becoming increasingly tricky, particularly for companies that engage customers online. Progression in technology is giving way to advanced systems. Cybercriminals are also becoming more sophisticated in their methods to compromise customer data. In order to keep up with such threats businesses must also embrace modern technology tools to keep out fraudsters. Some of the daunting security concerns faced by businesses today include;

1. Increased Data Breaches

The year 2019 has experienced a significant number of data breaches across major companies including Toyota, Facebook and Equifax. Even government agencies are victims of data breaches. The U.S. Federal Emergency Management Agency data for 2.5 million disaster survivors were compromised earlier this year.

There are a number of reasons for the increasing number of data breaches including:

  • Lack of online security.
  • Increasing use of cloud storage in businesses. While cloud computing may seem a much secure method for securing one’s data, cloud providers must be chosen with care.
  • Backup of essential data is not encrypted and stored on hard to breach servers.

It so happens that while backing up your data offline, other virtual devices are able to gain access to your system and thereby your information. For additional security, companies must encrypt their data to make it harder for hackers to access it.

2. Unsecured APIs

As the trend of Software as a Service (SaaS) is growing, many businesses are relying on third-party solutions for different purposes including customer services, project management and e-mail and chat support. Although such systems have increased the effectiveness of businesses significantly, not all of them have secure user interfaces. Identity Theft Protection Vulnerable APIs can lead to security breaches in online systems. It, therefore, comes down to the providers that a business chooses to improve their processes and systems. Reputable SaaS providers, however, have better security systems and secure APIs.

3. Inside Sources

Companies are most vulnerable in terms of the threat they face from their own employees. Disgruntled or terminated employees can end up leaking valuable user data from their companies. However, inside breaches may not be intentional at all. Employees in training may not be aware of the vulnerabilities in security. Therefore, it extremely important to educate your staff from day one about cybersecurity and measures to observe to ensure the prevention of data breaches and malware attacks.

4. The Rise of the Internet of Things (IoT)

Another rising trend in businesses is that of IoT or the Internet of Things. It relates to any and all electronic systems connected through the internet. Although IoT makes business systems more efficient and productive, it also leaves them more vulnerable to security breaches. With multiple endpoints in IoT systems, consumer data becomes more exposed. To address this issue, organisations must protect their software and customer information. It is imperative for businesses using IoT to use DDoS protection software to safeguard each point in their IoT systems.

5. Implementing Identity Theft Protection for Customer Information

A number of businesses dealing in vast amounts of customer data do not have proper security measures in place to make sure that information is accessible to only authorised personnel. Hospitals are a prime example of this. Any member of the staff, including doctors, nurses, technical and support staff, that has access to the hospital’s system can gain access to patient records. Customer data is one thing that needs to be guarded effectively. Using identity theft protection is an excellent way for businesses to keep user information secured.

6. Unencrypted Data

As the trend for BYODs and mobile devices, the protection of sensitive data is becoming ever challenging. Businesses are dealing with hordes of consumer data exposing it to data breaches. Moreover, with the rise of Big Data, companies are fast realising the value of it to analyse it to detect patterns in customer behaviour. However, dealing with vast amounts of data has its own risks as it exposes the data to breach attacks.

One way to prevent this is to encrypt and authenticate all user data. Data encryption puts a roadblock in front of cybercriminals. Meanwhile, the company can take measures to prevent any significant damage to their system and data.

7. Unauthenticated Users

One of the biggest security issues faced by businesses is identity theft and credit card fraud. Online businesses, in particular, are adversely affected by chargebacks and fines due to payment card and CNP frauds. Online verifications services, however, provide the best identity theft protection for businesses. Authenticating customers before allowing them to purchase goods can prevent fraudsters from using fake or stolen identities or credit cards.

Leveraging AI for Identity Theft Protection

Companies can verify customers by employing digital document verification and facial recognition scans. They allow businesses to authenticate the IDs and credentials provided by a user. It provides the ultimate fraud detection solution for companies looking to secure their user information and a solution for detecting and preventing credit card fraud. Shufti Pro is an identity theft protection service that uses an AI-enabled software to provide verification services for businesses.

8. Unpatched Devices

Hardware including printers, routers, servers etc. also make for easy points of entry for malware attacks. All such devices can be an entryway for cyber attacks if not properly secured. Hence, each of these devices must be secured before using them for the company’s purposes.

How to Avoid Cryptocurrency Scams

Cryptocurrency Scams – Checklist for Protection

Headlines about some cryptocurrency exchange being hacked are not unusual. So far, hackers have stolen over 1 million bitcoins BTC from different exchanges. Despite financial regulatory checks, scammers come up with innovative schemes. This article looks at the top five ways how cryptocurrency scams work and how to avoid them.

1. Fake ICOs – Pump and Dump Coins

Initial coin offerings (ICOs) that ‘dump’ once they have attracted enough investment, are the most prevalent frauds. Such coins usually have no utility but lots of promises.

2. Phone Porting

In phone porting, scammers steal identity of the victim. Then, they call the phone service provider to transfer the number to another provider. Finally, they log the victim out of his own accounts (banks, exchanges, e-wallets etc.). The victim may try to reset passwords but the two step verification would not reach his phone.

3. Online Wallets or Centralised Exchange

Hackers love it when investors store cryptocurrencies in an online wallet. It makes the treasure susceptible to hacking attacks. Such breaches are quite a sophisticated. Even large cryptocurrency exchanges are vulnerable to these attacks.

4. Ponzi schemes

An ICO venture that feeds money to the earliest investors from the money of new investors is a Ponzi scheme. Coins that guarantee return are usually Ponzi cryptocurrency scams.

5. Shady Exchanges

A huge number of cryptocurrency exchanges do not uphold KYC and AML compliance. So, Which cryptocurrency exchange to trust? Plenty of dodgy exchanges are mushrooming. And many put up an online presence that look credible on the surface. Yet, a deeper evaluation reveals that they have ‘set up’ this persona to steal money from investors.

How to Avoid Cryptocurrency Scams

  • Institutes approving ICOs should run thorough background checks on the people launching coin. Anonymity in the wrong hands can be devastating. Screening ICO initiators can thwart scammers.
  • On the flip side, the exchanges that enlist coins can also run these background checks. Following KYC compliance also deters double-dealers.
  • Safety first! Investors should do their due diligence and use safe methods to store coins. They should also be realistic when evaluating an ICO. A coin promising to make money from sunshine is an obvious red flag.   

Cryptocurrency scams cannot be completely eradicated. But by integrating background checks and vigilance they become easier to spot. Investors cannot be greedy or careless. Only trade through credible cryptocurrency exchanges.

The onus also lies on the government and financial regulators. Only legitimate ICOs should be able to do business on exchanges. 

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