AML Compliance For Banks

Smaller Banks are in dire need of AML Compliance to avoid fines

Smaller banks are being considered an easy target for money laundering activities because of their smaller base of operations and little to no regulatory oversight for their account holders, increasing the need of AML Compliance. It has been recently revealed by Mr. Jesper Berg, head of Denmark’s official watchdog tasked to oversee banking operations around the country. He made this claim after country’s biggest bank was found to be used to perform billions of dollars worth of money laundering. This money laundering activity was being performed by not some criminal elements of Denmark but financial criminals from Russia, Azerbaijan and Moldova used country’s largest bank Danske Bank A/S to carry out money laundering of nearly 8 Billion USD.

Why Smaller Banks are at risk?

Smaller Banks, even in highly regulated economies, are vulnerable to money laundering activities because of the nature of their operations. Financial regulators have already seen trends where smaller but frequent transactions are used to launder money on behalf of criminal elements. Even in the above stated case, USD 8 billion worth of money laundering was done from 2007 to 2015. So the smaller banks, with moderate assets and not so large banking operations are neglected, or at least not vigilantly monitored by financial regulators across the globe for AML Compliance. This creates a window of opportunity for money launderers and financial criminals to whitewash their funds using multiple accounts in branches of smaller banks in moderately populated cities where the staff might not have much understanding of AML compliance

Anonymity of these far off branches and even smaller size of bank creates opportunities that can be easily exploited by financial criminals even before any unusual activity comes on the radar of financial regulators tasked with AML compliance. This is a perfect example of flying under the radar without being noticed for an extended period of time. A string of such banks accounts can create a paper trail that can not be easily identified in the haystack of a country’s banking sector.

Another factor that leads to the smaller banks being exploited for money laundering activity is their lax approach towards AML compliance. Not only shortage of funds lead to this approach but the typical customer base of such banks also require them to be not vigilant about the kind of transactions being performed from the banks’ accounts. In a world where major banks are spending billions and are staffing hundreds of employees in their AML compliance departments, smaller banks find it hard to allocate such huge resources to ensure compliance with AML guidelines set forth by national regulators.

AML Compliance for Smaller Banks

But as a legitimate business operating within the territorial boundaries of a country, the mere small size or insufficient resources of the banking organization does not serve as an appropriate excuse for being used as an accessory to a crime like money laundering. A bank found involved in money laundering activities, even unwillingly, risks to be fined multi million dollars in regulatory penalties that for sure is death blow to the operations of such smaller banks. It means that money laundering is a genuine cause of concern not only for larger banks but smaller banks are even at greater risk if found to be in breach of AML Compliance.

So in the absence of satisfactory monetary resources and keeping in line with a futuristic vision, fintech turns out to be the only savior for smaller banks around the globe. There are many AML Compliance solutions available around the globe that can enable smaller banks to follow AML guidelines of their national regulators without spending a fortune on compliance departments.

Shufti Pro is an ideal choice for smaller banks, no matter which part of the world they are operating in. It is an Artificial Intelligence based end-to-end verification services provider that is offering KYC as well as AML Compliance to a worldwide clientele.

It has a huge data bank comprising of 1000 Watchlists and sanctions list in addition to data from 3000 databases maintained by national, regional and international watchdogs. This vast databank is updated every 14 minutes and a small bank will be playing a very small amount to ensure AML compliance against their customer base.

Fintech AML Compliance

Asian Banks push for greater Fintech to cut down AML Compliance cost

Asian Banks are now asking their regional and national regulators to allow more fintech in order for them to cut down AML compliance costs. Recent months have seen regulators and financial watchdogs – especially in Far East and Southeast Asia – slapping huge fines and tightening overall AML guidelines. Both these measures have an impact of double edged sword for the revenues of Asian banks that simultaneously dwindled in the light of multi million dollar fines and compliance costs. This is the reason why banks are looking to employ cheaper yet effective fintech to perform AML compliance in place of large swaths of compliance staff.

 AML Compliance Costs

Asian Banks have millions of accounts, tens of thousands of bank branches and billions worth of american dollars being transferred on daily basis. This huge scale of operations demand an equally huge workforce to ensure compliance regarding AML guidelines issued by financial watchdogs and regulators. On average, in 2017 there were 307 employees tasked to make operations of a financial institution compliant with AML guidelines applicable in this region. This is more than 4 times the number of employees that were working on average in a financial institution to perform AML Compliance in 2016.

HSBC, one of the major Asian banks having strong presence in the region, spent in excess of USD 3 Billion, just in 2017 for AML compliance and tripled its human resource in the span of 4 years. It has now 8600 employees on its payroll only performing compliance based operations.

What Fintech can do for AML Compliance?

Right now, fintech is the only logical and workable solution for Asian banks to cut down cost on compliance measures without seriously affecting their crusade against money laundering activities. Despite a large number of AML Compliance staff, financial criminals have been able to find out ways to circumvent AML Compliance measures of these banks, leading financial regulators to fine huge monetary penalties over these banks.

In a recent case, Commonwealth Bank of Australia was fined hundreds of millions of dollars by Austrac when it was find out that thousands of accounts were not being monitored under AML compliance guidelines of financial watchdog. Fintech can defeat both known and unknown money launderers and can detect suspicious transactions  in far less time as compared to a human staff of compliance officers. Automated systems developed by Fintech can run background checks in a few minutes to check the past transaction history. In case of an usual amount of online funds transfers, a 24 hour vigilant AML Compliance solution can redflag the account for the banking staff. 

Why regulators are reluctant about Fintech?

Well there is no stated or on-the-record resistance shown by regulators for introduction of fintech in order to provide AML Compliance. Infact, financial watchdogs have been encouraging about the use of fintech in banking sector and financial institutions. But they always require banks to utilise technology and manuals that are pre-approved by the regulators for use in banks and financial institutions. This creates a bottleneck to gain approvals for fintech given the limited technological expertise of financial regulators and even smaller number of individuals tasked with approval of fintech. Bureaucratic behaviours and red-tape slows the process of approval of fintech, thus forcing banks and financial institutions to employ higher number of workers and spending millions of dollars while fintech software spend months and months in approval grind mill.

Best Solution

When it comes to fintech for AML Compliance, there is hardly any match of the Artificial Intelligence backed Shufti Pro. It is an end-to-end ID verification SaaS product that provides a comprehensive suite of verification services and one of them is AML Compliance. Shufti Pro has gathered a large databank to perform background checks for AML Compliance. This huge dataset contains information from 1000 Watch lists, Sanction lists and Politically Exposed Persons list. In addition to that, individuals and enterprises present on 3000 databases of international watchdogs are also part on this databank.

Shufti Pro makes sure that every new customer of a bank or financial institution is checked against this vast databank to ensure that no person red flagged in any part of the world for his/her involvement in financial crime, becomes part of bankroll or account list.

digital kyc services shufti pro

Nordic Banks brace for Digital KYC with centralized Database

Five major Nordic banks have formed a partnership to establish a company that will compile a centralised database for Digital KYC services. In order to ensure greater transparency and identify financial risks that can create regulatory penalties for these banks, KYC was considered to be an ideal candidate by the bank executives. A shared facility will not only provide wider data bank for banks to utilise but it is also targeted to reduce development cost and maintenance charges for each banking organisation.

The Joint venture will be known as Nordic KYC Utility and will solely be focused on development of an “efficient, common, secure and cost effective” platform for sharing confidential and personal information. The vetted data will be provided by customers for opening an account or to perform transactions and funds’ transfer.

Why Digital KYC for Nordic Region?

Nordic KYC Utility will be opening shop to provide KYC services not only to the founding banks but to large and midsize nordic corporates as well. The management of the founding banks plans to offer KYC services to third parties as well, once the entire database is fully functional and operational. KYC is the easiest method to verify the identities of future customers and sort out the bad apples before receiving a regulatory penalty for handling business of customers or enterprises that are deemed as financial risks by financial regulators. Financial watchdogs around the globe want banks and financial institutions to tighten their business practices in order to identify their users. It further helps in gathering information about why these customers are in need of banking or financial services and what kind of niche those businesses/individuals belong to. It helps regulators to find out the needles of financial criminals in the haystack of businesses and banking customers.

A Unified Platform for Digital KYC

The approach adopted by Nordic banks, i.e. a unified database for KYC compliance, is also being seen as an efficient alternative to the otherwise time consuming and multi-format KYC services available at different banks. As the founding members of Nordic KYC Utility are already one of the largest banks of the region, customers will be facilitated to perform KYC and get their credentials verified in a robust and uniform manner.

The formation of company is yet to be verified by the European Commission under the Merger Regulations of the European behemoth. It is expected that operations of the company and foundational activities will be charted out once an approval is received from authorities that is expected by the end of Q2, 2018.

When we talk about Digital KYC services, there is a strong case made by an up and coming SaaS product – Shufti Pro. It is an end to end verification service that is perfect for any banking or financial institution, which is looking to adopt KYC services in any part of the world. Powered by Artificial intelligence and machine learning algorithms, Shufti Pro can verify identity of every person in the world and validate credentials of a person within industry best time of 30-60 seconds. KYC services by Shufti Pro can verify identity documents in any language, belonging to any country of the world. Shufti Pro can also integrate easily with the pre-existing systems through its flawless API and SDK integrations. AML Compliance and Customer Due Diligence are added features of Shufti Pro for banks and financial institutions that want to completely rid their operations from any financial crime risk.

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Asia Pacific Kyc

Shufti Pro Expands its KYC Services to APAC Region

Bath, United Kingdom – May 9, 2018 – Shufti Pro, the PCI certified, AML and KYC Services provider expands global outreach by venturing into key Asia Pacific economic markets!   

Shufti Pro, the go to name for KYC services, is delighted to inform that their emerging and competition defying ID and Document Verification Services have expanded to include three more Asia Pacific countries – Japan, North Korea and South Korea.

On the other side of the planet, Europe Middle East Africa – EMEA region has seen the addition of Greenland, Kazakhstan, Uzbekistan, Kyrgyzstan, Tajikistan, D R of Congo and Niger. Shufti Pro has started offering state of the art online ID verification services in these countries as well.

APAC and Scope of KYC Services

Accounting for almost 60 percent of the worldwide population with various countries at different stages of economic transition, the region is all set for a decade of promising growth. According to a report by UN, economies of the Asia Pacific region registered robust growth in 2017 and prospects for the 2018 financial year look very favourable yet again.

Fintech giants and veterans are eagerly eying APAC, as there is a huge potential for innovation in the financial sector. Almost forty percent of the market share is uncapped resources waiting to be exploited for inclusion in the mobile net user base. It should not be forgotten that telecom technologies and services itself account for 5.3% of APAC’s GDP that equates to a mammoth sum of 1.5 trillion in economic value. It is predicted that this economic sum will increase to $1.6 trillion (5.4% of GDP) by 2020.

“Shufti Pro’s core mission is to be the front runner in the heavily contested KYC compliance market. We’re very excited in expanding into key strategic markets of the APAC region. We aspire to establish long-term relationships with prospective clients as we expand into the market, providing unparalleled digital verification services” said CEO of Shufti Pro.

Vitality of KYC Services from Shruti Pro for APAC

This untapped market makes is perfect for Fintech as it brings in the power of the internet. This futuristic technology combines this large scale of potential mobile user base for innovative RegTech delivery. More and more businesses automate towards providing better services to their customers, on an array of applications that include financial services, AML/KYC compliance, information sharing, online gaming etc.

Asia Pacific regulators are allowing firms to accept digital forms of identity verification. Financial institutions struggle to find an adequate balance of AML and KYC compliance, while maintaining optimal online user experience. Not only does Shufti Pro provide flawless AML and improved KYC services to clients, but also a seamless user experience through minimal human intervention.   

The trend and viability of online identity verification is growing in the ASIA Pacific region, as the need to establish genuine identity of an individual becomes of crucial importance. A research conducted by GBG, highlighted that 95% of Australian financial firms are concerned with their ability to identify identities and above 90% place a crucial priority in performing identity checks.  

As with any online transaction, anonymity is the biggest challenge for financial institutions to tackle. The requirement for establishing trust online, calls upon for the process of identity verification as an integral element of any business entity. In a time of prevalent financial fraud and identity theft where banks, crowdsourcing platforms, fintech companies transact money digitally, put themselves at risks. The adoptions of the AML and digital KYC compliance has become a mandatory requirement for businesses. Failure to comply, could lead to serious consequences for the institution found in violation.

Bottom line

The nature of fintech companies, requires them to operate on a global level for increased productivity, by having the infrastructural ability to validate documents from as many countries as possible. As of April 2018, Shufti Pro has extended its KYC service to a total of 225 countries. To attain such a feat in a short span of time, signifies a capable team and a robust Artificial Intelligence technology running at its core.  

In light of APAC, Shufti Pro ideally aligns itself alongside the region’s purchasing potential and capacity. As majority of the nations in APAC are developing countries, having a solution that fills in the gap with 16% lower offering rates than nearest competitors, ensures a flawless adoption of KYC services at much more affordable prices.


About Shufti Pro

Shufti Pro is the upcoming entrant in identity management, KYC services and AML. The company saw inception on 31st October, 2016 in Bath, UK. The primary goal of the company is to provide its users with optimal customer experience, while maintaining highest levels of fraud prevention. As a company, it offers industry perfected SaaS that integrates a superior blend of Artificial and Human Intelligence. Operating in access of 225 countries and over 200 languages, businesses can now undergo hassle free digital verification processes, with least friction alongside unparalleled technology. The company is located in United Kingdom with its global office located in Sweden. Please visit Shufti Pro here.

Shufti Pro Limited
info@shuftipro.com

Unit C401, Westfield Shopping Centre,

Ariel Way, London, W12 7FD

Identity Verification

How Identity Verification Services make Regulatory Compliance Easier?

Financial institutions and banks have ended up in a loop of dumping billions of dollars because of ever-tightening regulatory compliance especially in regards to identity verification services and data protection. GDPR becomes mandatory in next few days for all the companies who want to operate in European Union. There are country-wise data protection and banking compliance regulations that are also needed to be taken care of by MNCs and financial institutions wishing to expand into those markets. FINMA regulations in Switzerland and FINTRAC compliance in Canada are few examples of these country specific guidelines.

Regulatory compliance fines over the years have cost financial institutions billions of dollars but the same banks and institutions were already spending billions of dollars for introducing structural changes to make their practices pro-regulations and pro-compliance. So if money is not going to solve the issue of regulatory compliance for banks and financial institutions than what is? The answer is pretty simple: A robust, cutting edge, end-to-end Digital Verification system. It not only reduces the processing time but if a right service provider is chosen, it can enable financial organizations to go about their usual business without having to worry about regulatory compliance and fines that come with these regulations.

Identity Verification Services

An intergovernmental body called The Financial Action Task Force suggests banks and financial organizations following  steps, to make identity verification services more effective for overall compliance observance:

  • Verifying the account owner’s identity
  • Understanding and obtaining information on the purpose and intended nature of the business relationship
  • Ensuring through ongoing analysis that transactions are “consistent with the institution’s knowledge of the customer, their business and risk profile, including where necessary, the source of funds”

Ever since 9/11 attacks, the clamp down on Terror Funding has also raised the stakes for financial institutes and international banks to ensure that the funds they are handling do not end up in wrong hands. FINMA and FINTRAC regulations have strict protocols to ensure that the money being transferred through the banks, working within their respective countries, are in no way related to a terrorist outfit or in hindsight, a person fronting for such organizations.

FINTRAC Regulations

FINTRAC regulations are applicable within the territorial confines of Canada offering protection not only against money laundering but since December 2001, this anti-graft government body has stepped into curbing terror financing as well. In 2006, customer identity verification also became a vital aspect of FINTRAC’s mandate. Today FINTRAC requires its regulated entities to submit following information in order to conduct business in Canadian territory

  • Suspicious Transactions
  • Suspected Terrorist Property
  • Large Cash transactions
  • Outgoing or incoming international Electronic Funds Transfer over 10,000 Canadian Dollars within a 24 hour period
  • Cross border currency reporting

GDPR Compliance

KYC services or providing top of the line Identity verification is useless without protecting the data of the customers held by financial institutions, even if for verification purposes. This is because such vital information also makes financial institutions and organizations prone to data breaches and even misuse of data by the holding organization itself. This led to the launch of GDPR in the first place by EU to ensure digital rights of its users and their digital data as well. Some of the bindings of GDPR are:

  • Encryption of personal data
  • Seeking consent of the person whose data is being stored
  • Data must be obtained for specific, explicit and legitimate purpose
  • Individuals must be able to withdraw consent and can force organization to forget about them

Identity Verification Service, when provided through a full proof system, can safeguard financial institutions and banking industry from any monetary penalties without having to spend billions of dollars worth of annual compliance budget. Shufti Pro is such a product that can easily perform end-to-end digital identity verification in real time and can support banks from any part of the world, operating in any language because of its Universal Language Support. Powered by 1000 whitelists and 3000 databases, AML compliance also becomes easier for financial institutions working under the regulations of FINMA, FINTRAC or GDPR.

Identity verification services not only streamline customer onboarding but it also plays a pivotal role in monitoring suspicious funds transfer, assessing risk for handling the funds of a particular organization/individual and better adoption of due diligence. Identity Verification is not only go-to-technology for financial institutions who want to avoid frequent fines from regulatory bodies but they also safeguard overall interests of customers as well by eliminating the risks of fraud, identity theft and account hacking. Identity Verification can enable banking sector to provide financial services in a more transparent and secure manner, without making any compromise on regulatory compliance.

KYc Solutions For Banks

KYC for Banks: Reducing financial risk with a perfect digital solution

The banking sector has to tread a very balanced path between compliance regulations and customer friendly business practices. At the same time, they have to safeguard their customers from online frauds and scams as well because the recent studies have revealed that online banking frauds are one of the biggest sources of digital scams. Not only conventional banking services but accounts attached to its various services such as credit card accounts are also at great risk of being exposed to digital bandits. Only KYC for Banks has the potential to safeguard interests of both the banking sector and their millions of clients spread across the world.

The expense of online identity theft directed towards banking services can be understood by the simple fact that last year witnessed more than 30% increase in credit card account takeover, resulting into millions being lost to cybercriminals. Integration of online banking services has created put both banks and their customers at risk of becoming victims of digital identity theft and online frauds. Banks can opt for even the most secure system that is considered hard to breach but the reality of the fact will stand out that hackers and cyber bandits will always find a way to circumvent even the hardest to crack security protocols. Only online identity verification services based on the KYC authentication principle has the potential to secure internet-based banking activities.

How Can an Online KYC for Banks Solution Be Useful?

Banks and other financial institutions already have a Know Your Customer solution implemented when a customer walks in and asks to open an account. The bank representative then takes down all the required information from the customer, including job/business, sources of income. The bank also asks for proof of the provided information.in the form of documents and copies of ID. When this is done as online services it gets a bit tricky given that the person applying is not physically present and the documents submitted can easily be forged ones. Hence, a smart KYC for banks solution is required that can actually verify that the provided documents as well as the person are the real deal. The smart online KYC solution is usually provided by 3rd party service providers. The system is based on an advanced AI that carries out all the verifications and scanning tasks and sometimes HI (Human Intelligence) is also implemented to authenticate the given result. If we look at it this system, it can prevent the use of a stolen identity as it will verify the person as well as check the documents for tampering and forgery. Given the above hypothetical situation, such a system would have been quite useful had the bank opted for it.

Well then, How Does the Smart KYC For Banks Work?

The online KYC for banks system uses the Internet, a webcam or a smartphone camera to carry out the verifications. Let’s take for example online services for opening a bank account. When a customer has filled out all the requirements and submitted the documents. The system kicks in and asks the customer to face his webcam. The system checks for such things as excessive make up, masks or the presentation of a picture instead of a live person. If the customer does not have a webcam, the system can utilize the camera of their smartphone to carry out the verification process. Then the person is asked to show their ID, the ID is checked for signs of tampering or forgery through hologram checking. The person is asked to focus on the picture on the card, the name, DOB and address. The face on the picture is matched with that of the customer and the details with that of the provided ones. The system at the same time does a background check of the person against global watchlists regarding terrorist organisations and money laundering. If everything is clear the system lets the customer proceed otherwise the process is halted.

KYC Verification – The Technology

Although there are many KYC service provider offering online identity verification services for a range of industries, the banking sector needs to rely only on a top of the line KYC for banks service, as the stakes are too high to be taken lightly. The technology used for ID verification and other KYC services, thus, have a vital role to play in the selection of a preferred KYC service provider. An ideal KYC for banks solution not only have to provide omni-channel support but must have flawless technology to quickly and correctly identify an incoming banking customer.

Shufti Pro is an AI-based SaaS product which means that not only the integration of identity verification services with any existing system will be totally hassle-free but the verification results provided for KYC for banks solution will be able to detect any attempt of identity fraud or identity theft in a matter of few seconds. Banks looking for a KYC service provider can take help from Shufti Pro to verify the identity of an incoming user with the help of:

  • Face Recognition
  • ID Verification
  • Address Verification
  • Document Verification
  • Phone Verification / 2 Factor Authentication
  • Handwritten Note Verification

Machine learning algorithm, liveness detection, template matching, OCR, and many other technologies are used by Artificial Intelligence system of Shufti Pro to detect any aspect of the identity of an incoming user.

Shufti Pro even offers 15 days free trial for all of its KYC services and its AML solution will be even best suited for banks that want to get rid of customers having substantial financial risk attached to them. AML background checks from Shufti Pro track the identity of an end-user against 1000 watchlists and 3000 databases of financial risk entities issued by national and international regulators.

So, if you are looking for a reliable identity verification service that can provide a top of the line KYC for banks solution, then you must give Shufti Pro a chance to prove its worth for your banking operations.

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