Remote KYC for Merchants in Europe to Ease Compliance Burden
When businesses think of regulations, it’s usually about the extra cost and processes that they need to implement. Rarely, new regulations offer a better way to do business and actually save money.
Good news if you’re in Europe and need to comply with the Fourth AML Directive (AMLD 4.1); the new rules allow you to verify customers remotely using electronic means. Actually, it not only allows eIDV (electronic ID verification), but promotes it:
“ … in particular with regard to notified electronic identification schemes and means that offer high-level secure tools and provide a benchmark against which assessing the identification methods set up at a national level may be checked.” European Money Laundering Directive 4.1
There are multiple reasons why the European Commission strongly believes in eIDV and set the regulation as they did:
- Simplicity for Consumers
As the speed of life seems to accelerate all the time, people want simple, quick ways to get things done. They take out their phone, and, with a few taps, do a quick search, sign up for an account, and start transacting. They don’t want to take a big trip and present their ID, simply to sign up for a service. Add to it, possible delays by having a slow, cumbersome back-office process to confirm the ID and it’s no wonder that consumers appreciate eIDV.
- Simplicity for Merchants
The speed and convenience of eIDV also benefits the merchant. Expediting the onboarding process decreases the rate of customer churn, adding to the bottom line. By delivering faster service and more convenience, customers are more likely to engage in repeat business, adding to the long-term value, as well as refer the merchant to others.
The merchant can also reduce KYC compliance costs due to better optimization of staff that no longer have to handle cumbersome paperwork. Compliance staff can focus on risk assessments and other high-value analysis, rather than simple, rote work that is better automated anyways.
- Simplicity for Regulators
Regulators are often painted as the enemy by businesses; perceived as obstacles standing in the way of innovation and impeding on potential profits. However, they are performing a public service, protecting citizens from unscrupulous people and organizations. Enabling them to do their jobs better makes for a fairer and more just society.
Using eIDV allows regulators to better monitor compliance, keep more accurate records, perform high-level analysis that can produce better processes, and spend their time more productively going after fraud, corruption, and terrorist funding.
- Effective Security
All the benefits of eIDV are for naught, if the systems are not secure. As the European Commission acknowledges, “Latest technical developments in the digitalization of transactions and payments enable a secure remote or electronic identification.” Already secure, eIDV will continue to develop at a fast pace and Europe, through the 4th Directive, is ready for quick adoption of new ID technologies.
For European merchants, financial institutions and others that must comply with AMLD 4.1 taking effect June 2017, eIDV is a powerful tool to increase business, decrease costs, and reduce risk of fraud. While it might seem new and complicated, implementation is easy with the right solutions in place.
As Stephen Ufford, CEO and Founder of Trulioo says, “[tweet_dis excerpt="#4AMLD eIDV is an important win for merchants concerned with the 4th Directive — @StephenUfford"]eIDV is an important win for merchants concerned with the 4th Directive.[/tweet_dis] It helps ensure compliance while providing tangible business benefits and setting businesses up for future growth opportunities.”