identify ourselves & others

Stephen Ufford, CEO and founder of Trulioo, explains why a global approach to identification is the way forward.

There are close to two billion people in the world today that do not have access to basic financial services and other opportunities that we take for granted. Whether it’s opening a bank account, getting a loan, using a credit card – the 1.7 billion or so “unbanked” have scarce opportunities for advancement unless these essential needs are met.

One might think: How’s this even possible, particularly in this day and age? The answer, to a large extent, can be explained by difficulties involved in the process of identity verification.

Identity verification cannot be circumvented

In much of the world today, banks, financial services, payment providers, money transfer companies, etc. are regulated under Know Your Customer (KYC) and Anti-Money Laundering (AML) laws. These regulations, which were instituted to combat – among other things –  money laundering, corruption, terrorism and drug trafficking, may differ from country-to-country; but, at the very least, they require the aforementioned regulated entities to verify the identity of their customers no matter where the customer is from.

Identity verification differs from country-to-country

The problem, however, is what constitutes identity verification differs from country to country. Different countries may have different rules; regulations in the UK may require the customer to submit certain kinds of ID documents – arguably, Australia might have similar rules, but the rules in China may dictate a different approach. This is why a global approach to identity verification works best. A flexible and customisable solution ensures that most regulations within each country, organisation or financial institution are met.

A global approach works best

Fraudsters are becoming more sophisticated, and adopting new ways to launder money through techniques such as falsifying documents and misrepresenting financial transactions. Screening customers against Anti-Money laundering watchlists, which comprises both local and international watchlists, can help regulated entities keep bad actors at bay, no matter where they are from.

Thinking out of the box to pave the way for financial inclusion

In large parts of the world, many individuals do not have a passport or a driver’s licence to prove their identity and therefore do not have enough data to meet KYC requirements.

Nevertheless, what many people do have access to is a mobile phone. In fact, 7.9 billion people around the globe use a mobile phone every day of their lives. And what most people don’t realise is that Mobile Network Operator (MNO) data can be utilized to help identity the world’s unbanked population. By connecting mobile network operators in a specific country, a large register of mobile users can be identified.

Case study: AML/KYC in the Philippines and eiDV in China

Consider the Philippines: Last year, an influx of £27 billion was recorded entering the Philippines, along with £1.7 billion in cash remittances from overseas Filipino workers – a 9.7 percent increase from the previous year. According to the World Bank, Philippines was poised to be the third-biggest remittance-receiving country this year. A substantial proportion of those remittance flows came from the US and the UK. Remittances help Filipino citizens as the money sent back home from Filipinos working abroad is usually transferred to their families. As large sum of money is transferred from country to country, it is essential to know exactly where it is coming from and who is receiving it.

Identifying this problem, Trulioo introduced its identity verification service in the Philippines earlier this year. With Trulioo, it’s easy to instantly verify the identity of the person transmitting the money into the country. As the Philippines is a remittance hub, having access to a global identity verification solution provides a comprehensive safeguard against money laundering and fraud. An innovative solution built specifically for the international market helps to keep the remittance costs low for senders and recipients, as well as providing flexibility and greater efficiencies as the business scales into new markets.

Meanwhile, in China, one of the largest forex traders has adopted Trulioo’s verification software to streamline their on-boarding process. Prior to using Trulioo, it was difficult to onboard Chinese customers who weren’t comfortable submitting their identity documents online. Different time zones and language barriers complicated the problem further and led to long delays in the onboarding process.

Trulioo’s electronic identification (eIDV) service streamlined the account opening process; the forex trader was able to verify the identity of Chinese customers instantly and seamlessly, eliminating the need for any back-and-forth with the customers. With Trulioo, the forex trader was able to verify 95% of its customers in China, and rarely required them to send additional documents for verification.

As financial institutions and business continue to take advantage of a digital, borderless and global economy, it is important that they begin to work on a global approach to meeting AML and KYC regulations.

There are over seven billion people in the world today; for many of us, particularly those of us in the developed world, technology has transformed our life and accelerated the speed of progress to an unprecedented rate – indeed, never has it been easier to solve hitherto unsolvable problems, turn an impossible idea into a reality, or start the next big tech company.

Despite all this progress, identity is broken and continues to be a problem for many; it’s time to bring advances in technology, such as AI and ML, to bear on identity verification and fix the identity problem once and for all.