Innovations in Identity

leveraging data for regulatory compliance

Rolling with regulation — leveraging data to meet regulatory requirements

leveraging data for regulatory compliance

With a new regulatory update issued every seven minutes and more than $243B in fines levied against financial institutions since the 2008 financial crisis, it’s no wonder compliance professionals are feeling the pressure.

With upcoming updates to the Anti-Money Laundering Directive (AMLD) and sweeping changes wrought by the second Payment Services Directive (PSD2) and the General Data Protection Regulation (GDPR), firms are finding themselves in a particularly precarious situation: exposed to liabilities and subject to large fines. These regulatory changes have not only made compliance more difficult and complex; they have also introduced a myriad of uncertainties and contradictions when it comes to dealing with data across borders.

At the same time, technology has been making quantum leaps and the availability of the internet in even the most remote parts of the world has lowered the cost of customer acquisition. With customers becoming increasingly reliant on mobile devices to transact online, it has never been easier to build a global base of customers in this borderless online economy.

Borderless identity verification made easy

 Spurred by internet ubiquity and the desire to tap into the resulting global online audience, businesses worldwide are now very much operating in a borderless society. Yet, despite the globalised nature of commerce, regulations are struggling to keep up and most are specific to a sector, state or country. This presents significant challenges for businesses with global ambitions.

For those looking to harness the economic benefits of this new borderless society, it has become essential to have an identity verification process that can scale quickly, efficiently and cost-effectively. Without such capabilities, differing regulatory requirements mean businesses must create separate customer onboarding processes when entering new markets.

While in the past this has been a complex, time-consuming task, now, through the use of an effective API embedded directly into a digital site, it is possible to securely access hundreds of data sources across the globe and thus verify the identity of billions of people. Additionally, new technology is now available that provides simplicity to developers who can instantly verify customers in multiple markets, while supporting country-specific Anti-Money Laundering (AML) and Know Your Customer requirements (KYC) laws.

Business can embed a snippet of code into their website – often the sign-up or registration form – to instantly verify customers in multiple markets. This is quick and convenient by design, which is ideal as in today’s digital and borderless economy, online identity verification needs to be instant, simple and unwaveringly reliable.

Leveraging data to reshape the world’s economy

Today, data is being generated at an unprecedented rate. Globally, over 4.8 billion people have smartphones so whether in Chile or South Africa, the customer is now transacting online. Indeed, easy and ubiquitous access to the internet is leading to a remaking of the world economy.

Thus, instant identity verification technologies are quickly making their way into hard-to-reach areas, which often lack traditional sources of identity data such as a birth certificate or passport. In developing areas of the world, where a large part of the population is ‘unbanked’, and traditional sources of identity data have limited coverage, mobile network operators (MNOs) are playing a game-changing role. In developing markets, it’s not uncommon for the mobile user base to outstrip that of traditional financial services; globally, one billion financially excluded adults already own a mobile phone and about 480 million have internet access.

The data in possession of MNOs can go a long way in verifying the identity of otherwise ‘thin-file’ customers, especially when combined with traditional sources of data. No less important is the added value that MNOs bring to fraud prevention; for example, when verifying a mobile number against MNO data, there is technology that can flag numbers that are Voice-over IP (VoIP) numbers, which are often prone to misuse by fraudsters.

Financial services providers now live in an era of both regulatory uncertainty and unprecedented opportunity. With the right technology and clear, well-informed strategies, it is becoming possible for organisations to leverage the data being generated to acquire new customers and meet regulatory requirements at a global scale.

This post first appeared on Finextra.

Disclaimer: Trulioo provides no warranty that the information contained in this document is accurate, up to date or complete and in no circumstance does such information constitute legal advice. Any person who intends to rely upon or use the information contained herein in any way is solely responsible for independently verifying the information and obtaining independent expert advice if required.

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