KYC and eKYC

Know Your Customer (KYC) is a process used by financial institutions and other regulated companies to verify the identity of their clients. The goal of KYC is to prevent financial crimes such as money laundering and terrorist financing. This process typically involves collecting and verifying personal information such as name, address, and government-issued identification.

Electronic Know Your Customer (eKYC) is a digital version of the traditional KYC process. Instead of manually collecting and verifying personal information, eKYC utilizes electronic methods such as online forms and digital identity verification tools.

One of the main benefits of eKYC is that it can significantly speed up the customer onboarding process. Instead of having to go through the process of collecting and verifying personal information in person, eKYC allows customers to complete the process digitally, which can save time and increase efficiency. Additionally, eKYC can also increase security by using digital verification methods to confirm the identity of customers.

However, eKYC also has its own set of challenges, such as the potential for fraud and the need for customers to have access to digital devices and internet connection.

In summary, both KYC and eKYC serve the same purpose of verifying the identity of customers to prevent financial crimes, but eKYC uses digital methods for a faster and more efficient process, but also with its own set of challenges.

Can AI help with KYC?

Yes, AI can be used to help with the Electronic Know Your Customer (eKYC) process in several ways.

1. Identity Verification: AI-powered systems can be used to verify the authenticity of government-issued identification documents, such as passports and ID cards, by analyzing various security features, such as biometric data, holograms, and watermarks.
2. Document Analysis: AI algorithms can be used to extract information from identification documents, such as name, address, and date of birth, and compare it to the information provided by the customer to ensure consistency.
3. Face and Voice Recognition: AI-powered facial and voice recognition technologies can be used to match the customer’s face or voice to the one on their identification document, providing an additional layer of security.
4. Fraud Detection: AI-powered systems can be used to detect potential fraudulent activity by analyzing customer data and identifying patterns or anomalies that may indicate suspicious behavior.

Can AI be used for Anti-Money-Laundering (AML)?

1. Transaction Monitoring: AI-powered systems can be used to analyze large volumes of financial transactions and identify patterns or anomalies that may indicate suspicious activity. This can help financial institutions comply with AML regulations by detecting and reporting suspicious transactions in a timely manner.
2. Customer Risk Assessment: AI algorithms can be used to analyze customer data and identify potential risks associated with a specific customer or group of customers. This can help financial institutions comply with AML regulations by identifying high-risk customers and applying enhanced due diligence measures.
3. Fraud Detection: AI-powered systems can be used to detect potential fraudulent activity by analyzing customer data and identifying patterns or anomalies that may indicate suspicious behavior.
4. Sanction Screening: AI-powered systems can be used to screen customer data against lists of sanctioned individuals and organizations, helping financial institutions comply with AML regulations by identifying and reporting any potential matches.

In summary, AI and companies like Aver can be used to automate and speed up the eKYC process, increase security, and help detect potential fraud. However, it’s important to note that the implementation of AI in eKYC process needs to be done carefully, ensuring compliance with the relevant regulations and data privacy laws, and avoiding any bias in the system.

KYC vs eKYC — ChatGPT Offers Their Thoughts was originally published in Aver on Medium, where people are continuing the conversation by highlighting and responding to this story.

Most businesses in the digital space know and operate around Know-Your-Customer (KYC) rules for identification and verifying identities. But, many guidelines have not adapted to things like the metaverse and digital transactions.

While modifying laws to make them more applicable is possible, many countries have established electronic Know Your Customer (eKYC) regulations to match digital and mobile realities. In general, eKYC refers to fully digital processes that use identity verification solutions or digital ID systems. In India, for example, eKYC is a consumer term referring to identity verification through the Aadhaar system.

International digital ID systems

Estonia

Estonians can use their eID for more than 600 government services, such as healthcare, filing and paying taxes, and voting. The eID also provides full legal status for any interaction in Estonia that requires identity confirmation, such as eCommerce, opening accounts at financial institutions, and signing contracts.

Business services have seen a change in onboarding in Estonia, what used to take weeks to do, now takes less than 20 minutes. Digital seals are provided and recorded in real-time for new business entities.

Overall, eID has had a dramatic effect on Estonia. The country in 2014 took it a step further by introducing e-Residency, which provides eID to citizens of other countries, allowing them access to various e-Services.

eIDAS

In the European Union, the electronic Identification, Authentication and Trust Services (eIDAS) identity framework is intended to enable one EU member state’s eID to be used in all others. The goal is to create a modern identity framework that can perform electronic identification and trust services for digital transactions.

In its current form, the framework requires member states create their own rules and notify others, which must accept the ID scheme when allocating public services. But not every EU country has implemented eIDAS yet.

A more recent initiative, the European Digital Identity Wallet, is designed to provide an EU-wide eID that can be used for digital onboarding for cross-border services.

Document Verification

Verifying an ID document is another choice for eKYC. A user captures an image of a document and software determines if it is real or not. Automation software can decode things like advanced security functions and barcodes, ensuring a match and confidence that a document is genuine.

Wrapping it all up

ID Verification is important as a first step for a total eKYC system. Ensuring proper due dilligence through questions like what is the nature of the business? Who are their customers? What is the volume of the transactions?

These things can sound overwhelming when onboarding a new customer, especially if doing manually and using a “paper-trail.”

Digital providers like Aver are able to handle these processes near-instantly to stop the fraudsters before they even enter your platform.

eKYC — Electronic Know Your Customer enters the real world was originally published in Aver on Medium, where people are continuing the conversation by highlighting and responding to this story.

Covid changed the way businesses interact and meet new customers. This comes with ensuring trust, so everyone involved is protected. But, how do you choose the right identity verification provider to do this? What are the costs and differences?

In this piece, we will explain how identity verification services work and dive into the differences between providers.

Identity Verification Is Broken

The last two years have seen many “startups” shift into the identity verification space. This has caused marketing costs to reach new customers to skyrocket. This cost is being passed onto businesses that require these services in areas like cryptocturrency due to regulations. The competition are spending most of their budgets on marketing, rather than research and development. The other issue is customers are being verified on multiple platforms, multiple times, just increasing margins for identity verification providers.

Aver and the competition, Onfido try to help

Both Aver and Onfido provide online identity verification services to companies worldwide. Their solutions build trust on the internet and make it a safer place. These companies can help your business scale by offering services that help you know your customer and verify them in seconds.

Get to Know Your Customer:

1 — Customer uploads document — passport, driver license, etc

2 — Customers takes a “selfie.” You can choose multi-angle selfies, video options and more.

3 — The information is extrapolated and the customer is proccesed and reviewed.

What does the product market look like?

Onfido and Aver offer multiple types of products and plans for identity verification.

Aver has Identity verification, AML screening that checks data and images, adverse media screening and more. Aver handles all your forms end-to-end; from automatic data collection to verified. Clients can configure regions for instant accept/deny and watchlist criteria to be vetted. The dashboard is all web-based to allow multiple access for teammates in your organization to get quick insight.

A complete, AI-powered identity verification solution to power open, secure, and inclusive relationships between you and your customers. The Onfido Real Identity Platform helps you reduce the cost of customer acquisition, onboard new customers, detect fraud, and satisfy KYC, AML, and other global compliance requirements.

Onfido also offers multiple products, such as ID Verification, Identity Verification, Transaction Monitoring or Document Verification, which gives a wide range of choices for verifying users.

This goes head-to-head with Aver Edge, but Aver has less overhead and their reliance on automation helps reduces cost per check.

How To Choose

Aver and Onfido both provide a huge variety of identity verification services. They offer compliance with ‘Know Your Customer’ (KYC) and Anti-Money Laundering (AML) regulations and extensive fraud prevention services. The cost differences can be massive and can cause impact on the business.

There are a couple of key factors when it comes to choosing the right verification service for your business. AML & KYC compliance are the main elements to keep customers secure and build a trusting relationship with them. We should also take the speed into consideration — when you have honest customers, it shouldn’t take too long for them to get verified.

Aver relies on automation first, not outsourced manual reviews. Looking for a technology partner that is continually elevating to detect fraudsters with deepfake technology and visual AML technology is also key. This forward thinking is something regulators like to see.

Onfido puts heavy focus into their in-house built AI for image recognition. They tout this as having industry leading logic and learning. They also offer Onfido Studio, which offers a no-code worflow to tailor your ID verification needs.

Pricing

Aver offers easy pricing thorugh Aver Edge, just select and go with no contract fees or hidden charges. For larger businesses, Aver offers enterprise pricing that is even lower than their Edge plans. The pricing is tailored and not fixed, so it depends on your needs.

To sign up for an Enterprise plan, contact the Aver team, so they can work together with you to find the best possible verification options for the company’s needs. Enterprise tends to appeal to companies who need at least about 1,000 verification sessions per month.

1. Growing Plan — $249.99 per month and includes 250 checks
2. Booming Plan — $749.99 per month and includes 750 checks
3. Gangbusters Plan — $1499.99 per month and includes 1,500 checks

Reviews

Aver prides itself on customers satisfaction and their technology. Customers like Nick Passarelli of Brex says:

The platform is easy to use from both a company and client perspective and it produces fast and sustainable results. Finally, it is significantly more cost effective than most of the existing solutions in this space. I made the decision to use Aver for all AML/KYC reviews at LGO and we could not be happier.

Lead platform manager at Revolut, Lewis Tuff says, “Onfido has really aligned with our priorities, working with us to achieve our desired delivery by rapidly responding and iterating on their offering.’’

Aver supports over 10,000 document types from over 195 countries. Onfido advertises 2,500 ID types and 195 countries. Here at Aver, we will continue to use technology to make identity verification cheaper and better.

Aver vs Onfido: A comparison of features and cost was originally published in Aver on Medium, where people are continuing the conversation by highlighting and responding to this story.

Covid changed the way businesses interact and meet new customers. This comes with ensuring trust, so everyone involved is protected. But, how do you choose the right identity verification provider to do this? What are the costs and differences?

In this piece, we will explain how identity verification services work and dive into the differences between providers.

Identity Verification Is Broken

The last two years have seen many “startups” shift into the identity verification space. This has caused marketing costs to reach new customers to skyrocket. This cost is being passed onto businesses that require these services in areas like cryptocturrency due to regulations. The competition are spending most of their budgets on marketing, rather than research and development. The other issue is customers are being verified on multiple platforms, multiple times, just increasing margins for identity verification providers.

Aver and the competition, Jumio try to help

Both Aver and Jumio provide online identity verification services to companies worldwide. Their solutions build trust on the internet and make it a safer place. These companies can help your business scale by offering services that help you know your customer and verify them in seconds.

Get to Know Your Customer:

1 — Customer uploads document — passport, driver license, etc

2 — Customers takes a “selfie.” You can choose multi-angle selfies, video options and more.

3 — The information is extrapolated and the customer is proccesed and reviewed.

What does the product market look like?

Jumio and Aver offer multiple types of products and plans for identity verification.

Aver has Identity verification, AML screening that checks data and images, adverse media screening and more. Aver handles all your forms end-to-end; from automatic data collection to verified. Clients can configure regions for instant accept/deny and watchlist criteria to be vetted. The dashboard is all web-based to allow multiple access for teammates in your organization to get quick insight.

So what is Jumio offering? A unified, end-to-end identity and eKYC platform — it is called Jumio KYX and is a trusted identity platform for businesses worldwide. Their single end-to-end platform delivers the assurance customers need to know when doing business. It adapts to the needs and risks of different companies and provides a specific set of services that guarantees security and convenience.

Jumio also offers multiple products, such as ID Verification, Identity Verification, Transaction Monitoring or Document Verification, which gives a wide range of choices for verifying users. Among their products is Jumio Go, which is a fully automated real-time identity verification.

This goes head-to-head with Aver Edge, but Aver has less overhead and their reliance on automation helps reduce cost per check.

How To Choose

Aver and Jumio both provide a huge variety of identity verification services. They offer compliance with ‘Know Your Customer’ (KYC) and Anti-Money Laundering (AML) regulations and extensive fraud prevention services. The cost differences can be massive and can cause impact on the business.

There are a couple of key factors when it comes to choosing the right verification service for your business. AML & KYC compliance are the main elements to keep customers secure and build a trusting relationship with them. We should also take the speed into consideration — when you have honest customers, it shouldn’t take too long for them to get verified.

Aver relies on automation first, not outsourced manual reviews. Looking for a technology partner that is continually elevating to detect fraudsters with deepfake technology and visual AML technology is also key. This forward thinking is something regulators like to see.

Jumio puts heavy focus on their KYX platform — the total solution to know your customers, users, employees, or whoever the ‘X’ is in your business. Their end-to-end platform delivers the assurance companies need to know, then trust. According to their website, Jumio offers fast and accurate verifications — they use AI, machine learning, and biometrics to automate the verification process and make decisions in a short amount of time.

Pricing

Aver offers easy pricing thorugh Aver Edge, just select and go with no contract fees or hidden charges. For larger businesses, Aver offers enterprise pricing that is even lower than their Edge plans. The pricing is tailored and not fixed, so it depends on your needs.

To sign up for an Enterprise plan, contact the Aver team, so they can work together with you to find the best possible verification options for the company’s needs. Enterprise tends to appeal to companies who need at least about 1,000 verification sessions per month.

1. Growing Plan — $249.99 per month and includes 250 checks
2. Booming Plan — $749.99 per month and includes 750 checks
3. Gangbusters Plan — $1499.99 per month and includes 1,500 checks

Reviews

Aver prides itself on customers satisfaction and their technology. Customers like Nick Passarelli of Brex says:

The platform is easy to use from both a company and client perspective and it produces fast and sustainable results. Finally, it is significantly more cost effective than most of the existing solutions in this space. I made the decision to use Aver for all AML/KYC reviews at LGO and we could not be happier.

Jumio’s products have positive feedback from the clients as well. For example, as Nick Mourgue, the product manager of WeWork, says — “We had what we thought was a crazy idea to automate the identity verification process, and Jumio brought the idea to life.”

Aver supports over 10,000 document types from over 195 countries. Jumio advertises 3,500 ID types and 200 countries. Here at Aver, we will continue to use technology to make identity verification cheaper and better.

Aver vs Jumio: A comparison of features and cost was originally published in Aver on Medium, where people are continuing the conversation by highlighting and responding to this story.

Cryptocurrency made a roar in 2020 and 2021. Investors saw very nice returns and countries like India saw massive adoption from retail investors.

The United States saw 44% of crypto owners adopting it for the first time that year. With the world’s largest economy, how crypto regulations are defined in the U.S. will significantly impact global crypto adoption.

Investors are continuing to pile money into Canadian cryptocurrency exchange-traded funds despite the sector losing more than US$1-trillion in value globally so far in 2022. Canada has about 40 crypto ETFs — including bitcoin and ethereum funds. Since crypto funds first launched in February, 2021, ETF investors have bought steadily in the sector, which had $4.3-billion in total assets as of May 31, according to research by National Bank Financial.

But, Canada has a few firsts that they officially beat the United States too:

1. The first country to design and sign into law Anti-Money Laundering (AML) regulations for cryptocurrency “service providers.”
2. The first to register a cryptocurrency-only investment fund. The United States has been putting their efforts on hold as the government tries to get a better grasp of it.
3. Applying securities laws to cryptocurrencies

United States, Joe Biden and Crypto

In the U.S., there’s a move to create a coordinated approach to all things crypto using tools such as an Executive Order. Different agencies and regulators are examining the issues, including the Securities and Exchange Commission (SEC), the Commodities Futures and Trading Commission, federal banking agencies and the Departments of Treasury, State, Justice, and Homeland Security.

• Data Protection — Without “sufficient oversight and standards,” firms providing digital asset services “may provide inadequate protections for sensitive financial data, custodial and other arrangements relating to customer assets and funds.”[7]
• Privacy — Key “safeguards” identified in “responsible development” of digital assets include “maintain[ing] privacy” and “shield[ing] against arbitrary or unlawful surveillance.”[8]
• Risk Disclosures — An important facet of protecting investors is ensuring adequate “disclosures of risks associated with investment.”[9]
• Cybersecurity — Cybersecurity issues that have occurred at major digital asset exchanges and trading platforms to date have contributed to billions of dollars of losses.[10]
• Systemic Risk — In order to mitigate systemic risk, digital asset issuers, exchanges and trading platforms, and other intermediaries “should, as appropriate, be subject to and in compliance with regulatory and supervisory standards that govern traditional market infrastructures and financial firms.”[11] Moreover, new and unique uses of digital assets “may create additional economic and financial risks” that require “an evolution to a regulatory approach.”[12]
• National Security and Illicit Finance — Noting that digital assets can pose significant national security and illicit finance risks ranging from terrorism financing to cybercrime, the Executive Order aims to “ensure appropriate controls and accountability” for digital asset systems to “promote high standards for transparency, privacy, and security” in order to counter these activities.[13]
• Sanctions Evasion­ — Digital assets may be used to circumvent sanctions.[14]
• Climate and Pollution — The United States also has an interest in reducing “negative climate impacts and environmental pollution” from “some cryptocurrency mining.”[15]

Banks and an “odd” relationship with digital assets

Through various Interpretive Letters, the Office of the Comptroller of the Currency (OCC) is allowing U.S. national banks to:

• Take custody of cryptocurrencies
• Hold U.S. dollar reserves against stablecoins
• Use blockchain nodes and stablecoins for payment activities

But, Acting Comptroller Michael Hsu has put out a more recent Interpretive Letter. According to former U.S. FDIC regulator Jason Brett, it will “only add confusion to the marketplace … leaving only the largest and most well-funded incumbent banks in a position to afford conducting cryptocurrency activities.”

Here comes the Travel Rule

Cryptocurrency firms have assembled teams of compliance experts and lawyers to try and navigate the Travel Rule.

The Financial Action Task Force (FATF) guides how its 37 members regulate cryptocurrency exchanges. One controversial guidance is the so-called travel rule that requires obligations to obtain, hold, and transmit required originator and beneficiary information in order to identify and report suspicious transactions, monitor the availability of information, take freezing actions, and prohibit transactions with designated persons and entities.

The key here is that both parties on the sides of the cryptocurrency transaction know and trust each other, at least enough to satisfy regulators.

Threats, Actions and Answers

The United States is already taking actions and making examples of those not in compliance.

Ari Redbord, who served as a senior adviser to the Treasury Department’s undersecretary for terrorism and financial intelligence, suggested

What we are seeing is that the Department of Justice is going to actively go after actors that attempt to use cryptocurrency, but also that it is hard to use cryptocurrency to evade sanctions.

Canada says that anyone who handles cryptocurrency transfers is a money-service-business (MSBs) and have similar requirements to banks in terms of reporting and record keeping duties. A distinction is made between crypto-asset trading platforms (CTPs) that immediately deliver crypto assets to clients and those with custody of the assets. If a CTP holds, possesses or controls the asset, then the asset is treated as a security or derivative, and the CTP is regulated as a security dealer.

Regulators want to ensure that KYC procedures are in place, including identity verification. Low cost and easy to establish kyc/aml exist, the excuse to regulators from small startups on cost and complexity, is not getting a pass anymore.

Source: https://www.gibsondunn.com/the-biden-administrations-digital-assets-executive-order-and-its-implications/

U.S., Canada Crypto Regulations Update was originally published in Aver on Medium, where people are continuing the conversation by highlighting and responding to this story.

The Issue

A team that used a type of “penetration testing” against digital identity providers, has found that deepfakes easily fooled the onboarding process.

In a report published on Wednesday, researchers with Sensity, a security firm focused on deepfake detection, demonstrated how it was able to bypass an automated “liveness test” by using AI-generated faces.

KYC verification is utilized in a wide array of industries including banking, fintech, insurance, crypto, and gambling. Sensity tweeted out footage of its demonstration a week before it released its report, detailing how 9 of the top 10 KYC vendors were highly vulnerable to deepfake attacks.

What is a deepfake?

Disinformation comes in many forms, and no single technology will solve the challenge of helping people decipher what is true and accurate.

The word deep fake comes from the terms “deep learning” and “fake,” and is a type of artificial intelligence. In simplistic terms, deep fakes are falsified videos made by means of deep learning. Deep learning is “a subset of AI,” and refers to arrangements of algorithms that can learn and make intelligent decisions on their own.

Basically, a computer program finds similarities between faces and matches that to a genuine person. The deception plays on the human tendency to believe what is seen at first glance. The video is near seamless and most human eyes won’t ever notice.

Problem and the Fix

Aver and other identity providers use various methods to detect deepfakes. The problem is, legacy providers have made a lot of money using old technology that has not adapted to sophisticated criminals. ID verifiers have taken the stance that they are “deterrents” of fraud, not terminators.

But, companies like Aver saw this problem and started to detect patterns in their onboarding process with deepfakes.

Fraudsters are good, but deepfakes cause something akin to a ripple in water in images.

When Aver detects a face, it goes through a process that will extract the image and look for lower quality snippets, when these are detected, rather than a uniform bit-rate image(s), software can flag for review and look at further layers of data to identity deepfakes and fraud.

It works by detecting the blending boundary of the deepfake and subtle fading or greyscale elements that might not be detectable by the human eye.

With cryptocurrency gaining in popularity and value, these exchanges are the most vulnerable. Once a customers loses a token after an account compromise, the token and the value are gone, with no recovery options available. Cryptocurrency exchanges are not like traditional banking systems that have reimbursement protocols to ensure funds are insured. Making sure your business is using the newest technology is crucial to reduce customer loss.

Deepfakes can easily fool most identity verification providers, report says was originally published in Aver on Medium, where people are continuing the conversation by highlighting and responding to this story.

When COVID-19 started, most of the world went into lockdown, but we still needed to transact with local and large businesses. This pushed many into the digital-age and catapulted the ones that were already there, to be the leaders.

The Association of Certified Fraud Examiners (ACFE), from a survey May 2021, in collaboration with Grant Thornton LLP showed that more than half the organizations polled uncovered more fraud than usual since the beginning of the pandemic. And 20% of those organizations detected a significant increase in fraud crimes.

These changes will not be temporary. As the world became used to doing things from our phone more, the demand for contactless payment and verifying identity grew. While the government is battling unemployment and PPP loan fraud, going over your protocol against identity fraud are more important than ever.

Social Engineering Schemes

Think of social engineering of like meeting a new person, that loves the same books, lives in your same neighborhood and enjoy the same activities. Once this person “connects,” trust is established and it becomes easier to collect other pieces of information. The fraud becomes individualistic and personalized in nature from the attacker. This is mostly done online through social media and chat forums.

What makes social engineering attacks, such as phishing and spear phishing, so dangerous for companies is that human error is much more difficult to identify, detect, and thwart than weaknesses in operating systems and software, which is how malware works.

User credentials (e.g., usernames, passwords, and PINs), personally identifiable information or PII (e.g., names, street addresses, and email addresses), and medical information (e.g., insurance claim, healthcare provider, and diagnosis/treatment information) top the list for the bits that fraudsters piece together for their attack. With just one piece of that information released, it can cause major headaches for the victim and businesses.

Identity Fraud

This one existed well before COVID-19 and continues to break records every year. This is when a fraudster impersonates someone that is not them. This is done to gain access to accounts. Once one account is compromised, the bad-actor can access many accounts for the takeover.

• Account takeover fraud — is a type of identity theft. The fraudster poses as a genuine customer to gain access to the account. The smart fraudster uses bots to automate the attempted access to accounts. This makes it even harder and more time consuming to respond to threats as a business. When fraudsters perform account takeovers, they usually attack personal, not corporate, accounts. However, account takeover fraud can cost companies money as well. For example, if the affected user disputes the fraudulent transactions, the business may be held liable.
• Synthetic Identity Fraud — it’s the fastest-growing crime in the country, estimated to cause $48 billion in annual online fraud losses by 2023. Synthetic fraud happens when someone combines a real piece of information (e.g., SSN) with fake Personally Identifiable Information (PII) (e.g., birthdates, addresses, or even a permutation on the spelling of the individual’s first or last name) to create a fake identity.
• Deepfakes — This is a headline in the news often lately. Using something as easy as an iPhone app, people can create near-perfect images of someone else’s head on another person’s body. This is being done all over social media for many popular celebrities, like Elon Musk for example.

How to stop the fraud

Now that we have covered all the acronyms and buzz-words, the question at the end is what can your business do to fight back?

1. Stay Educated — keep abreast of newest methods of attacks and hire a team that knows how to practice and have procedures in place to curb a cyberattack.
2. Identity your customers from the start — have the total picture, not just an address and name cuts it anymore. This includes identity verification that collects a document and verifies it with a live seflie. Companies like Aver, use artificial intelligence and image recognition to catch the fake-documents and bad-actors from the start.
3. Offer more — Advise customers to set up things like biometric access to devices and 2-Factor Authentication (2FA).

Identity Fraud In the New, Post-Pandemic Digital World was originally published in Aver on Medium, where people are continuing the conversation by highlighting and responding to this story.

Anti-money laundering (AML) is a term that is used a lot, but most of the world is not in the financial services sector. So, we are going to break it down and some of the terms that come with AML.

The regulations are broad and each country has different ways to manage them. But, the principles evolve around making sure funds that are deposited are coming from a source that is not touched by terrorists and fraudsters. The aim is to keep the “dirty money” from ever entering the financial system.

European Union (EU) AML Regulations

The European Commission (EC) enacted its first AML Directive (1AMLD) to combat money laundering in 1991. This established key AML rules and measures to combat terrorist financing (CFT). They included customer identification, record-keeping, methods of reporting suspicious transactions, as well as other CDD measures that all EU Member States had to implement in their national law.

There are also implemented the 2nd and 3rd directives; these handle requirements to lawyers, accountants, real estate agents and others. The 4th directive imposes requirements over casinos and gambling services.

Cryptocurrency Rules

Cryptocurrency became too big for regulators to ignore. So in 2020, the 5th directive (5AMLd) was issued. It covers legal definitons of what cryptocurrency is and the exchanges that handle Bitcoin (BTC) and other digital currencies would be governed like a financial institution. 5AMLD also introduced new requirements for pre-paid cards, high-value goods, and made updates to the due diligence required for high-risk countries and PEPs.

United Kingdom (UK) AML Regulations

The Financial Conduct Authority (FCA) is the UK’s main financial services regulator and oversees institutions’ compliance with AML regulations.

• Proceeds of Crime Act 2002 (POCA): This is the UK’s primary AML regulation. Under POCA, banks and financial institutions must take the necessary steps to detect money laundering activities. These steps include CDD, transaction monitoring and suspicious activity reporting.
• The Terrorism Act 2000: Under this act, financial services must take steps to prevent terrorist financing, including CDD, transaction monitoring and reporting obligations.
• The Money Laundering, Terrorist Financing and Transfer of Funds 2017: This regulation implements the obligations set out in the EU’s 5AMLD. It also introduced the requirement that firms implement a written AML and CFT risk assessment. HM Treasury initiated a review on amendments to this act in July 2021. A call for evidence on the review of the UK’s AML/CTF regulatory and supervisory regime also ran in parallel to this consultation. HMT has committed to publishing its response by 26 June 2022.

United States AML Regulations

International AML Guidelines

The Financial Action Task Force (FATF) is an intergovernmental organization that aims to combat money laundering and terrorist financing. Created in 1989, it sets global standards for AML and CFT regulations and promotes their adoption.

At the time of writing, the FATF has 39 members, including the UK, the US, the European Commission, China and India.

Compliance Definitions: AML Chapter 1 was originally published in Aver on Medium, where people are continuing the conversation by highlighting and responding to this story.

Biometrics are what make us unique as humans. These are things like walking patterns, fingerprints, facial features and voice.

Identifying someone via these characteristics help verify people in a digital world. After verification, others can believe to a level of certainty that the person is who they say they are. They can also grant and allow access to devices and data.

Why use biometrics and risk compromise?

The argument can be made for biometrics for verification like Two-Factor Authentication (2FA) on your financial accounts for example. Biometrics can secure your devices and data with less risk of compromise. For example, using machine learning and computers to do the analysis is also more secure due to less human-eyes on sensitive data, as opposed to a human-eye verifying each ID or person as they go through airport security.

Study after study has shown that passwords are a weak security gate.

Using something like a face to verify a user is much more secure and harder to break into.

Passwords are also more of a burden for your customers, these surveys have also shown that users forget their passwords often; and to no one’s surprise, they do not like constantly changing passwords.

In fact, according to IBM research, 87% of businesses would consider using biometric identification in the future.

Different Types of Biometrics

Most consumers do not even know they use biometrics everyday. In fact, they have become a staple in most of our lives. From things like Siri, Alexa and voice prompts in certain automobiles all use biometrics for access and task services. Any device with a camera can be used to unlock a device. Most of us with cell phones use our faces to unlock our devices.

Fingerprint recognition is probably one of the most common forms of biometrics used in our everyday lives, due to their mass deployment in smartphones. Many devices such as screens or touchpads can be fairly easily turned into fingerprint scanners.

Biometrics at Aver

Aver can anchor and tie account sign-ups to a Photo ID or a selfie. Our advanced image detection can push customers to upload multiple angles of a “selfie” to further reduce fraud.

Facial Recognition Analysis — instant and on-demand, Aver will show a facial score that matches to documents. This can help ensure that users that are submitting IDs are also who they say they are.

Images are constantly checked to make sure they are matching the data that is tied to them through things like barcodes.

Find out how biometric verification can work for you. Combined with document verification, you can ensure a comprehensive solution for identity.

What is biometric verification? was originally published in Aver on Medium, where people are continuing the conversation by highlighting and responding to this story.

Before the days of smartphones and even basic computer scanners, asking someone to verify an ID document by just looking it, they probably would have laughed. But, now this is being done digitally and with no human eyes. This presents challenges of trust on both sides.

Let’s Get Digital

The facts are astonishing, there are currently around 4.6 billion internet users.

Around 2 billion people are ‘’unbanked’’, or are ‘‘thin file’’ customers.

Without their credentials on record, businesses need to verify these users’ identities each time they access a service, which could be up to three times a year. This could equate to 8.6 billion verifications a year. There are ~4.5 billion people going checkpoints at an airport yearly, that means a physical human(s)checking 4.5 billion documents in a 3D environment.

Business Shift

Office spaces are shuttering, banks and retail stores are closing more locations everyday. COVID-19 has changed the way we think and do business. As a result, more ID verifications are being done online.

It’s a similar story in the UK, Accenture have found that there’s been a 12.5% in the number of bank branches since 2014 — from 10,960 branches in 2014 to 6,549 in 2019. Their analysis finds there will be fewer than 3,000 branches left by 2025 or an average of fewer than 300 branches per financial institution. Combined with the impact of COVID-19, Accenture expects there to be even fewer branches left in the UK, with scenarios ranging from approximately 800 to 2,000 by 2025.

The United States saw 13,000 bank branches close from 2008 to 2020, with a large spike coming in 2020/2021.

This is causing even smaller, regional branches to foster digital apps and online identity verification for new sign-ups.

But, the fraudsters are finding more vulnerabilities, this has led to an increase in device malware attacks.

How To Address Identity Verification Fraud in the Digital Age

As ID documents evolved, so have the techniques of the fraudsters. When processing a digital image, a digital identity company only has limited views in a 2D environment to authenticate it. Digital counterfeiting is much easier for fraudsters, it allows multiple attempts on different variations to make it through. Before the internet, a physical document had to be reproduced and they only had a single attempt to try and make it clear.

Solution

The good news is that software can handle the various attempts by bad-actors. Using facial recognition in a live environment to match is just the start. Many pieces of data are analyzed at the start; things like address, watchlist checking and IP and TOR browser detection. Smart systems like Aver, also check for barcode data to match image data from documents. Using technology providers will help foster adoption and keep your customers happy while going digital.

Digital vs Physical Document Verification was originally published in Aver on Medium, where people are continuing the conversation by highlighting and responding to this story.