Financial institutions face constant pressure to comply with regulatory mandates designed to prevent identity fraud and money laundering while still delivering excellent customer care, watching bottom-line results, and meeting business objectives. In today’s complex business environment, this seems like an almost impossible task. However, those regulatory mandates also create many opportunities to improve efficiencies and save money. By integrating identity verification into the general risk management strategy, financial institutions can get to see substantial benefits for their bottom lines, customer care levels, and employee productivity.
What’s identity verification?
Identity verification is defined as “the procedure of using claimed or observed attributes of an individual to infer who the individual is.”(1)
For today’s financial institution, identity verification is just a critical part of establishing a new relationship. True identity verification means reviewing the truthfulness of what a prospective customer discloses by screening the information against multiple sources, then analyzing the important points to ascertain whether a new relationship must certanly be started. “Know your customer” has for ages been promoted within institutions as an indicator of personalized customer care; however, with the enactment of the USA PATRIOT Act regulations, identity verification is currently the difference between success and failure in the ever-changing financial services market.
How come identity verification very important to financial institutions?
The increased role of the country’s financial institutions in securing the home front mustn’t be undervalued. The point behind the USA PATRIOT Act is national security. Nobody will disagree that having an improved knowledge of the customer doing business at an establishment provides increased security for the institution, its customers and people in general.
The danger for banks is more than just monetary loss. Damage to a financial institution’s reputation created by noncompliance and the publicity surrounding terrorists opening accounts can cause lost confidence in the institution and significant lack of customers, sales, and revenue. Coping with negative publicity is just a long, difficult, costly process.
Compliance can not be ignored because penalties for noncompliance are severe. Regulatory penalties for the USA PATRIOT Act and OFAC regulations can range from $10,000 to $1 million per infraction.
Just how can a financial institution take advantage of the USA PATRIOT Act?
Protecting Against Identity Fraud
Institutions need to prevent identity fraud while balancing the need to protect customer information with a customer’s requirement for quick, efficient service. Identity verification is obviously a first step in reducing the opportunities for fraud and taking action 안전놀이터. Stopping the “bad guys” from opening a new account at an establishment is the easiest and most cost-effective way to cut back a bank’s burden. That’s how “knowing your customer” can help–if identity verification becomes part of the defensive measures within the general risk strategy, it can be a significant element in preventing fraud.
Increasing Operational Efficiencies
The USA PATRIOT Act has driven financial institutions to review corporate policies and perform lengthy risk analyses. Identity verification technology helps integrate policies into normal routines by allowing frontline workers to gather needed information rapidly and efficiently in place of manually researching identity information by calling references and checking websites.
Improving Customer Service
The consummate take advantage of integrating identity verification into an institution’s risk management strategy is just a higher amount of customer service.
From airline go school registration to doctor visits, society is accustomed to trading some privacy for the security of each individual and the country. However, customers do expect their financial institutions to guard their identity information and their fiscal assets. Identity verification programs allow new accounts to be opened quickly, developing a positive experience for the consumer while showcasing the methodology the institution has in position to guard its customers.
Identity Verification Options
Section 326 of the USA PATRIOT Act requires that financial institutions develop Customer Identification Programs (CIPs) that implement reasonable procedures to
Collect identifying details about customers opening accounts
Verify that the customers are who they say they are
Maintain records of the data used to verify their identities
Determine perhaps the customers appear on any set of suspected terrorists or terrorist organizations(2)
You’ll find so many solutions to simply help banks implement identity verification programs to comply with the regulations, always aiming to make educated and proactive decisions about customers. The USA PATRIOT Act regulations allow a documentary or nondocumentary approach.
Traditionally, the usage of manual or documentary solutions for identity verification has been prevalent in the financial services community. At many institutions, a member of staff will look at a driver’s license or passport to start account-opening procedures. Institutions are counting on driver’s licenses and passports to be valid, but with the recent upsurge in forgery, it’s difficult to own confidence that the documentation is legitimate.
Because the enactment of the USA PATRIOT Act, technology has improved within the location of identity verification. Identity verification technology provides a simple method of integrating a CIP into an institution’s risk management strategy. In addition, identity verification technology gives an establishment a cost-effective tactic for keeping up-to-date with ever-changing regulations.
For true identity verification, it is important to screen presented data against multiple independent sources to ensure consistency. Checking one source will not provide enough information, and there’s no database that includes everyone living in the United States. What this means is an establishment must make sure the name, Social Security number, address, and date of birth are valid and associated together using various data sources. If the data is unvarying throughout multiple sources, the institution could make an informed decision that it’s truthful. By utilizing identity verification technology, organizations can have the tools, not merely to verify identity, but also to screen against government lists and document transactions. Institutions can completely comply with the regulations, while also realizing the advantages of protecting against fraud, increasing operational efficiency, and improving customer care levels.
For financial institutions, the USA PATRIOT Act has created many burdens and opportunities. By embracing change and integrating identity verification to their corporate risk policies, institutions can drive back fraud, increase efficiencies, and keep service levels high while remaining profitable.