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Business Continuity After Fraud: How to Recover and Build a Foundation for Success

Business Continuity After Fraud: How to Recover and Build a Foundation for Success

by | Jan 23, 2023 | Blog, KYC

Business Continuity After Fraud: How to Recover and Build a Foundation for Success

Has your business recently faced difficulties due to a fraudster, money laundering, or other criminal activity? Whether your experience stems from a failure to comply with existing AML legislation or from overlooked vulnerabilities in your current KYC or KYB protocols, knowing how to build the best path forward after a fraud case is essential to long-term success.

At iComply, we know that the standards for compliance are ever-shifting within the financial market, and that tracking evolving rules and criminal activity can be tricky. In the first half of 2022 alone, the global market has seen over a billion dollars worth of AML fines handed out in North America and the UK alone. iComply knows the best way to avoid becoming one of these statistics is to be proactive in your operational processes and to be ready to adapt when necessary.

Below, we’ll discuss how you can begin the process of recovering after an experience with fraud and how you can set up your organization for a better, more secure future.

Why Fraud Happens

The business and financial services markets have had their share of fraudsters and criminal activities going back as long as you’re willing to dig. The unfortunate reality? Where there is room to profit legally, there’s often even more opportunity to capitalize and profit illegally. While there are countless methods and circumstances under which fraud, money laundering, terrorist funding, and other illicit activities occur, the biggest culprit is often a fundamental lack of protections in place for a business or institution.

Governing bodies like the FATF institute global mandates to attempt to prevent financial crime; however, without an active approach to compliance in place, holes in the safety net offered by such legislation begin to widen and leave everyone more vulnerable to damaging mistakes.

What to Do After Dealing With Fraud

The unfortunate reality is that sometimes, even with the best tools and practices in place, fraudsters do succeed. Regardless of legislative or financial repercussions, your organization should know how to recover from fraud and reset with better safeguards for the future. Should you need to regroup and move on, it’s important to start by:

Review (and Renew) KYC, KYB, CDD, and EDD Protocols

Know Your Customer (KYC), Customer Due Diligence (CDD), and Enhanced Due Diligence (EDD) are all designed to help safeguard against money laundering, counter-terrorism funding, and other financial crimes. In the absence of a trusted software platform like iComplyKYC and/or skilled in-house support equipped to assess and respond to threats accordingly, the effectiveness of your countermeasures suffers greatly. Taking the time to review what you currently have in place gives your team(s) the ability to earnestly reassess active safeguards, identify shortcomings, and refresh any weak areas so your organization doesn’t experience the same issues in the future.

Identify the REAL Problem

Whenever there is a breach of security, there are typically several factors that enabled that attack to succeed. In order to learn from mistakes and move forward, business leaders need to know exactly what happened. Take the time you need to get the full story. Did your software fail? Was it a user error or a manual review mistake? The more you know, the more you can understand what to address in the future and which key areas your organization can improve.

Educate and Prevent

The best approach to preventing criminal activity is to be as proactive as possible. Once you identify where to refocus your protective efforts, double down on educating your team members, making protocols and procedures as reliable and transparent as possible, and committing to consistent learning organization-wide as compliance standards continue to evolve.

Close the Door

In the aftermath of fraud, you’ll likely have quite a few loose ends that will need to be tied up before you can fully focus on revamping your KYC approach. Pay any fines as quickly as possible and/or pursue whatever you may need to in order to recoup any viable damages. Once you’re able to close this chapter fully, looking into the future will feel much more attainable for all parties involved.

Your Trusted Partner for Compliance: Meet iComplyKYC

iComply is proud to be a world leader when it comes to delivering KYC and financial crime compliance. Our team understands that staying on top of ever-evolving protocols is more than simply avoiding fines—it’s about using a system you can trust.

We offer businesses and institutions across North America and Europe a truly end-to-end KYC platform, with KYC onboarding and AML screening services for both individuals and legal entities. With a lightning-fast setup and various options to customize your unique needs, iComply is your trusted provider for digital KYC and CDD solutions.

Give yourself peace of mind and the reassurance of reliable, robust compliance by viewing our platform today! Discover how we do it by talking to our team today and booking a demo.

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Is your AML compliance too expensive, time-consuming, or ineffective?

iComply enables financial services providers to reduce costs, risk, and complexity and improve staff capacity, effectiveness, and customer experience.

Request a demo today.

Reviewing Customer Risk Profiles After Onboarding

Reviewing Customer Risk Profiles After Onboarding

by | Jan 23, 2023 | Blog, KYC

Reviewing Customer Risk Profiles After Onboarding

As we ease into a new year, there’s never been a better time to review your organization’s AML and KYC protocols to ensure you are as protected as possible. Criminal activities continue to grow increasingly complex and fraudsters find new ways to fly under the radar, as technology grows more innovative. The message to financial institutions and Virtual Asset Service Providers (VASPs) is clear: to fall behind on your due diligence practices is to leave yourself vulnerable to costly fines and adverse long-term repercussions.

At iComply, we know that managing KYC, KYB, CDD, and EDD protocols can be tricky, especially with the constantly evolving nature of AML legislation. With North America and the UK receiving the highest AML fines in the first half of 2022 (USD $1 billion and $18 million, respectively), businesses wishing to avoid the pain of being caught unprepared need to stay on top of best practices.

Below, we’ll discuss core KYC fundamentals, as well as how often you should be reviewing your customer risk profiles after onboarding is complete.

What is the Core Objective of KYC?

Know Your Customer, better known as KYC or KYB, is a form of AML and fraud protection that seeks to prevent financial crime by learning identifying details about a prospective individual or business to form vetted partnerships. By verifying the parties your organization deals with, you can remove many of the risks that come with the unknown and allow your operations to proceed confidently, with the safety and accuracy you can trust. Through advanced forms of KYC, Customer Due Diligence (CDD) and Enhanced Due Diligence (EDD), dig beneath the surface to get important details that keep you on the right side of the law and ready to move forward with any business relationship or partnership safely.

The main objectives of the KYC process are:

  • Identify and verify the identity of customers (both humans and organizations);
  • Properly evaluate the nature and purpose of customer relationships to develop customer risk profiles; and
  • Continuously monitor, identify, and report suspicious transactions on a risk basis to update client information as needed.

Due diligence measures are typically concerned with 4 main types of risk:

Customer Risk

Are you able to vet a client, their activities, and their known pattern of behaviours? Are there any high-risk factors, ownership structures, or political exposures you need to be worried about? CDD and EDD can dig past the surface to see who or what is hiding behind any given name.

Geographical Risks

Sometimes the location of a business or prospective client can uncover additional risks that you’ll want to be aware of, such as heightened exposure to money laundering activities or jurisdiction-specific requirements. In addition to knowing where a business is incorporated, you’ll also want to know where their main headquarters are and if there are any other locations you need to record and report.

Product and Service Offering

Certain products and services (virtual asset exchanges, for example) have more inherent risk where fraud and money laundering are concerned. How open and transparent is your prospective customer or business partner’s past, what additional risk factors are you aware of, such as additional team members or owners to be wary of, etc.?

Delivery Channel Risk

The delivery of any good or service is never fully without risk, but to mitigate unnecessary risk, knowing a wide variety of extenuating factors is critical to avoiding conflicts and damaging risks.

Using dedicated KYC software and protocols that help to automate much of the review process is one of the best ways to gain a clear picture of the above information and rest easy knowing you are compliant, prepared, and ready to act.

How Often Should You Review Your Risk Profiles

The financial world moves quickly, and with global regulations and risk factors constantly shifting, the reality is that businesses need to maintain up-to-date client and partner risk profiles to operate effectively. International sanctions issued in 2022 have been a strong reminder that global standards and sources of data can change instantly. Without the right tools to adapt to these changes quickly, you risk exposing your organization to extensive fines and other avoidable risks.

While the frequency you need to review your risk profiles will vary somewhat depending on your industry, services offered, etc., standard protocols advise at least once every 3 years (typically for lower-risk clients) or as needed for additional information. Being prepared to review your profiles on an annual (or more frequent) basis gives you the ability to adjust to evolving information and protect your company from costly liability allegations caused by failure to act. Rather than leaving reviews to chance and circumstance, it’s best to have reliable protocols in place alongside dedicated KYC software that can automate much of the review process, helping to reduce or eliminate manual errors and streamline operations.

EDD with iComplyKYC

At iComply, we know that balancing the need for CDD and EDD with the demands of day-to-day business operations can be challenging. Our modular suite of KYC products makes it easy to tailor your workflows to your specific requirements, including standard CDD, EDD, continuous risk monitoring, and more.

iComplyKYC allows you to focus on the ins and outs of running your business while reducing the cost of running ID verification and KYC protocols by up to 80% all while keeping you compliant with requirements in nearly 250 different jurisdictions. When it comes to streamlining your KYC and CDD process and simplifying risk profile reviews, iComply has you covered!

Book a demo with our team today to learn more about iComply’s range of KYC solutions, and discover how our platform can be customized for your organization.

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Is your AML compliance too expensive, time-consuming, or ineffective?

iComply enables financial services providers to reduce costs, risk, and complexity and improve staff capacity, effectiveness, and customer experience.

Request a demo today.

Factors of Conducting Enhanced Due Diligence

Factors of Conducting Enhanced Due Diligence

by | Jan 18, 2023 | Blog, KYC

Factors of Conducting Enhanced Due Diligence

Are your KYC protocols and practices set up for success in 2023? As we settle into the new year and face the ever-evolving world of online business, now more than ever before companies and financial institutions should prepare and implement strong Anti-Money Laundering (AML) and due diligence approaches to preventing fraud and financial crime. Customer Due Diligence and its more intensive counterpart Enhanced Due Diligence are essential components in an overall effective KYC and compliance strategy, with both providing you with integral information that allows you to forge partnerships with care.

Below, we’ll take a closer look at the steps involved in conducting EDD, as well as partnering with a proven KYC leader like iComply Investor Services.

What is Enhanced Due Diligence?

Enhanced Due Diligence (EDD) is the more advanced form of standard Customer Due Diligence (CDD). While both aim to obtain and verify certain basic details such as a customer’s name and location (or place of incorporation for business entities), Enhanced Due Diligence takes things further and digs for additional information that verifies customer identity, ownership structures, existing financial data, and other relevant historical factors like known associates, political exposures, and more.

With money laundering and other fraudulent practices becoming incredibly advanced, and the constant evolution of current data privacy and security standards, EDD is increasingly necessary for today’s market. Beyond staying compliant with the latest AML standards, EDD also allows your internal fraud and security teams to make better business decisions with confidence when partnering with new individuals and entities.

Some of the standard steps involved in conducting EDD include:

Using a Risk-Based Assessment

The primary goal of CDD and EDD is to be able to create accurate risk profiles compiled about natural persons and corporate entities, based on the most up-to-date information available. At the most basic level, EDD will begin by using information collected during the initial CDD—by focusing on key risk factors (which may vary dependent on the persons and/or industry in question)—to best categorize the individual or entity in question and assess which factors might have the greatest potential impact on your organization.

Obtaining Core Information

High-risk customers require a closer assessment and more detailed information beyond what standard verification measures or provides. While your team may be able to garner certain specifics from refined questionnaires and prompts on a mobile device, EDD will go deeper and look for the following:

For Natural Persons:

  • Known associations
  • Relevant business and/or personal history
  • Title and details held by Politically Exposed Persons (PEP), as well as close familial ties to a PEP (as needed)
  • Individual sanctions, where applicable
  • Credit history, etc.

For Businesses

  • Official company documentation
  • Articles of incorporation
  • Names of suppliers and customers, as well as their locations
  • Board member and beneficiary information, etc.

Other factors to be analyzed include the source of funds/source of wealth for individuals and related companies, including shares, investments, salaries, property and assets, dividends, and other elements that contribute to the accumulation and distribution of funds.

Transaction Monitoring

A client’s transaction history can tell you quite a bit about the potential risk they may pose to your business or institution. Transaction history can help establish whether or not there is a viable credit score, what kind of assets are frequently moved (and where), what parties they frequently interact with, and whether or not you need to be aware of other methods of funds transferring, such as the use of cryptocurrencies to move money.

Adverse Media and Negative Associations

High-risk persons have an elevated risk of carrying adverse media and negative associations that can cause problems for your organization down the line. To avoid costly fines and other potential risk exposure, your EDD protocols should incorporate adverse media and reputation assessment, as well as a method to continuously reevaluate as needed.

Ongoing monitoring

Business leaders without a reliable plan to adequately monitor and assess risks to their organizations play a dangerous game with both compliance and operational best practices. Under AML regulations, you need to ensure that you continuously screen for sanctions and other issues that can arise, even after a partnership is formed. Utilizing a trusted platform like iComplyKYC makes it easy to stay in the know and catch critical risk factors as soon as they arise, allowing you to stay compliant and protected when it matters most.

EDD with iComplyKYC

At iComply, we know that compliance and transparency are critical to long-term success. Our award-winning suite of modular KYC services gives your team the software, data, and support needed to easily locate the information required to stay compliant with AML legislation for every jurisdiction around the world where you serve your clients.

Thanks to our partnerships with trusted industry leaders like Microsoft, we’re proud to offer a truly end-to-end KYC and EDD digital solution for businesses and institutions across North America and Europe. Learn how we do it by talking to our team today and booking a demo!

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Is your AML compliance too expensive, time-consuming, or ineffective?

iComply enables financial services providers to reduce costs, risk, and complexity and improve staff capacity, effectiveness, and customer experience.

Request a demo today.

Reviewing the Travel Rule for Virtual Assets: What You Need to Know

Reviewing the Travel Rule for Virtual Assets: What You Need to Know

by | Jan 18, 2023 | Blog, KYC

Reviewing the Travel Rule for Virtual Assets: What You Need to Know

With virtual assets and decentralized financial exchanges continuing to make headlines in 2022, many countries are aiming to implement more compliance advancements in the coming years. Reviewing the Financial Action Task Force (FATF) Travel Rule and related virtual asset recommendation is advisable for all financial and virtual asset service providers (VASPs), to better understand existing frameworks in place. Designed to circumvent fraudulent actions when transferring funds, the Travel Rule presents VASPs with a particularly difficult challenge in implementing and collaborating with security protocols and other providers.

While initiatives like the Travel Rule can highlight the difficulties of creating cohesive security within a decentralized financial market, they also point to the importance of prioritizing Know Your Customer (KYC), Know Your Business (KYB), Customer Due Diligence (CDD), and Enhanced Due Diligence (EDD) as foundational pillars of your business operations. At iComply, we know that staying on top of evolving AML, CFT, and privacy legislation can be challenging, especially when working with non-tangible assets like bank funds or cryptocurrency. Our modular suite of KYC + KYB software makes it easy to get the information you need to stay compliant, as well as streamline your operations and reduce costs in the process.

Below, we’ll take a closer look at the Travel Rule when applied to virtual assets and the greater implications for identity verification and security practices for financial entities globally.

What is The “Travel Rule”

Introduced in late 2019, the FATF Travel Rule (also referred to as Recommendation 16) is intended to implement more consistent and dependable regulations for virtual transactions like electronic money transfers, crypto transactions, and other exchanges involving digital/virtual assets. By verifying both originator and beneficiary information and sharing it with the necessary counterparty during (or before) the transaction, the intention is to reduce the risk of fraud, money laundering, and terrorism financing—all of which have been historically difficult to eradicate from decentralized platforms.

Under the guidelines suggested by the FATF, there is a minimum threshold of USD 1,000/EUR 1,000 for virtual asset (VA) wire transfers. For transfers under this threshold, VASPs must collect the name of the originator and beneficiary, as well as the VA wallet address for each and/or a unique transaction code. For those transactions over the threshold, additional information is required, including:

  • Originator’s name
  • Account number of the originator (i.e. wallet address)
  • The physical address of the originator (geographically)
  • National identity number (SSN or SIN)
  • Customer ID number that is signature of the ordering institution
  • Date and place of birth
  • Beneficiary’s name
  • Beneficiary’s account number used to process the transaction (i.e. wallet address)

The Travel Rule applies to both financial institutions and VASPs when a transaction involves a traditional wire transfer or a VA transfer between a VASP and another obligated party (i.e. banking institution). While several countries like Switzerland, Canada, and the US* have taken strides to embrace the Travel Rule, universal adaptation is difficult to enforce and seamless integration remains a challenge that regulators and institutions have yet to reconcile.

*Note that the Travel Rule is quite similar to the Bank Secrecy Act, meaning that the United States was already implementing verification standards.

What are the Implications?

While it’s easy to take the direct implications of regulations like the Travel Rule at their face value, it’s important to remember that these rules come out of a much larger conversation that reveals the prevailing need for financial institutions and VASPs to establish and prioritize a foundation of KYC and CDD protocols in their daily operations. Whether dealing with virtual assets like money transfers and crypto exchanges, vetting credit applications, signing off on mortgages, or handling sensitive information transfers, due diligence and identity verification are essential to circumventing fraud and stopping criminals from taking advantage of vulnerable systems.

Partner with iComply Today

At iComply, we know how essential this foundation of knowledge and verification is to protect your business, as well as your clients’ sensitive data. We are pleased to offer a unique, end-to-end suite of KYC + KYB software that makes it simple to stay informed and compliant with the latest AML legislation. Our modular platform can be set up within minutes and configured to match your own workflows with the specific regulations of the jurisdictions you operate in and serve, meaning your downtime is minimal and process integration is as seamless as possible.

Learn how you can stay ahead of evolving AML and fraud standards, and discover why iComply is your leading choice for software solutions by talking to our team today!

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Is your AML compliance too expensive, time-consuming, or ineffective?

iComply enables financial services providers to reduce costs, risk, and complexity and improve staff capacity, effectiveness, and customer experience.

Request a demo today.

Protect and Streamline Your Business with iComply’s EDD and KYC Software

Protect and Streamline Your Business with iComply’s EDD and KYC Software

by | Jan 9, 2023 | Blog, KYC

Protect and Streamline Your Business with iComply’s EDD and KYC Software

Does your organization have adequate safeguards in place to circumvent fraud and uphold evolving money laundering legislation? Know Your Customer (KYC) and Customer Due Diligence (CDD) protocols are essential to avoid unnecessary risks and stay compliant with jurisdictional mandates; in addition, with fraudsters continuously finding ways to get around standard verification practices, Enhanced Due Diligence (EDD) has become an increasingly invaluable protection method. Designed to dig deeper than standard evaluations, EDD is particularly important when evaluating new business partnerships and assessing the risk profile of current and prospective clientele.

With 2023 expected to set a more demanding pace for compliance and additional remuneration to existing standards on the horizon out of the EU, business leaders will need to ensure the right protocols for AML practices and KYC are in place. Partnering with a robust EDD and AML software platform like iComplyKYC makes staying compliant easy. Below, we’ll discuss the importance of EDD, as well as the benefits of partnering with iComply.

What is Enhanced Due Diligence?

Enhanced Due Diligence, otherwise known as EDD, is a specific branch of foundational KYC (Know Your Customer) protocols designed to dig deeper than more standard levels of basic identity verification. EDD is essential for various scenarios, including when dealing with legal entities, Politically Exposed Persons (PEPs), known high-risk associates, etc. Common factors that may trigger enhanced investigation include:

  • Cash-intensive businesses;
  • Countries without adequate AML/CFT protocols;
  • Companies that have unclear, unusual, and/or complex ownership or leadership structures;
  • Businesses or individuals that are or have previously been subject to embargoes.

Where basic identification protocols may only be concerned with verifying entry-level details, EDD goes even further and investigates core data points like certificates of incorporation, known associates, additional financial history, and other advanced risk factors. As a screening approach, EDD is more robust and provides more detailed documentation for better threat assessment and compliance reassurance. This means that whether you’re dealing with a legal entity or an individual, your organization will get a much clearer picture of who you’re working with, as well as any relevant notes of potential risks you need to be aware of when moving forward.

Why it Matters

Beyond staying compliant with AML legislation, EDD helps to streamline your operations, avoid problematic partnerships, and makes it much more difficult for criminals to abuse financial channels. As we face an increasingly complex range of fraudulent practices, enhanced due diligence and vetted KYC protocols are one of the best ways to protect your organization, build trust among your customers, partners and investors, and solidify your brand as a leading player within your market.

EDD with iComplyKYC

At iComply, we recognize that having streamlined KYC and EDD protocols are essential when it comes to protecting your business when it matters most. Our innovative, modular suite of KYC products is designed to make it easy to integrate security measures and identity verification practices into your daily operations, with setup taking a matter of minutes. Our software utilizes edge computing and advanced end-to-end practices to process sensitive user data on the native device for optimal privacy and results that you can trust. (Don’t believe we’re fully end-to-end? Let us show you how)

Our suite of KYC products allows you to handle client and partner onboarding confidently and, best of all, can reduce the cost of running KYC protocols by up to 80%. We know that having access to the latest information is crucial to staying ahead of fraud and potential problems, which is why our platform makes it simple to obtain real-time data and updates on potential sanctions, police reports, or events of interest regarding current or potential clients in as little as 20 minutes. With iComplyKYC running your KYC, CDD, and EDD protocols, you can rest easy knowing that your team is compliant, protected, and ready to hit the ground running!

Book a demo with our team today to learn more about iComplyKYC and how our platform can be tailored to your specific needs and applications.

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learn more

Is your AML compliance too expensive, time-consuming, or ineffective?

iComply enables financial services providers to reduce costs, risk, and complexity and improve staff capacity, effectiveness, and customer experience.

Request a demo today.