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Exploring the Importance and Challenges of KYC Protocols

Exploring the Importance and Challenges of KYC Protocols

by | Apr 21, 2023 | Blog, Human Trafficking, KYC, News & Events

Exploring the Importance and Challenges of KYC Protocols

Are your fraud prevention protocols up to date with the latest Know Your Customer (KYC) and Anti-Money Laundering (AML) standards? In 2021, there was a 43% increase in fraud and computer misuse crimes compared to 2019, indicating that economic crime is on the rise. Having the right procedures and resources in place to prevent nefarious activities is essential for financial institutions and businesses.

With uncertain markets, ongoing global conflict, and a rapid influx of online banking users globally, 2023 has become a critical year for compliance legislation; failure to abide by evolving standards will likely spell even steeper costs for businesses than ever before.

At iComply, we know that using a proven KYC solution like our iComplyKYC platform is one of the best ways to streamline your operations and decrease your exposure to risk. As one of the leaders in identity verification and regulatory compliance, we’re proud to partner with clients across the globe to ensure you have everything you need to operate safely and efficiently. Below, we’ll take a closer look at some of the core elements that drive KYC legislation, as well as the benefits of using proven solutions like iComplyKYC.

What is KYC?

Know Your Customer (KYC) is a principle that refers to the practice of mitigating risk through the accumulation of verification-based information for unknown individuals and entities on a business level. From hiring new team members to securing a loan, adding a customer to your database, and more, KYC and AML protocols help to reduce the opportunity for criminals to conduct fraudulent practices and engage in nefarious activities like terrorist financing (CFT), human trafficking, the transfer of illegal products for financial gain, and more.

While KYC may not be a new concept (background checks have been an increasingly prevalent occurrence since the late 1970s thanks to both the Consumer Credit Protection Act and the Fair Credit Reporting Act), the constant push towards a more digital-centric existence makes being able to verify who you’re “working with” even more significant.

While each industry will have different points of consideration and corresponding legislation to accommodate when conducting KYC protocols, the end goal is to give businesses and their clients protection against fraud and other criminal acts that put the global marketplace at risk.

How Does KYC Mitigate Risk?

The unfortunate reality today is that international legislators and security watchdogs have yet to find a definitive method that completely halts the capacity for criminals to operate undetected in the financial sector.

While many of these crimes still go undetected, KYC and AML guidelines make it significantly harder for fraudsters to fly under the radar. By exposing fake users, flagging suspicious transfers, and performing other risk-reporting activities, organizations and regional legislators have a much better opportunity to address threats head-on and eliminate the misuse of funds or assets for nefarious purposes.

Addressing Global Challenges

One of the most difficult challenges facing the global regulation industry is pushing for the universal adoption of compliance guidelines, which, as mentioned above, currently differ regionally.

The EU and North America have the benefit of being able to leverage governing bodies like the FTC, Financial Action Task Force (FATF), Eurojust, Europol, and more, but not every country has embraced the need for KYC and fincrime prevention equally. This lack of balance presents regulators with a significant problem, as many of the highest-risk countries for illegal trafficking and fraudulent activity tend to have more relaxed (or an absence of) protocols that allow criminals to continue to operate unchecked with greater ease.

Though it may be easy to infer that financial crime is more centralized in such regions, the international community along with institutions that deal with financial and digital asset transactions must remember that rapidly evolving technology makes it more feasible than ever before for criminals to have a global reach. This makes compliance with KYC and AML protocols a necessity rather than a nicety; businesses need to be aware that failure to comply doesn’t simply result in fines, but can also lead to gateways for dangerous activities that affect the global community as a whole.

Why Partner With iComply

At iComply, we know the importance of having access to KYC protocols you can trust when it matters most. That’s why we’re proud to offer an innovative, modular-based suite of KYC programs that make it easy to stay compliant and adapt to evolving legislation.

iComplyKYC leverages cutting-edge AI and blockchain technology to ensure total regulatory compliance in over 245 jurisdictions worldwide and makes it easy to build fully-automated workflows for unique client types, jurisdictional requirements, and more with minimal downtime.

With a readily accessible 360º view of KYC data across your entire organization, you can move forward with confidence and know you are in the best position possible to combat fraud and financial crime and stay on the right side of KYC legislation in your region.

Ready to Discover More?

Contact us today to learn about iComply’s comprehensive, modular compliance solutions or to book a demo with one of our product specialists.

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.

Navigating KYB Compliance for Law Firms
Navigating KYB Compliance for Law Firms

Oct 23, 2024

Know Your Business (KYB) compliance is essential for law firms to verify the legitimacy of their business clients, mitigate risks, and adhere to regulatory requirements. This article explores the best practices and strategies for...

Edge Computing and Real-Time AML Monitoring
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Anti-Money Laundering (AML) monitoring is crucial for detecting and preventing financial crimes in real-time. Edge computing plays a vital role in enhancing real-time AML monitoring by providing improved data processing speed,...

Assessing Customer Risk with Automated KYC and AML Software

Assessing Customer Risk with Automated KYC and AML Software

by | Apr 21, 2023 | Blog, Human Trafficking, KYC, News & Events

Assessing Customer Risk with Automated KYC and AML Software

With financial crime, fraud, and money laundering quickly taking precedence as some of the most aggressively expanding forms of crime across the globe, having a risk-based approach to monitoring your current customer base, as well as verifying the identities of new entities is essential to circumventing criminal activity and providing safeguards that allow users to navigate your institution with peace of mind.

A risk-based approach, as defined by the Financial Action Task Force (FATF) focuses on the identification, assessment, and understanding of money laundering and other types of financial crime through Customer Due Diligence (CDD) as well as Know Your Customer (KYC) protocols. When integrated into your regular securities framework and operations, KYC procedures can reduce costs, boost AML efficiency, and help contribute to a safer global marketplace for all entities to navigate.

Below, we’ll take a closer look at some of the key elements of taking a risk-based approach to evaluating entities and circumventing fraud, as well as the benefits of using a trusted KYC software provider like iComply to streamline your procedures. Read on to learn more!


What Are the Main Steps to Implementing a Risk-Based Approach?

While there are many different factors that contribute to taking a holistic approach to circumventing fraud, there are a few main variables that make up a solid risk-based plan. These aspects include:

Assessing Risk and Value

It comes as no surprise that the backbone of adopting a risk-based approach to AML involves painting a clear picture of the risk associated with certain customers through the development of detailed profiles that allow you to carefully, and accurately, segment clients as needed. Core components that help assign a risk value include your ability to verify their identity and/or financial information, known activities and patterns of behaviors that may cause concern, geographical location, and more.

Should a prospective customer raise cause for concern, you should also have refined Enhanced Due Diligence (EDD) protocols in place that allow you to dig deeper and clarify any missing variables that would allow you to make a definitive decision before moving forward.


Efficiency and Practicality

While manual reviews can solicit valuable information about clients, they are often non-practical in fast-paced business environments that demand results as quickly as possible to avoid downtime and inconvenience for users. Automated AML and KYC platforms not only help to eliminate accidental biases and the risk of human errors, but they also streamline your operations and allow you to seamlessly conduct AML screening in a significantly faster (and much more reliable) manner.

At iComply, we believe that taking a risk-based approach to KYC and AML doesn’t have to mean long wait times and further headaches. Our innovative suite of modular risk assessment software puts compliance in your hands with ease, integrating with existing security frameworks in a matter of minutes and adopting regulations across the globe for maximum protection and compliance.

Evaluating on a Micro Level

When countering finCrime and the many risks associated with criminal activity, there is no denying that it’s important to be aware of the macro-level effect such efforts have on the global marketplace, including reducing human trafficking statistics, combatting the international drug trade, circumventing terrorist financing, and more. With that being said, it’s just as important to look at the successes garnered on a micro-level, with businesses and institutions understanding that their efforts must focus specifically on an individual customer level to stay as compliant and accurate as possible. Clearly identifying parties within your own unique database plays a key role in both micro and macro efforts to reduce the harm of finCrime, and ensure that your institution will always be on the right side of compliance laws in the process.

What About Assessing Dynamic Risk?

Risk, much like the customer data it is attached to, is not a stagnate prospect. Companies and institutions that only conduct KYC and AML measures when new accounts are opened miss one of the most important parts of crime reduction. It should always be anticipated that customer information will change regularly, with new details like new associations and behaviors directly influencing their actual level of risk. Inaccurate risk scores fuelled by outdated information pose a serious risk to AML efforts, and it is estimated that including continuous review measures like transaction monitoring and customer, screening can reduce your risk of misclassifying your risk profiles by 25-50%.

Dynamic risk assessment, that is, assessing the risk that arises from sudden events in real-time, gives your company the power to pivot as needed at the moment and deal with the very real challenges associated with handling high-profile clients like PEPs and more.

Implement a Proven Risk-Based KYC Approach with iComply

At iComply, we know that compliance with KYC and AML legislations is essential to circumventing the rise in financial crimes across the globe and avoiding fines from international legislators. Our modular suite of KYC, KYB, and AML products not only ensures you have everything you need to manage and maintain a wide range of jurisdictional AML regulations and conduct risk-based assessments but also automates your customer identification and risk screening processes more intuitively than ever before.

Book a demo with our team today to learn more about iComply’s AML solutions and discover how iComplyKYC can be customized to fit the unique risk screening needs of your organization.

DISCOVER ICOMPLY

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.

Navigating KYB Compliance for Law Firms
Navigating KYB Compliance for Law Firms

Oct 23, 2024

Know Your Business (KYB) compliance is essential for law firms to verify the legitimacy of their business clients, mitigate risks, and adhere to regulatory requirements. This article explores the best practices and strategies for...

Edge Computing and Real-Time AML Monitoring
Edge Computing and Real-Time AML Monitoring

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KYC for Banking – Made Simple with iComply

KYC for Banking – Made Simple with iComply

by | Apr 10, 2023 | Blog, KYC, News & Events

KYC for Banking – Made Simple with iComply

Is your banking institution set up for success and compliance in 2023?

With the financial and digital asset markets experiencing a tumultuous time after the extreme fluctuations faced during the peak of COVID-19, there’s never been a more important time to double down on your Know Your Customer (KYC) and Anti-Money Laundering (AML) protocols to ensure your organization is adequately prepared to face evolving legislation and overcome the risks associated with criminal activity.

2023 is expected to bring an increased focus on the importance of KYC efforts. As a result, banks need to be ready to pivot when needed to avoid being left behind or being found to be non-compliant with jurisdictional standards.

At iComply, we know the value of staying on top of KYC standards and are proud to partner with leaders in the finance, banking, and related securities-focused industries to provide world-leading Know Your Customer (KYC) technology. We know AML and KYC play an integral role in helping to dismantle criminal networks across the globe; our goal is to deliver a modular suite of digital KYC solutions that upholds the latest standards to keep you and your clients safe.

Below, we’ll take a closer look at some of the core basics of KYC practices within the banking industry, and why it’s integral to partner with an automated software provider you know you can trust.

A Strong Foundation: KYC Fundamentals

It comes as little surprise that the banking and financial sectors are a primary target for criminals globally. The staunch increase in financial and cybercrimes has led to them becoming a predominant source of concern amongst global legislators, and financial fraud (e.g. money laundering) remains at the top of Interpol’s list of future crime threats as of 2023 (source listed above).

While the current realities of cybercrime and financial fraud paint a bleak picture, they also impart an invaluable message: now, more than ever before, the global community faces significant and growing risk if institutions choose to ignore security protocols.

To prevent the prevalence and ease with which identity fraud, money laundering, and other white-collar crimes are committed, institutions must adhere to the core standards of KYC protocols which aim to:

  • Establish a verified customer/business identity;
  • Evaluate and accurately assess said identity’s known activities, associations, existing sanctions (where applicable), and other relevant factors; and
  • Develop a vetted risk profile based on the information above, one that allows for Enhanced Due Diligence (EDD) as needed to determine further alignment concerns like known involvement with terrorist funding, illicit activities, and questionable sources of funding.

Implementing electronic KYC (eKYC) technology and software like iComplyKYC simplifies compliance procedures and dramatically reduces the risks associated with onboarding new clients and forming partnerships with unknown third parties. Trusted software platforms like iComply also help reduce internal redundancies and streamline operations by removing the risk of manual errors, allowing your team to focus on other key factors that keep you ahead of the curve when it comes to avoiding criminal activity and fines.

Your Partner in Compliance: iComplyKYC

eKYC platforms like iComplyKYC play an integral role in helping to circumvent the many threats caused by fincrime, and aid banks and financial institutions in moving away from the risks and inefficiencies associated with manual KYC procedures. As we continue to move forward in a world with more digital banking users than ever before, partnering with the right AML and KYC software is essential for success.

iComplyKYC is proud to be a game changer in the world of compliance, offering users a truly end-to-end solution that utilizes edge computing to process sensitive user data directly on the user’s device, instead of leaving it susceptible to risk in the cloud or an unvetted third-party vendor. Our modular suite of programs is designed to be compliant with legislation from nearly 250 jurisdictions across the globe and can help your company reduce overhead, lowering the cost of KYC operations by up to 80%.

Whether you’re hiring, assessing your current customer database, or building the foundation to ramp up your operations for the rest of the year, iComplyKYC offers you unparalleled safety and security in the form of an intelligent, customizable platform that can be set up in minutes.

Don’t believe we’re truly end-to-end? Let us show you.

Chat With Us Today

At iComply, we know that the world of digital securities and compliance moves fast, and staying on top of rules and guidelines can be tricky while managing deadlines, bottom lines, and day-to-day operations. We’ve streamlined iComplyKYC to make it as easy as possible to stay compliant, screen for risks like AML, conduct Enhanced Due Diligence and implement Daily Ongoing Monitoring, all within a single platform.

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

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.

Navigating KYB Compliance for Law Firms
Navigating KYB Compliance for Law Firms

Oct 23, 2024

Know Your Business (KYB) compliance is essential for law firms to verify the legitimacy of their business clients, mitigate risks, and adhere to regulatory requirements. This article explores the best practices and strategies for...

Edge Computing and Real-Time AML Monitoring
Edge Computing and Real-Time AML Monitoring

Oct 18, 2024

Anti-Money Laundering (AML) monitoring is crucial for detecting and preventing financial crimes in real-time. Edge computing plays a vital role in enhancing real-time AML monitoring by providing improved data processing speed,...

How to Spot Fraudulent Users with KYC Protocols

How to Spot Fraudulent Users with KYC Protocols

by | Apr 10, 2023 | Blog, KYC, News & Events

How to Spot Fraudulent Users with KYC Protocols

While we often speak about the many risks and crimes that Know Your Customer (KYC) protocols help to circumvent (the reactive approach), the cybersecurity industry can sometimes forget to highlight the specific ways KYC software and practices offer protection (the proactive approach).

With the number of digital users rapidly expanding globally, knowing how to accurately verify someone’s ID and assess their true risk profile is essential to ensuring compliance and upholding important safety standards set by your local jurisdiction.

2023 has shown that the exchange of digital assets and a more competitive than usual marketplace have driven technological advances further than ever before. Staying on top of evolving trends, while still remembering the core basics of Customer Due Diligence (CDD), are two of the best ways to keep your business as well as your clientele safe from evolving cybercrime, fraudsters, money laundering (AML), and many other types of financial and identity crimes.

Below, we’ll take a closer look at some of the fundamentals of spotting fraudulent users in your database. Read on to learn more

Focus on Specific Areas of KYC Documents

While KYC processes and verification documents are unfortunately unable to provide 100% security against fraud and criminal activity, they do play a valuable role in catching key details that may indicate a higher risk profile and/or uncover problematic associations that allow your organization to act accordingly. When reviewing documents like a passport or driver’s license, it’s important to closely review everything submitted and evaluate data points like:

  • Identification photos,
  • Full name,
  • Date of birth,
  • Expiry date,
  • Document number,
  • Address,
  • and more.

With personal identity documents being one of the most popular commodities on the black market, knowing how to spot inconsistent details is one of your best lines of defense, and having automated solutions in place—such as iComply’s modular suite of KYC programs—helps to remove the risk of human error or oversight.

Cross Reference Materials and Verify Photos

One of the most important parts of KYC is ensuring your verification process doesn’t exist in a vacuum. Using multiple points of reference, including more than one document, and being able to compare passport/ID photos with a live representation of an individual all help to reduce fraudulent users. The more databases you are able to (safely and legally) access to conduct your verification, the stronger your confidence can be with regard to the validity of the identities in your system.

iComplyKYC conducts CDD and EDD using some of the world’s most trusted record bases, giving you access to the information you need to move forward, while still respecting ethical guidelines pertaining to accessing private information.

Triple Check All Information and Little Details

Any information contained in the Machine Readable Zone (MRZ) should clearly match the standardized setup of the document in question. For example, passports should have issuing and expiration dates that match up, font types should align, and any other security details (e.g. reflective strips) should be consistent with all government-issued documents. If any detail seems questionable, the application and/or user should immediately be flagged and escalated for further review.

Manual vs Automated Review

While manual document review may be effective on a small scale, the reality is often inefficient when it comes to keeping up with onboarding, constant re-evaluation, and adjusting to shifting global regulations. Automated software solutions like iComplyKYC help you navigate complicated KYC processes with confidence and ease, allowing you to focus on your business operations while still remaining compliant. Our world-leading end-to-end suite of KYC + KYB software is able to integrate with existing frameworks in a matter of minutes, mitigating headaches and removing the frustration of downtime during adoption.

iComply is proud to partner with businesses across North America and Europe to ensure you have everything you need to stay compliant and ahead of the curve when it comes to circumventing criminal activity through your organization. Learn more about 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!

DISCOVER ICOMPLYKYC NOW

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.

Navigating KYB Compliance for Law Firms
Navigating KYB Compliance for Law Firms

Oct 23, 2024

Know Your Business (KYB) compliance is essential for law firms to verify the legitimacy of their business clients, mitigate risks, and adhere to regulatory requirements. This article explores the best practices and strategies for...

Edge Computing and Real-Time AML Monitoring
Edge Computing and Real-Time AML Monitoring

Oct 18, 2024

Anti-Money Laundering (AML) monitoring is crucial for detecting and preventing financial crimes in real-time. Edge computing plays a vital role in enhancing real-time AML monitoring by providing improved data processing speed,...

Eye On Compliance in 2023: Top KYC Trends

Eye On Compliance in 2023: Top KYC Trends

by | Apr 3, 2023 | Blog, KYC, News & Events

Eye On Compliance in 2023: Top KYC Trends

As Q2 of 2023 ramps up, the compliance industry continues to face a fast-paced environment of global changes and challenges when implementing protective measures against fraud, money laundering (AML), and other forms of financial crime (FinCrime). 2022 brought no shortage of showcase incidences highlighting the importance of compliance measures; with an estimated 90% of FinCrime activities still going undetected, it’s more important than ever to stay on top of evolving practices and emergent data to build a safer global marketplace for all.

At iComply, we recognize how vital KYC and AML measures are when it comes to circumventing crime and ensuring your business is aligned with all relevant regulations. Below, we’ll take a closer look at some of the most prevalent trends and points of consideration emerging in 2023, as well as why partnering with a trusted software platform like iComplyKYC is one of the best ways to streamline your compliance. Read on to learn more.

Core Takeaways

Before we delve into some of the more specific factors to be aware of in 2023, it is worth noting that the compliance industry as a whole—as well as financial institutions subject to regulation—need to be aware of the following 3 major themes at the forefront of AML and KYC protocols:

  • Adapting to upcoming legislation
  • Embracing proactive strategies
  • Investing in continued education and training

While the uncertainty arising out of COVID-19 led to a brief slowdown in the addition of new regulations and difficulty in amassing concrete statistics with regard to AML and fraud, there is no denying that we have seen a marked increase in fraudulent activity, specifically in cybercrimes. Ransomware, targeted phishing campaigns, evolving digital scams, and other crimes committed through “cyber-enabled” means have risen to the top of Interpol’s risk profile for fraudulent activity. Making sure your organization is aware of and implementing the new recommended standards resulting from these activities is crucial.

In addition to a significant increase in cybercrime, 2023 AML and fraud prevention focal points include:

Addressing New Geopolitical Risks

The ongoing conflict between Ukraine and Russia has highlighted the importance of monitoring sanction lists and maintaining Know Your Customer (KYC) and Enhanced Due Diligence (EDD) protocols that are able to adapt quickly to changing circumstances. International sanctions can lead to an increase in the risk of money laundering, with criminals becoming ever more creative with their methods of circumventing regulations and restrictions; this means financial institutions and digital asset management firms must be hyper-vigilant when it comes to spotting fraudulent or criminal users and dealing with them swiftly and effectively.

Monitoring Digital Assets

As major scandals like the sudden collapse of FTX in late 2022 have reminded us, the growth of digital asset markets like cryptocurrency exchanges has presented unique challenges when it comes to monitoring and accountability. With 2023 ushering in the implementation of regulations like the Financial Action Task Force’s Travel Rule (Recommendation 16), and with the EU poised to approve an upcoming Markets in Crypto-Assets (MiCA) Regulation, businesses and institutions need to be ready to pivot accordingly—especially as more stringent guidelines are being designed to safeguard against digital fraud and other forms of cybercrime that go undetected.

An Increase in “Challenger” Banks and Alternative Payment Companies

The number of alternative payment companies and “challenger” (aka “Neo” / “digital”) banks across the globe have increased significantly in the last few years, and international regulators have grown concerned with ensuring they are subject to the same (if not higher) level of compliance standards. Decentralized banking systems present a high risk for fraudulent activities without the proper measures in place, and such institutions should anticipate the arrival of more legal safeguards that help keep criminals at bay in the coming months and years.

Facing the Challenges of Digital Identities and the Metaverse

COVID-19 accelerated the shift to a more prevalent online global community, with users worldwide adopting digital avatars through venues like Meta and utilizing other services that enable an online persona. While the metaverse remains in its fledging stages, it presents a very real threat and a high potential for money laundering, human trafficking, terrorist and adjacent activities, and other financial crimes as it continues to develop. With these risks already beginning to surface and a precedent already being set due to fraudulent activities on existing platforms, we can likely expect the international regulatory guidelines to implement protective measures and thoroughly analyze any evolving concerns as they make themselves known.

Lay the Foundation for Safety Through Compliance With iComply

At iComply, we’re proud to help financial institutions and companies facing ever-complex compliance guidelines streamline their operations and build a strong foundation of safety. Our modular suite of KYC + KYB software makes it simple for business leaders to stay informed and compliant with the latest AML legislation, and our modular platform can be set up within minutes, alleviating headaches, tedious manual work, and downtime woes.

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.

DISCOVER ICOMPLYKYC

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.

Navigating KYB Compliance for Law Firms
Navigating KYB Compliance for Law Firms

Oct 23, 2024

Know Your Business (KYB) compliance is essential for law firms to verify the legitimacy of their business clients, mitigate risks, and adhere to regulatory requirements. This article explores the best practices and strategies for...

Edge Computing and Real-Time AML Monitoring
Edge Computing and Real-Time AML Monitoring

Oct 18, 2024

Anti-Money Laundering (AML) monitoring is crucial for detecting and preventing financial crimes in real-time. Edge computing plays a vital role in enhancing real-time AML monitoring by providing improved data processing speed,...

Digital Identities in 2023: Trends and Updates

Digital Identities in 2023: Trends and Updates

by | Apr 3, 2023 | Blog, KYC, News & Events

Digital Identities in 2023: Trends and Updates

With the first months of 2023 already showing uncertainty in both financial and digital markets (re: Silicon Valley Bank and Credit Suisse), business leaders are looking for ways to stay on top of evolving trends and patterns of risks to mitigate the harm caused by money laundering (AML), fraud, and unintentional funding of criminal/terrorist activities (CFT).

As more users adopt digital identities and integrate virtual payment methods, platforms, and practices in their daily lives, global regulators are carefully monitoring trends and actively looking to implement standards that help to circumvent the risks associated with criminal corruption.

Below, we’ll take a closer look at some of the anticipated and notable trends expected in 2023 in the digital universe as online and virtual avenues continue to expand.

Full Speed Ahead

As mentioned above, there are no signs that the creation and usage of digital identities will slow down (quite the opposite, in fact). Digital identity verification has become a pressing issue for regulators as user “personas” become more prevalent in daily matters such as government verification, banking, healthcare, the workforce, and education.

With the identity verification market expected to be worth in excess of US$38.5 Billion by 2033 (source), it should not be a surprise to those in industries adjacent to or directly utilizing ID verification that it is highly likely global regulars and lawmakers will introduce new guidelines that aim to establish a universal understanding and standard of compliance for countries to follow.

The speed with which digital identities are being implemented in innovative ways not only opens the doors for groundbreaking societal and technological advancements but also opens the door to a world of unknown vulnerabilities that place citizens and organizations at risk. Compliance standards and KYC protocols (more on that below), continue to grow in importance as a result, making it essential for businesses and institutions to be ready to pivot as needed.

Did you know: iComply’s unique, modular suite of KYC programs makes it easy to stay compliant with fincrime mandates across the globe and can integrate into your existing frame in minutes?

Data Privacy and Security Concerns

Identity fraud has become one of the most prevalent forms of criminal activity in the digital sphere, causing significant harm to the individuals directly targeted, as well as funding illicit activities with stolen funds and assets. Protection against such crimes is crucial for the privacy and security of your most sensitive client data. In 2023, we expect to see an even more competitive security technologies industry as legislators and manufacturers seek to keep private data safely where it belongs, and out of the hands of nefarious users.

Increased Risk for Fraud

With more users adapting to digital lifestyles at such a rapid pace, inevitable gaps in our current security frameworks could lead to an increased risk for fraud. Ransomware, geo-targeted phishing, and cloud security breaches are expected to increase in 2023, with online banking and electronic transfers being particularly vulnerable. There is also considerable talk—with a growing number of AI advancements entering the spotlight—of concerns that machine learning (ML) could be used to manipulate user likenesses, generate new identity documents that might be harder to debunk upfront and other such issues that come with recent technological advancements. Integrated biometrics and a focus on refining Enhanced Due Diligence (EDD) will be essential to combat these risks.

Digital Asset and Cryptocurrency Exchange Regulation

Cryptocurrency and digital asset exchanges have been under close monitoring over the past several years, and 2023 is poised to implement several watershed regulations to help combat the risks and challenges presented by decentralized banking. In addition to the travel rule, the Markets in Crypto Assets (MiCA) regulation (not anticipated until 2024) puts additional safeguards in place to tie transactions to known persons and give institutions the ability to accurately assess and react to risk in real-time. The Travel Rule and MiCA are most likely the start of a long line of subsequent crypto and digital asset regulations that will continue to evolve—especially as global task forces keep an eye on new issues that come to light over time and as information technology enables new methods to counteract criminal intent proactively.

Stricter Compliance Enforcement

With such prevalent risks arising out of the rapid pace of technological advances and digital user adoption, the time has come for businesses and institutions across the globe to wholly embrace the fact that KYC and AML protocols are far from optional. Failure to comply with existing and future standards carries the threat of hefty fines and can place your client base in significant peril. To avoid the heavy repercussions that come with non-compliance, it is essential to routinely review your processes and protocols and to ensure that you are using the best software available to serve the unique needs of your business.

Stay Ahead of KYC Risks with iComply

At iComply, we know that the costs of non-compliance can be devastating. To help you mitigate risk and stay on top of current legislation, we offer a unique, end-to-end suite of KYC + KYB software that utilizes a modular platform that can be integrated into your workflow seamlessly with minimal downtime.

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!

DISCOVER ICOMPLYKYC

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.

Navigating KYB Compliance for Law Firms
Navigating KYB Compliance for Law Firms

Oct 23, 2024

Know Your Business (KYB) compliance is essential for law firms to verify the legitimacy of their business clients, mitigate risks, and adhere to regulatory requirements. This article explores the best practices and strategies for...

Edge Computing and Real-Time AML Monitoring
Edge Computing and Real-Time AML Monitoring

Oct 18, 2024

Anti-Money Laundering (AML) monitoring is crucial for detecting and preventing financial crimes in real-time. Edge computing plays a vital role in enhancing real-time AML monitoring by providing improved data processing speed,...