Financial institutions face constant pressure to conform to regulatory mandates designed to avoid identity fraud and money laundering while still delivering excellent customer support, watching bottom-line results, and meeting business objectives. In today’s complex business environment, this seems like a nearly impossible task. However, those regulatory mandates also create many opportunities to improve efficiencies and save money. By integrating identity verification into the entire risk management strategy, financial institutions can expect to see substantial benefits to their bottom lines, customer support levels, and employee productivity.
What is identity verification?
Identity verification is defined as “the procedure of using claimed or observed attributes of a person to infer who the patient is.”(1)
For today’s financial institution, identity verification is just a critical aspect of establishing a brand new relationship. True identity verification means reviewing the truthfulness of just what a prospective customer discloses by screening the info against multiple sources, then analyzing the important points to determine whether a brand new relationship must certanly be started. “Know your customer” has for ages been promoted within institutions as a sign of personalized customer support; however, with the enactment of the USA PATRIOT Act regulations, identity verification is now the difference between success and failure in the ever-changing financial services market.
How come identity verification vital that you financial institutions?
The increased role of the country’s financial institutions in securing your home front must not be undervalued. The reason behind the USA PATRIOT Act is national security. No-one will disagree that having an improved understanding of the customer working at an institution provides increased security for the institution, its customers and the public in general.
The danger for banks is more than just monetary loss. Harm to an economic institution’s reputation developed by noncompliance and the publicity surrounding terrorists opening accounts can lead to lost confidence in the institution and significant lack of customers, sales, and revenue. Dealing with negative publicity is just a long, difficult, costly process.
Compliance cannot be ignored because penalties for noncompliance are severe. Regulatory penalties for the USA PATRIOT Act and OFAC regulations can range between $10,000 to $1 million per infraction.
How do an economic institution take advantage of the USA PATRIOT Act?
Protecting Against Identity Fraud
Institutions need to avoid identity fraud while balancing the necessity to protect customer information with a customer’s requirement for quick, efficient service. Identity verification is clearly a first faltering step in reducing the opportunities for fraud and taking action 안전놀이터. Stopping the “bad guys” from opening a brand new account at an institution 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 the main defensive measures within the entire risk strategy, it could be a significant factor in preventing fraud.
Increasing Operational Efficiencies
The USA PATRIOT Act has driven financial institutions to examine corporate policies and perform lengthy risk analyses. Identity verification technology helps integrate policies into normal routines by allowing frontline workers to gather needed information very quickly 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 degree of customer service.
From airline travel to 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)
There are many possibilities to greatly help banks implement identity verification programs to conform to the regulations, always aiming to create educated and proactive decisions about customers. The USA PATRIOT Act regulations allow a documentary or nondocumentary approach.
Traditionally, the use of manual or documentary solutions for identity verification has been prevalent in the financial services community. At many institutions, an employee will appear 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.
Considering that the enactment of the USA PATRIOT Act, technology has improved within the area of identity verification. Identity verification technology offers a simple method of integrating a CIP into an institution’s risk management strategy. Additionally, identity verification technology gives an institution a cost-effective tactic for keeping up-to-date with ever-changing regulations.
For true identity verification, it is critical 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 surviving in the United States. This means an institution must make sure the name, Social Security number, address, and date of birth are valid and associated with each other using various data sources. If the data is unvarying throughout multiple sources, the institution will make an informed decision it is truthful. By utilizing identity verification technology, organizations might have the tools, not just to verify identity, but also to screen against government lists and document transactions. Institutions can completely conform to the regulations, while also realizing the benefits of protecting against fraud, increasing operational efficiency, and improving customer support levels.
For financial institutions, the USA PATRIOT Act has created many burdens and opportunities. By embracing change and integrating identity verification into their corporate risk policies, institutions can force away fraud, increase efficiencies, and keep service levels high while remaining profitable.