Financial institutions face constant pressure to adhere to 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 appears like a nearly impossible task. However, those regulatory mandates also create many opportunities to boost 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 care 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 in-patient is.”(1)
For today’s financial institution, identity verification is a critical facet of establishing a new relationship. True identity verification means reviewing the truthfulness of just what a prospective customer discloses by screening the data against multiple sources, then analyzing the facts to ascertain whether a new relationship ought to be started. “Know your customer” has for ages been promoted within institutions as a sign of personalized customer care; however, with the enactment of the USA PATRIOT Act regulations, identity verification has become the difference between success and failure in the ever-changing financial services market.
Exactly why is identity verification crucial that you financial institutions?
The increased role of the country’s financial institutions in securing the house front mustn’t be undervalued. The purpose behind the USA PATRIOT Act is national security. No-one will disagree that having a better understanding of the customer working at an organization provides increased security for the institution, its customers and people in general.
The danger for banks is more than just monetary loss. Injury to an economic institution’s reputation developed by noncompliance and the publicity surrounding terrorists opening accounts can result in lost confidence in the institution and significant loss of customers, sales, and revenue. Recovering from negative publicity is a long, difficult, costly process.
Compliance can’t 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 an economic institution benefit from the USA PATRIOT Act?
Protecting Against Identity Fraud
Institutions need to prevent identity fraud while balancing the necessity to protect customer information with a customer’s requirement for quick, efficient service. Identity verification is actually a first faltering step in reducing the opportunities for fraud and taking action 안전놀이터. Stopping the “bad guys” from opening a new account at an organization is the simplest and most cost-effective way to lessen a bank’s burden. That’s how “knowing your customer” can help–if identity verification becomes part of the 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 quickly and efficiently instead of manually researching identity information by calling references and checking websites.
Improving Customer Service
The consummate benefit from integrating identity verification into an institution’s risk management strategy is a higher amount of customer service.
From airline happen to be school registration to doctor visits, society is accustomed to trading some privacy for the security of every person and the country. However, customers do expect their financial institutions to protect their identity information and their fiscal assets. Identity verification programs allow new accounts to be opened quickly, making a positive experience for the consumer while showcasing the methodology the institution has in place to protect 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 information regarding customers opening accounts
Verify that the clients are who they say they are
Maintain records of the information used to verify their identities
Determine if the customers appear on any list of suspected terrorists or terrorist organizations(2)
There are many options available to greatly help banks implement identity verification programs to adhere to the regulations, always aiming to produce 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 can 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 increase in forgery, it is difficult to own confidence that the documentation is legitimate.
Considering that the enactment of the USA PATRIOT Act, technology has improved within the region of identity verification. Identity verification technology supplies a simple approach to integrating a CIP into an institution’s risk management strategy. Furthermore, identity verification technology gives an organization a cost-effective tactic for keeping up-to-date with ever-changing regulations.
For true identity verification, it is crucial to screen presented data against multiple independent sources to make sure consistency. Checking one source won’t provide enough information, and there’s no single database that features everyone surviving in the United States. This implies an organization must confirm that the name, Social Security number, address, and date of birth are valid and associated with each other using various data sources. If the information is unvarying throughout multiple sources, the institution can make an informed decision that it is truthful. By using identity verification technology, organizations might have the various tools, not just to verify identity, but and to screen against government lists and document transactions. Institutions can completely adhere to 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 within their corporate risk policies, institutions can protect against fraud, increase efficiencies, and keep service levels high while remaining profitable.