Financial institutions face constant pressure to conform to regulatory mandates designed to prevent 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 may seem 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 overall risk management strategy, financial institutions can get to see substantial benefits to their bottom lines, customer support levels, and employee productivity.
What’s identity verification?
Identity verification is defined as “the process of using claimed or observed attributes of a person to infer who the average person is.”(1)
For today’s financial institution, identity verification is just a critical aspect of establishing a fresh 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 fresh relationship must certanly be started. “Know your customer” has long been promoted within institutions as an indication of personalized customer support; 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.
Why is identity verification vital 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. Nobody will disagree that having a much better knowledge of the client conducting business at a company 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 produced by noncompliance and the publicity surrounding terrorists opening accounts can cause 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 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.
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 requirement to protect customer information with a customer’s requirement for quick, efficient service. Identity verification is clearly a first step in reducing the opportunities for fraud and taking action 안전놀이터. Stopping the “bad guys” from opening a fresh account at a company 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 area of the defensive measures within the overall 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 instead 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 travel to school registration to doctor visits, society is used 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, making 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 information regarding customers opening accounts
Verify that the clients are who they say they are
Maintain records of the data used to verify their identities
Determine perhaps the customers appear on any list of suspected terrorists or terrorist organizations(2)
There are numerous 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 utilization 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 begin account-opening procedures. Institutions are counting on driver’s licenses and passports to be valid, but with the recent upsurge in forgery, it is difficult to have confidence that the documentation is legitimate.
Since 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. In addition, identity verification technology gives a company 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 make certain consistency. Checking one source will not provide enough information, and there is no single database that includes everyone living in the United States. This implies a company must confirm that the name, Social Security number, address, and date of birth are valid and associated with one another using various data sources. If the data is unvarying throughout multiple sources, the institution could make an educated decision it is truthful. By using identity verification technology, organizations might have the equipment, not merely to verify identity, but and also to screen against government lists and document transactions. Institutions can completely conform to the regulations, while also realizing the advantages of protecting against fraud, increasing operational efficiency, and improving customer support levels.
For financial institutions, the USA PATRIOT Act has generated many burdens and opportunities. By embracing change and integrating identity verification into their corporate risk policies, institutions can protect against fraud, increase efficiencies, and keep service levels high while remaining profitable.