• October 2, 2023

Marking Identity Verification inside Hazard Organization.

Financial institutions face constant pressure to comply with 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 seems 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 for their bottom lines, customer care levels, and employee productivity.

What’s identity verification?

Identity verification is defined as “the process of using claimed or observed attributes of someone to infer who the patient is.”(1)

For today’s financial institution, identity verification is just a critical aspect of establishing a new relationship. True identity verification means reviewing the truthfulness of what a prospective customer discloses by screening the information against multiple sources, then analyzing the reality to find out whether a new relationship should be started. “Know your customer” has long been promoted within institutions as a sign of personalized customer care; however, with the enactment of the USA PATRIOT Act regulations, identity verification is currently the difference between success and failure in the ever-changing financial services market.

Exactly why is identity verification vital that you financial institutions?

The increased role of the country’s financial institutions in securing the home front mustn’t be undervalued. The reason behind the USA PATRIOT Act is national security. No one will disagree that having a much better comprehension of the customer conducting business 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. Harm to a financial institution’s reputation produced by noncompliance and the publicity surrounding terrorists opening accounts can result in lost confidence in the institution and significant loss in customers, sales, and revenue. Recovering from 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 between $10,000 to $1 million per infraction.

How can a financial institution benefit from 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 actually a first 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 easiest and most cost-effective way to reduce a bank’s burden. That’s how “knowing your customer” can help–if identity verification becomes the main defensive measures within the overall risk strategy, it could be a significant aspect in preventing fraud.

Increasing Operational Efficiencies

The USA PATRIOT Act has driven financial institutions to review 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 rather than 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 just a higher level of customer service.

From airline go school registration to doctor visits, society is used to trading some privacy for the security of every person and the country. However, customers do expect their financial institutions to safeguard their identity information and their fiscal assets. Identity verification programs allow new accounts to be opened quickly, creating a positive experience for the consumer while showcasing the methodology the institution has set up to safeguard 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 about customers opening accounts
Verify that the clients are who they say they are
Maintain records of the information used to verify their identities
Determine perhaps the customers appear on any list of suspected terrorists or terrorist organizations(2)
There are many possibilities to simply help banks implement identity verification programs to comply with the regulations, always aiming to create educated and proactive decisions about customers. The USA PATRIOT Act regulations allow a documentary or nondocumentary approach.
Documentary Solution

Traditionally, the usage of manual or documentary solutions for identity verification has been prevalent in the financial services community. At many institutions, an employee 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 increase in forgery, it is difficult to own confidence that the documentation is legitimate.

Nondocumentary Solution

Because 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. In addition, 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 certain consistency. Checking one source will not provide enough information, and there is not one database that includes everyone surviving in the United States. This means an organization must concur that the name, Social Security number, address, and date of birth are valid and associated with one another using various data sources. If the information is unvarying throughout multiple sources, the institution can make an informed decision it is truthful. By using identity verification technology, organizations can have the tools, not merely to verify identity, but also to screen against government lists and document transactions. Institutions can completely comply with the regulations, while also realizing the benefits of protecting against fraud, increasing operational efficiency, and improving customer care 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 force away fraud, increase efficiencies, and keep service levels high while remaining profitable.

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