Financial institutions face constant pressure to adhere to regulatory mandates designed to stop 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 may seem like an almost impossible task. However, those regulatory mandates also create many opportunities to improve efficiencies and save money. By integrating identity verification into the general risk management strategy, financial institutions can expect to see substantial benefits for their bottom lines, customer care levels, and employee productivity.
What is identity verification?
Identity verification is defined as “the method of using claimed or observed attributes of someone to infer who the patient is.”(1)
For today’s financial institution, identity verification is a critical part of establishing a fresh 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 facts to find out whether a fresh relationship must 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 has become the difference between success and failure in the ever-changing financial services market.
Exactly why is identity verification very important to financial institutions?
The increased role of the country’s financial institutions in securing your home front must not be undervalued. The purpose behind the USA PATRIOT Act is national security. Nobody will disagree that having a better knowledge of the consumer doing business at an institution provides increased security for the institution, its customers and the public in general.
The danger for banks is more than simply monetary loss. Injury to a financial institution’s reputation developed by noncompliance and the publicity surrounding terrorists opening accounts can lead to lost confidence in the institution and significant loss in customers, sales, and revenue. Recovering from negative publicity is a long, difficult, costly process.
Compliance can not 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 take advantage of the USA PATRIOT Act?
Protecting Against Identity Fraud
Institutions need to stop identity fraud while balancing the necessity to protect customer information with a customer’s requirement for quick, efficient service. Identity verification is obviously a first faltering step in reducing the opportunities for fraud and taking action 안전놀이터. Stopping the “bad guys” from opening a fresh account at an institution is the simplest and most cost-effective way to reduce a bank’s burden. That’s how “knowing your customer” can help–if identity verification becomes part of the defensive measures within the general risk strategy, it can be a significant element 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 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 a higher amount of customer service.
From airline go 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 guard their identity information and their fiscal assets. Identity verification programs allow new accounts to be opened quickly, making a positive experience for the buyer 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 about customers opening accounts
Verify that the clients are who they say they’re
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 simply 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 usage of manual or documentary solutions for identity verification has been prevalent in the financial services community. At many institutions, a worker will appear at a driver’s license or passport to start account-opening procedures. Institutions are depending 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.
Since 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 institution 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. What this means is an institution 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 data is unvarying throughout multiple sources, the institution may make an informed decision that it is truthful. By using identity verification technology, organizations can have the various tools, not merely to verify identity, but and also 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 force away fraud, increase efficiencies, and keep service levels high while remaining profitable.