Financial institutions face constant pressure to comply with 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 appears like a nearly impossible task. However, those regulatory mandates also create many opportunities to increase 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’s identity verification?
Identity verification is defined as “the procedure of using claimed or observed attributes of an individual to infer who the in-patient 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 just what a prospective customer discloses by screening the information against multiple sources, then analyzing the important points to find out whether a fresh relationship should be started. “Know your customer” has long been promoted within institutions as an indicator 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 important to financial institutions?
The increased role of the country’s financial institutions in securing your home front must not be undervalued. The point behind the USA PATRIOT Act is national security. No-one will disagree that having a better understanding of the consumer doing business at a company provides increased security for the institution, its customers and people in general.
The danger for banks is more than 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. Recovering from 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 can an economic institution benefit from the USA PATRIOT Act?
Protecting Against Identity Fraud
Institutions need to stop identity fraud while balancing the requirement 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 a company 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 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 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 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 accustomed to trading some privacy for the security of every individual 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, developing a positive experience for the consumer while showcasing the methodology the institution has in position 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 details 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 whether the customers appear on any listing of suspected terrorists or terrorist organizations(2)
There are many options available to help banks implement identity verification programs to comply with 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 utilization 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 relying 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.
Because the enactment of the USA PATRIOT Act, technology has improved within the region of identity verification. Identity verification technology supplies a simple way of 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 ensure consistency. Checking one source won’t provide enough information, and there is no database which includes everyone living in the United States. What this means is a company 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 could make an educated decision that it’s truthful. By utilizing identity verification technology, organizations might have the various tools, not just 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 established many burdens and opportunities. By embracing change and integrating identity verification to their corporate risk policies, institutions can drive back fraud, increase efficiencies, and keep service levels high while remaining profitable.