Financial institutions face constant pressure to conform 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 seems like an almost 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 expect 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 an individual to infer who the patient is.”(1)
For today’s financial institution, identity verification is a critical aspect of establishing a brand 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 brand new relationship should really be started. “Know your customer” has for ages 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.
How come identity verification vital that you financial institutions?
The increased role of the country’s financial institutions in securing the home front must not 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 establishment provides increased security for the institution, its customers and the general public in general.
The danger for banks is more than simply monetary loss. Harm to an economic institution’s reputation created by noncompliance and the publicity surrounding terrorists opening accounts can lead to lost confidence in the institution and significant loss of customers, sales, and revenue. Coping with 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 between $10,000 to $1 million per infraction.
Just how can an economic institution take advantage of the USA PATRIOT Act?
Protecting Against Identity Fraud
Institutions need to prevent identity fraud while balancing the need to protect customer information with a customer’s requirement for quick, efficient service. Identity verification is obviously a first step in reducing the opportunities for fraud and taking action 안전놀이터. Stopping the “bad guys” from opening a brand new account at an establishment is the easiest and most cost-effective way to lessen 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 can 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 rapidly 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 a higher degree of customer service.
From airline travel to school registration to doctor visits, society is used 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 customer while showcasing the methodology the institution has in place 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 customers are who they say they’re
Maintain records of the info used to verify their identities
Determine whether the customers appear on any listing of suspected terrorists or terrorist organizations(2)
There are many solutions to simply help banks implement identity verification programs to conform to the regulations, always aiming to produce 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, 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 upsurge in forgery, it’s difficult to have confidence that the documentation is legitimate.
Nondocumentary Solution
Since the enactment of the USA PATRIOT Act, technology has improved within the location of identity verification. Identity verification technology supplies a simple way of integrating a CIP into an institution’s risk management strategy. Additionally, identity verification technology gives an establishment 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 will not provide enough information, and there’s no single database that includes everyone living in the United States. What this means is an establishment must make sure the name, Social Security number, address, and date of birth are valid and associated together using various data sources. If the info is unvarying throughout multiple sources, the institution will make an educated decision that it is truthful. By utilizing identity verification technology, organizations can have the tools, not just 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 care levels.
Conclusion
For financial institutions, the USA PATRIOT Act has established many burdens and opportunities. By embracing change and integrating identity verification within their corporate risk policies, institutions can drive back fraud, increase efficiencies, and keep service levels high while remaining profitable.
