Financial institutions face constant pressure to adhere to regulatory mandates designed to avoid identity fraud and money laundering while still delivering excellent customer service, 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 entire risk management strategy, financial institutions can get to see substantial benefits with their bottom lines, customer service levels, and employee productivity.
What is identity verification?
Identity verification is defined as “the process of using claimed or observed attributes of a person to infer who the person 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 facts to ascertain whether a new relationship should really be started. “Know your customer” has always been promoted within institutions as an indication of personalized customer service; however, with the enactment of the USA PATRIOT Act regulations, identity verification is now 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 house 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 establishment provides increased security for the institution, its customers and the general public in general.
The danger for banks is more than just monetary loss. Injury to an economic institution’s reputation created by noncompliance and the publicity surrounding terrorists opening accounts can cause lost confidence in the institution and significant loss in customers, sales, and revenue. Dealing with negative publicity is just 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 vary from $10,000 to $1 million per infraction.
Just how can an economic institution benefit from the USA PATRIOT Act?
Protecting Against Identity Fraud
Institutions need to avoid 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 establishment is the easiest and most cost-effective way to cut back 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 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 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 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 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 customers are who they say they are
Maintain records of the information used to verify their identities
Determine perhaps the customers appear on any listing of suspected terrorists or terrorist organizations(2)
There are numerous options available to 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.
Documentary Solution
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 can look at a driver’s license or passport to start account-opening procedures. Institutions are counting on driver’s licenses and passports to be valid, but with the recent upsurge in forgery, it’s difficult to possess 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 provides a simple approach to integrating a CIP into an institution’s risk management strategy. Furthermore, 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 important 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 features everyone surviving 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 information is unvarying throughout multiple sources, the institution may make an informed decision that it is truthful. By using identity verification technology, organizations may have the tools, not only to verify identity, but 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 service levels.
Conclusion
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 protect against fraud, increase efficiencies, and keep service levels high while remaining profitable.