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 may seem 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 general risk management strategy, financial institutions can get to see substantial benefits to their bottom lines, customer care levels, and employee productivity.
What’s identity verification?
Identity verification is defined as “the method of using claimed or observed attributes of a person to infer who the in-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 what a prospective customer discloses by screening the information against multiple sources, then analyzing the important points to ascertain whether a fresh relationship ought to be started. “Know your customer” has been promoted within institutions as a sign of personalized customer care; 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 crucial that you financial institutions?
The increased role of the country’s financial institutions in securing your home front mustn’t be undervalued. The point behind the USA PATRIOT Act is national security. No one will disagree that having a better comprehension of the client conducting business at an establishment provides increased security for the institution, its customers and the public in general.
The danger for banks is more than just monetary loss. Injury to a financial institution’s reputation created 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 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 from $10,000 to $1 million per infraction.
Just how can a financial institution benefit from 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 actually a first step in reducing the opportunities for fraud and taking action 안전놀이터. Stopping the “bad guys” from opening a fresh account at an establishment is the simplest and most cost-effective way to cut back a bank’s burden. That’s how “knowing your customer” can help–if identity verification becomes area of the defensive measures within the general risk strategy, it could be a significant aspect in preventing fraud.
Increasing Operational Efficiencies
The USA PATRIOT Act has driven financial institutions to examine 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 instead 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 a higher level 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, creating a positive experience for the buyer 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 customers are who they say they’re
Maintain records of the data used to verify their identities
Determine whether the customers appear on any listing of suspected terrorists or terrorist organizations(2)
You’ll find so many options available to greatly 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, an employee can look 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 increase in forgery, it is difficult to possess confidence that the documentation is legitimate.
Since the enactment of the USA PATRIOT Act, technology has improved within the region of identity verification. Identity verification technology offers 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 critical to screen presented data against multiple independent sources to make sure consistency. Checking one source will not provide enough information, and there is no single database which includes everyone living in the United States. This means 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 data is unvarying throughout multiple sources, the institution can make an informed decision that it is truthful. By using identity verification technology, organizations may have the various tools, not only to verify identity, but and 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 created many burdens and opportunities. By embracing change and integrating identity verification into their corporate risk policies, institutions can drive back fraud, increase efficiencies, and keep service levels high while remaining profitable.