Financial institutions face constant pressure to conform to regulatory mandates designed to prevent identity fraud and money laundering while still delivering excellent customer support, watching bottom-line results, and meeting business objectives. In today’s complex business environment, this appears 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 get to see substantial benefits to their bottom lines, customer support 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 individual is.”(1)

For today’s financial institution, identity verification is really a critical facet of establishing a brand new relationship. True identity verification means reviewing the truthfulness of exactly 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 be started. “Know your customer” has long been promoted within institutions as a sign of personalized customer support; 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 home front must not be undervalued. The purpose behind the USA PATRIOT Act is national security. Nobody will disagree that having an improved comprehension of the customer doing business at an organization 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 an economic institution’s reputation produced by noncompliance and the publicity surrounding terrorists opening accounts can result in lost confidence in the institution and significant lack of customers, sales, and revenue. Dealing with negative publicity is really 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 vary from $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 organization 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 overall risk strategy, it can be quite a significant aspect 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 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 really a higher level of customer service.

From airline travel to 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 protect their identity information and their fiscal assets. Identity verification programs allow new accounts to be opened quickly, making a positive experience for the customer while showcasing the methodology the institution has in position to protect 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)
You’ll find so 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 can look at a driver’s license or passport to begin 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 own confidence that the documentation is legitimate.

Nondocumentary Solution

Since the enactment of the USA PATRIOT Act, technology has improved within the region of identity verification. Identity verification technology supplies a simple approach to integrating a CIP into an institution’s risk management strategy. In addition, identity verification technology gives an organization 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 certain consistency. Checking one source won’t provide enough information, and there is no database which includes everyone living in the United States. This means an organization must make sure 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 is truthful. By utilizing identity verification technology, organizations can have the tools, not only to verify identity, but 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 support levels.

Conclusion
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 protect against fraud, increase efficiencies, and keep service levels high while remaining profitable.