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Accelerating Payments: Security Matters in a Crowded Payments Market

There was a time, not so long ago, when shopping was straightforward – you chose something, then handed over your cash, cheque, or credit card to pay for it, and walked away with your goods. These days, consumers are faced with a dizzying array of payment options, whether they shop in person or online read more

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A Guide to PEP and Sanction Checks

If you own or work for a business that must comply with “know your customer” (KYC) and anti-money laundering (AML) regulations, then odds are you’ve heard of another three-letter acronym: PEP or “politically exposed person.” While the definition of a PEP is continuously changing to reflect new legislation, in general, a PEP refers to a person or a close associate who has been trusted to fulfill a public role, such as an elected official, and who is also at high risk of bribery or some form of corruption. While it’s commonplace for federally regulated companies like financial institutions to perform identity verifications as part of their onboarding processes, PEP checks are part of “enhanced due diligence” (EDD) required before the company forms a business relationship with the PEP.

PEPs are separated into several categories, including domestic and foreign PEPs. These distinctions reflect the variations in regulations across different jurisdictions. KYC laws are continually changing, and it’s up to regulated companies to update their PEP checks so that they’re compliant. Failing to comply not only subjects the organization to hefty fines but also jeopardizes its reputation and financial integrity. So, regulated industries must conduct PEP scans before and throughout their business relationship to maintain compliance and reduce fraud.

Because PEPs are often business-minded individuals who typically have privileged access and affiliations with private companies, KYC laws often require sanction checks. These sanction screens check whether an organization has been sanctioned for violating KYC policies and help a regulated company uncover the nature of the PEP’s relationship with the organization. Together, PEP checks and sanction screens reduce a company’s exposure to hefty fines or reputation damage.

Because KYC laws and AML data are always shifting, it is genuinely impossible to manage the risks associated with handling millions of customers’ sensitive data. So rather than regularly scanning and rescanning millions of customers by hand, save your time, your money and your limited resources by integrating smart technology that does it for you. There are many solutions out there, but the right software is going to streamline your operation, reduce costs and keep your business compliant as it navigates regulation changes for you.

Read a similar article about PEP screening tactics here at this page.

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How KYC is An Important Component of FinCEN

In 2001, FinCEN implemented KYC, or know your customer regulations, as part of the Patriot Act. These requirements are intended to be counter-terroist efforts as well as a way to prevent other financial crimes such as money laundering and fraud. Learn more about KYC, what it means for businesses and who FinCEN actually are below.

What is FinCEN?

FinCEN, also known as the Financial Crimes Enforcement Network, is a regulatory body which is part of the US Department of the Treasury. Their primary mission is to collect data and analyze it to prevent financial crimes, especially crimes such as money laundering and terrorism funding. The know your customer compliance regulations are a part of this mission.

What are the Main Facets of Know Your Customer Compliance?

If you’re unfamiliar with know your customer compliance, here are a few of the main components:

Customer Identification

This requires financial services to collect enough information to properly identify their new potential customer. This means that individuals will need to provide several different forms of identifying information in order to start an account. Things like photo ID and their social security number are common. Businesses must also provide identifying documents.

Customer Due Diligence

Identifying customers properly is important, but further due diligence is required to determine the trustworthiness or risk of an individual or business. Due diligence involved looking at who and individual or business deals with financially, or who they’ve dealt with previously. For instance, if an individual holds public office, or a business regularly works with less than reputable organizations, they would be considered higher risk.

Ongoing Monitoring

Finally, once identification and due diligence is completed, a financial service must continue to monitor the financial dealings of their customers to ensure no illicit activity is going on. A mixture of risk-assessment software and manual employee investigation will be required to do this effectively.

Know your customer compliance is essential for banks and financial institutions to follow, so it’s important they stay up to date with the latest KYC software and procedures to ensure that they mitigate risk as much as possible.

Read a similar article about best identity verification service here at this page.

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Understanding FATF Blacklists and Greylists and the Implications on the Financial Ecosystem

The Financial Action Task Force (FATF), established in 1989, is the global money laundering and terrorist financing watchdog that sets international standards that aim to prevent illegal activities and the harm they cause to society read more

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AML Checklist for Banks

Detection, deterrence, and money laundering prevention require the following on every AML checklist for banks:

1. AML requires an anti money laundering compliance officer (OCC) to oversee the entire application process, including the screening and issuance of business licenses.

2. AML requires periodic on-site audits of financial transactions by an AML compliance officer and a KBS officer.

3. AML requires notification by the office of the comptroller of the currency (OCC) to the designated senior management and key personnel of all negative findings in the on-site or off-site examinations.

In short, the primary responsibility of an anti money laundering compliance officer is to monitor compliance with the various provisions of the money laundering risk management act (MLRMA). The OCC and KBS have additional responsibilities, however. The AML officer or KBS and their designated senior management will conduct an on-site examination of financial activities. On the other hand, the OCC and KBS will have responsibility for determining if entities need to further enhance the AML compliance program with specific, applicable regulatory documents, such as the comprehensive loss underwriting exchange (CLUE) and the security rule list (SRL). They will also have responsibility for addressing customer concerns, issues, and suggestions on areas for improvement.

If senior management is unaware of the specific regulatory documents and requirements, they need to ensure that they do not assist in a money laundering or terrorist organization. Anti money laundering compliance officers should be very proactive in their efforts to ensure that senior management and all key personnel are very well informed about their respective firms' specific requirements and regulations. Failure to be well informed could prove costly to the firm. Unless specifically trained to do so by their bank, anti-money laundering officers should never provide any bank documentation to anyone.

Read a similar article about business verification here at this page.

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ISO 20022 and Evolving Payment Infrastructures: Where Are We Now?

Payments are undergoing a digital transformation. The reach of this change is so deep and so vast that it will have an impact on large and small players alike – from traditional global banks to the taxi driver in South Africa who can now accept cashless payments read more

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Identity Verification in 2020 and Beyond

Proving that someone is who he says he is was once limited to face-face verification, but with the rise of technology, transactions are frequently carried out online. With this advancement comes the risk of identity theft because we have to reveal our personal information when signing up for new services. Consequently, nearly every entity relies on an identity verification service to approve real customers and deter fraud. As technology continues to advance, let's take a look at the challenges and opportunities that identity verification in 2020 and beyond will have.

Opportunities in Engaging Identity Verification Service

Online Education

Students who are after a good grade without working for it use different tactics to ensure they pass. One of them is having someone take the exam on their behalf, which in the long-run means the workers employers get are unknowledgeable despite having impressive certificates. With an identity verification service to authenticate that the student taking the exam is the one registered; such future problems will be eliminated.

Health Sector

Clinical studies have benefited from virtual visits because participants do not have to check in physically. However, for such studies to have viable results, the scientists have to authenticate the volunteer's identity. Additionally, you can never be too careful; hence an identity verification service will ensure that the health care provider is licensed and qualified.

Challenges during the Identity Verification Process

Customer Ignorance and Beliefs

Usually, service providers rely on official identification documents to verify a person's identity. Unfortunately, not everyone has such documents, so coming up with a database that integrates a person's entire information is difficult. Besides, some digitally illiterate customers will not see the need for such services. Others are illegal immigrants or hold certain religious or personal beliefs against technology. Some are physically deformed hence cannot provide key biometric data.

Privacy and Trust Issues

No one is ever comfortable revealing their personal information; hence businesses must prove that the data customers provide will not be breached. Customers are legally supposed to be aware of how companies are managing their personal data. In Europe, the European GDPR protects consumer data, but it is up to each business and government to set up a framework to manage personal data. Therefore, an identity verification service is essential to prevent your business from losing data and facing the customers' wrath.

Parting Shot

The nature of your business will affect how crucial you find identity verification. If you deal with sensitive personal data, you will need stringent measures to protect your customers. While most businesses are still relying on physical identity verification, digitally doing it is the only way to keep up with the technological changes that are yet to come.

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ISO 20022: Preparing for a New Payment Standard

ISO 20022 is an open and freely available common standard language for payments messaging. It was developed to replace a proliferation of disparate message formats that arose over the years in line with the growth of the internet, other technological advancements, and specific jurisdictional requirements. ISO 20022 offers a flexible infrastructure that facilitates information exchange and helps to harmonise the payments language between old and new technologies read more