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 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 general risk management strategy, financial institutions can get to see substantial benefits to their bottom lines, customer service levels, and employee productivity.

What is identity verification?

Identity verification is defined as “the method of using claimed or observed attributes of an individual 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 what a prospective customer discloses by screening the info against multiple sources, then analyzing the facts to determine whether a brand new relationship must 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.

Why is identity verification crucial 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. Nobody will disagree that having a better understanding of the client conducting business at a company provides increased security for the institution, its customers and the public in general.
The danger for banks is more than just monetary loss. Damage 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. Recovering from negative publicity is really a long, difficult, costly process.

Compliance cannot 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.

How do an economic institution take advantage of 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 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 a company 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 part of the defensive measures within the general risk strategy, it can 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 rather than 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 degree of customer service.

From airline go school registration to doctor visits, society is accustomed to trading some privacy for the security of each individual 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 buyer while showcasing the methodology the institution has in place 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 regarding customers opening accounts
Verify that the clients are who they say they are
Maintain records of the info used to verify their identities
Determine if the customers appear on any set of suspected terrorists or terrorist organizations(2)
There are many possibilities to greatly help banks implement identity verification programs to adhere to the regulations, always aiming to create educated and proactive decisions about customers. The USA PATRIOT Act regulations allow a documentary or nondocumentary approach.
Documentary Solution

Traditionally, the use of manual or documentary solutions for identity verification has been prevalent in the financial services community. At many institutions, an employee will look at a driver’s license or passport to begin account-opening procedures. Institutions are depending on driver’s licenses and passports to be valid, but with the recent escalation in forgery, it’s difficult to own confidence that the documentation is legitimate.

Nondocumentary Solution

Considering that 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. Additionally, identity verification technology gives a company 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 is no single database that includes everyone residing in the United States. This means a company 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 info is unvarying throughout multiple sources, the institution could make an educated decision that it is truthful. By utilizing identity verification technology, organizations may have the equipment, not only to verify identity, but and to screen against government lists and document transactions. Institutions can completely adhere to the regulations, while also realizing the benefits 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 within their corporate risk policies, institutions can protect against fraud, increase efficiencies, and keep service levels high while remaining profitable.