Financial institutions face constant pressure to adhere to 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 seems like an almost impossible task. However, those regulatory mandates also create many opportunities to improve efficiencies and save money. By integrating identity verification into the overall risk management strategy, financial institutions can get to see substantial benefits with their bottom lines, customer care levels, and employee productivity.

What is identity verification?

Identity verification is defined as “the method of using claimed or observed attributes of someone to infer who the patient is.”(1)

For today’s financial institution, identity verification is just a critical facet of establishing a new relationship. True identity verification means reviewing the truthfulness of exactly what a prospective customer discloses by screening the info against multiple sources, then analyzing the reality to determine whether a new relationship must be started. “Know your customer” has always been promoted within institutions as an indicator of personalized customer care; however, with the enactment of the USA PATRIOT Act regulations, identity verification has become the difference between success and failure in the ever-changing financial services market.

Why is identity verification very important to financial institutions?

The increased role of the country’s financial institutions in securing the house front must not be undervalued. The purpose behind the USA PATRIOT Act is national security. No-one will disagree that having a better knowledge of the customer working at an organization provides increased security for the institution, its customers and the public in general.
The danger for banks is more than monetary loss. Injury to a financial institution’s reputation produced by noncompliance and the publicity surrounding terrorists opening accounts can cause lost confidence in the institution and significant loss of customers, sales, and revenue. Coping 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.

How can a financial institution take advantage of the USA PATRIOT Act?

Protecting Against Identity Fraud

Institutions need to stop identity fraud while balancing the need to protect customer information with a customer’s requirement for quick, efficient service. Identity verification is actually a first faltering step in reducing the opportunities for fraud and taking action 안전놀이터. Stopping the “bad guys” from opening a new account at an organization is the simplest and most cost-effective way to lessen a bank’s burden. That’s how “knowing your customer” can help–if identity verification becomes the main 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 quickly and efficiently as opposed to 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 just 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 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 set up 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 clients are who they say they’re
Maintain records of the data used to verify their identities
Determine if the customers appear on any set of suspected terrorists or terrorist organizations(2)
There are numerous possibilities to 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 usage of manual or documentary solutions for identity verification has been prevalent in the financial services community. At many institutions, a worker will appear 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 increase in forgery, it is difficult to possess confidence that the documentation is legitimate.

Nondocumentary Solution

Since the enactment of the USA PATRIOT Act, technology has improved within the area of identity verification. Identity verification technology offers a simple method of integrating a CIP into an institution’s risk management strategy. Furthermore, 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 crucial to screen presented data against multiple independent sources to ensure consistency. Checking one source won’t provide enough information, and there is not one database which includes everyone living in the United States. This means an organization must concur that 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 could make an informed decision that it is truthful. By utilizing identity verification technology, organizations might have the tools, 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 care 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.