How ID&V applications support regulatory compliance

identity verification

AML compliance in 2024 is not the same as it was in 2023. Let alone 5 or 10 years ago. New advancements in technology, criminal tactics, scams, means of laundering illicit funds and a whole host of other challenges has made the lives of compliance professionals more demanding of late.

And yet, the need to verify the identities of clients and customers remains a cornerstone of compliance with AML regulations. 

In this article, we take a look at the crucial role of Identity and Verification (ID&V) applications in supporting regulatory compliance within regulated firms, shedding light on their significance and benefits, while sharing some best practices along the way. 

What are ID&V applications?

ID&V applications are tools designed to authenticate and validate the identity of individuals during the onboarding process. As part of AML regulations, financial institutions and regulated businesses must confirm the identity of the individuals they are seeking to onboard and must establish comprehensive ID&V procedures to ensure they know the true identity of their customers. 

Typically, this involves obtaining and verifying key identity information, such as personal details and documentation, to mitigate the risk of illicit activities, such as money laundering and terrorist financing.

ID&V applications provide a variety of techniques to support the onboarding process, including document verification, biometric authentication, liveness checking, and database checks, to ensure the accuracy and legitimacy of the information provided by clients. 

How ID&V applications support regulatory compliance

ID&V applications play a pivotal role in verifying identities as part of Know Your Customer (KYC) processes by automating the collection and verification of client identity information and documents. 

Traditional methods of identity verification, such as manual or in-person document checks, are time-consuming, prone to errors, and at risk of human oversight. ID&V applications automate and speed up this process, reducing the time and resources required to verify the identity of clients and customers. 

This not only improves the overall customer experience with a smooth, friction-free onboarding, but enables firms to onboard legitimate clients more quickly while flagging any suspicious individuals for further investigation. 

Not only do they streamline the onboarding process, reducing the time and resources required to verify identities, but ID&V applications also support a firm’s broader AML obligations. A crucial step in conducting due diligence, ID&V applications are often the first step in ensuring clients are not associated with money laundering, committing fraud or other illicit activities. By verifying the identity of individuals, firms can mitigate the risk of inadvertently facilitating financial crime. 

What are the benefits of using ID&V applications?

ID&V applications offer several key benefits for ensuring AML compliance in regulated firms. Firstly, these tools improve the accuracy and reliability of identity verification processes as part of KYC checks, ensuring that an acceptable level of security is placed upon customers to make sure they are thoroughly verified before being onboarded. 

Additionally, ID&V applications streamline compliance processes and minimise any delays in onboarding new customers while maintaining high levels of accuracy and compliance. 

What’s more, ID&V applications provide a robust audit trail of the verification process, offering firms comprehensive records to demonstrate compliance with AML regulations. With a comprehensive, digital trail of documents reviewed, biometric and liveness data collected, and decisions made during the identity verification process, ID&V tools not only strengthen a firm’s ability to detect and mitigate risk, but make the process of providing proof of regulatory compliance to regulators during inspections a lot simpler. 

As financial crime threats continue to evolve, ID&V applications remain essential tools for safeguarding against illicit activities and upholding regulatory standards in the ongoing fight against money laundering. 

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