In the dynamic and often unpredictable world of financial technology, few events have had as profound an impact as the FTX scandal. This saga unfolded not merely as a cautionary tale of a single company's downfall but as a pivotal moment that highlighted the urgent need for robust governance, unwavering transparency, and stringent legal compliance in the cryptocurrency domain.

On March 28th, The New York Times reported, "Sam Bankman-Fried, the founder of the FTX cryptocurrency exchange who was convicted of stealing billions of dollars from customers, was sentenced to 25 years in prison on Thursday, capping an extraordinary saga that upended the crypto industry and became a cautionary tale of greed and hubris." As this scandal continues to dominate the headlines, we aim to dive into where it all started and unfold the entire story for you.

As we embark on this comprehensive exploration of the FTX scandal, it's important to note that the insights and analyses presented are drawn exclusively from credible sources. These include detailed reports and articles from CNBC, Coindesk, CNN Business, official statements from the U.S. Securities and Exchange Commission and etc. Each of these sources offers a unique vantage point, piecing together a narrative that's both complex and instructive.

Understanding the FTX Collapse: A Fact-Based Overview

(From BBC, November 3, 2023 & CNN BUSINESS, February 23, 2023; Coindesk, Novembet 2, 2022)

In November 2022, balance sheet of FTX was leaked in the internet. CoinDesk released an article revealing that Alameda Research, also established by the CEO of FTX, Bankman-Fried, heavily relied on FTX's FTT token, with its assets pegged at $5 billion. A leaked FTX balance sheet exposed a significant lack of diversification, highlighting the intertwined nature of the two firms. The document detailed $9 billion in liabilities, $900 million in assets and vague entries reflecting a negative $8 billion balance.

A central factor in FTX's collapse was the inappropriate use of customer funds. Reports indicate that customer deposits at FTX were redirected to Alameda Research. This redirection of funds, typically meant for safekeeping and trading on the FTX platform, was a significant deviation from standard financial practices in customer asset management. A lack of clear financial separation between FTX and Alameda Research played a crucial role in the unfolding crisis. Alameda Research, a trading firm was trading billions of dollars from FTX accounts and leveraging the exchange’s native token as collateral, according to a source. Many employees and outside auditors were unaware that FTX did not have enough money to match customer withdrawals, the source says. The intertwining of these entities' finances led to a complex situation where the risks and financial health of one significantly impacted the other.

Neither FTX nor its affiliate companies adhered to the norm of publishing balance sheets delineating assets and liabilities. As a private entity, FTX never underwent auditing, leaving no verifiable documentation of cash flow or assets to prove its capacity to settle liabilities or safeguard customer assets. The available FTX balance sheets indicated assets were below the figures Bankman-Fried had declared.

As FTX's financial stability became a topic of concern, efforts were reportedly made to stabilize the market perception of FTX and its digital token (FTT). This included public statements aimed at maintaining customer confidence and preventing a rapid devaluation of FTT. Binance announced that it would be selling all FTT assets that it had. FTT price started falling down resulting in costumers withdrowal of their money from their deposits. During this mass withdrawal, FTX lost billions of dollars. Bankman-Fried ordered Alameda Research to sell assets to cover the needed capital from the withdrawals and he also looked for financing to cover the gap of what was owed and what could be paid.

On Nov. 8, FTX blocked customers from taking money out of the platform by removing that option online, which meant hundreds of thousands of customers did not have access to their money. When FTX could not pay the $8 billion gap, the company filed for bankruptcy. FTX crashed due to mismanagement of funds, lack of liquidity and the large volume of withdrawals. Binance announced it would buy FTX to prevent a larger market crash, but quickly bailed out of the deal as more news reports of mishandled customer funds surfaced.

On November 8, Binance, a rival cryptocurrency exchange and one of FTX's first investors CEO Changpeng Zhao, agreed to acquire FTX amidst emerging challenges. However, the arrangement collapsed, with Binance withdrawing due to concerns over how FTX managed customer funds and impending U.S. legal scrutiny.

The collapse of FTX has had a significant impact on the cryptocurrency market, raising questions about regulatory oversight, market stability, and the management of crypto platforms. The event has spurred discussions about the need for clearer guidelines and stronger governance structures in the crypto industry to protect investors and maintain market integrity.

The Legal Case Against Sam Bankman-Fried: Charges by SEC and Conviction
(From SEC, December 13, 2022 &  From BBC, November 3, 2023)

On December 13, 2022, the SEC charged Sam Bankman-Fried with orchestrating a scheme to defraud equity investors in FTX. According to the SEC's complaint, Bankman-Fried, from at least May 2019, raised over $1.8 billion from equity investors for FTX, including approximately $1.1 billion from about 90 U.S.-based investors. The SEC accused Bankman-Fried of misrepresenting FTX as a safe and responsible crypto asset trading platform. In reality, he allegedly used FTX customer funds for undisclosed venture investments, real estate purchases, and political donations.

The SEC's complaint highlighted several key allegations:

• Diversion of FTX customer funds to Alameda Research LLC, Bankman-Fried's privately-held crypto hedge fund.

• Special treatment for Alameda on FTX's platform, including a virtually unlimited line of credit funded by customer funds and exemption from certain risk mitigation measures.

• Risk exposure from FTX’s dealings with Alameda’s holdings of overvalued, illiquid assets, including FTX-affiliated tokens.

SEC Chair Gary Gensler commented on the case, stating, "Sam Bankman-Fried built a house of cards on a foundation of deception while telling investors that it was one of the safest buildings in crypto." He emphasized the importance of compliance with laws to protect investors and maintain market integrity.

Trial, Conviction and Sentencing

Bankman-Fried's trial, as reported by BBC, revealed a clear pattern of deception. He was found guilty of lying to investors and lenders, leading to the theft of billions from FTX and precipitating its collapse. The jury's verdict, delivered after less than five hours of deliberations, marked a dramatic fall for the former billionaire, once dubbed the "King of Crypto." This guilty verdict encompassed seven counts of fraud and money laundering, carrying a potential maximum sentence of 110 years, though a more lenient sentence is expected. On 28th of March Sam Bankman was sentanced with 25 years in jail.

Regulatory Reactions and Repercussions

The FTX scandal triggered a significant regulatory response, highlighting the need for stringent oversight in the rapidly evolving cryptocurrency sector. This response underscored the importance of legal compliance and investor protection, shaping the future landscape of digital finance.

SEC's Call for Compliance
(From Coindesk, November 9, 2023)

In response to the unfolding FTX scandal, SEC Chair Gary Gensler issued a stern reminder about the importance of legal compliance in the cryptocurrency sector. His comments, as reported by Coindesk, were a direct response to the potential revival of FTX under new leadership and the bids being considered for the bankrupt crypto exchange.

Gensler emphasized, “If Tom [Farley] or anybody else wanted to be in this field, I would say, 'Do it within the law.' Build the trust of investors in what you’re doing and ensure that you’re doing the proper disclosures — and also that you’re not commingling all these functions, trading against your customers. Or using their crypto assets for your own purposes.” This statement highlighted the SEC’s unwavering focus on operating within the boundaries of the law, emphasizing the need for transparency and integrity in business practices.

Gensler's commentary reflects a broader regulatory perspective on the crypto industry, advocating for a framework where investor protection and ethical business practices are paramount. His stance signals a shift towards more rigorous enforcement of securities laws in the cryptocurrency domain, stressing the importance of compliance as a cornerstone for building trust and credibility in this evolving market.

The SEC Chair's call for adherence to legal standards is not just a regulatory mandate but also a strategic imperative for the long-term stability and growth of the cryptocurrency sector. In a landscape marked by rapid innovation and emerging technologies, Gensler’s words serve as a guiding principle for businesses seeking to navigate the complexities of the crypto market while maintaining the trust and confidence of their investors.

Looking to the Future

Going forward, Identomat aims to learn from the FTX case. We recognize that the fintech landscape is constantly changing, and staying competitive requires a commitment to innovation as well as to high standards of governance and ethical practice. Our goal is to create a culture where transparency, accountability, and compliance are fundamental to all our activities.

According to Thomson Reuters, 89% of clients go through an onboarding that creates friction and frustration, and as a result, 13% choose to switch for a competitor. These numbers might sound shocking, but research and evidence show that most companies lose clients before acquiring them. 

According to research by McKinsey & Company, every one-point increase in customer onboarding satisfaction on a 10-point Net Promoter Score (NPS) scale equaled a 3% increase in customer revenue. That’s huge. 

What makes a good customer onboarding process, what are the challenges, and why do companies keep on underperforming in this specific part of their customer acquisition? Let’s shed some light. 

1. Information Overload

It makes perfect sense that when you are onboarding a new client, you have a lot to tell them, show them, and share with them. Do not let your eagerness share all the exciting things about your product/service be the reason people jump off the onboarding ship. 

Keep in mind that people can lose their concentration and can get overwhelmed very quickly. Dropping a ton of information might be an attempt to help and educate them, but the way you share that information can be crucial in whether it has a positive or negative impact. 

For instance, according to Wyzowl, 97% believe video is an effective tool to welcome and educate new customers. Pack a lot of information into video content, or even use video as one of the KYC steps necessary to onboard clients. It’s easier, faster, and as research shows, it is highly effective. 

2. Inaccessible Customer Support 

Customer support is often associated with existing customers. The truth of the matter is that people trying to become customers and are going through the onboarding process need help and assistance as much, if not more, than existing customers. Any difficulty in accessing customer support can create reasonable frustration. 

Easy access to customer support can prove to be pivotal during the onboarding process. 

3. Long, Arduous Process

Onboarding duration is critical in the decision-making process of a prospective client. The longer it takes, the greater are the chances that someone will drop out. How do you cut this process short? How do you optimize it? 

• Be digital-first - Eliminate all manual processes. People should be able to start and complete the onboarding process digitally. It’s fast, it’s accessible, and it takes a fraction of the time. 
• Use simple language - Avoid jargon, corporate lingo, and talk to people directly and conversationally. Get them to act instead of scratch their head.
• Give them feedback during the process - Interacting with people who complete the necessary steps is essential in urging them to take another action forward. Offering advice, pointing mistakes, and clarifying different sections can fast-track a person’s journey and cut the total time significantly. 
• Make sure they interact with your product, not simply create an account - Onboarding should have a clear finish line, and that line should be when the new customer interacts with your service. Going through the KYC process, account verification, and profile creation should not count as a successful onboarding process.  

Choose Identomat For A Smooth Customer Onboarding 

Our team here at Identomat is at the forefront of modern onboarding solutions that ensure you stop losing customers and, instead, increase retention and traction. Feel free to reach out, and inquire about our solution, the features, the technology, and areas we can help you with.

The meaning, impact, and benefits of artificial intelligence change depending on context. AI is such a diverse breed of technology that it means different things to different industries. Today, we’ll investigate how AI is changing the ID verification space for the better and what we should expect going forward.

Data Accuracy

Picture this: a new client is submitting their passport, government-issued ID, and proof of residence for review. In a non-AI world, these documents would have to be checked by a human being. What are the two obvious problems with that? Firstly, it takes a lot of time, and secondly, there is always the possibility of human error. 

Here comes artificial intelligence. With AI, this process is automated. Documents are uploaded through an app or a website, the review happens almost instantly, and the possibility for error is minute. What you have as a result is the opportunity to onboard more clients at a faster pace. From a client-facing perspective, you get happier and more satisfied people who no longer have to wait for ages for their accounts to be approved. 

Building Risk Profiles

Verifying a potential customer’s identity and onboarding them to your company is simply the beginning of a long relationship. Once the customer is onboarded, there needs to be a real-time evaluation of their activity, risk status, and a constant re-assessment of eligibility. 

This process is extremely complicated as it is practically impossible to manually monitor clients, keep track of their activity and record data to build a risk profile. Artificial intelligence can process unstructured data and create these risk profiles on the fly. Just so you get an idea, here are a few external sources AI technology can access to build these risk profiles. 

• PEP lists
• Corporate registries
• Deep web search
• Government data
• Sanctions lists 
• Ultimate Beneficial Owner data
• Adverse media

The sources mentioned above would take time, effort, and resources to access, let alone isolate and analyze. What AI can do is amass the necessary information, build the profile, and afford you the time to assess it critically. Compliance and KYC teams are offloaded from the burden of building these profiles and are gifted with the time and peace of mind to make informed decisions based on the data. 

Workflow Automation

ID verification and KYC are processes that involve a series of steps. These steps need to happen in a specific order, and each stage requires time, effort, and resources to be executed. In a world where people have no patience and an excess of options and alternatives, there is a realistic chance that you will lose potential customers during these steps if you are not making their life easier. 

In an ideal world, people would want to breeze through this process, click “Next step” as quickly as possible and find themselves on the other side of the process in a few minutes. What artificial intelligence does is make each step of the process more efficient and streamline the entire process end-to-end. It creates a seamless workflow where users jump from step to step, decreasing the chances of them switching to another provider. 

From OCR checks and 3D liveness detection to gathering personal information, AI is unifying the process, making it flow. 

Cutting Costs

ID verification and KYC cost a lot to companies. The untrained eye might not see the costs associated with these processes, but a lot goes into it. Here is a list of the main components that contribute to the total cost of KYC:

• The salaries and wages of compliance teams dedicated to reviewing documents and managing the process.
  
• The cost of outsourcing or developing the necessary technology for identity verification and KYC processing.
  
• The loss of revenue from an inefficient onboarding process causing potential customers to quit or switch providers.
  
• The regulatory fines associated with an inadequate verification process.
  
• The reputational harm and loss of customer trust due to a security-related incident such as a personal data breach. 

These components might not sound like a lot, but they have many zeros attached to them. According to Fenergo, financial institutions have been hit with $10.4 billion in global fines and penalties related to AML, KYC, data privacy, and MiFID regulations in 2020. 

According to Autonomous, a financial research firm, by the year 2030, financial institutions can cut up to 22% in costs. Here’s how the report breaks down those cost savings:

Front Office – $490 billion in savings mainly from cutting back on retail branch networks, security, tellers, and cashiers.  

Middle Office – $350 billion in savings by simply applying AI to compliance, KYC/AML, authentication, and other data processing forms. 

Back Office – $200 billion in savings. $31 billion of this will be attributed to underwriting and collections systems.

The potential is endless. AI is not only making the process faster and better, but it’s obviously making it way more affordable. AI is changing the ID verification industry for the better and you should be looking at solutions that have AI at their core. 

Check out our free Identity Verification & KYC Solution Buying Guide. 

What is identity proofing? Why is age verification required for digital platforms?  What are the other methods of avoiding fraudsters carrying out a digital process on behalf of others?

In the era of digitalization, creating a safe and secure environment is a key to success. This is not a new concept, however. Verifying one’s identity has always been a part of the modern world, for instance, visiting your healthcare provider, opening a bank account, or even going to a club - checking your physical ID is what gets you places.

Digital identity verification is simply a process that guarantees the realness of a person behind an action. Modern identity verification software helps businesses to avoid fraudsters carrying out a digital process on behalf of others without their consent while averting fraud or stealing identities.  

What Is Identity Proofing?

With the rise of online platforms, identity proofing services have been implemented in our daily lives. The simple identity proofing definition is the following: a system that ensures that the user is who they claim to be. 

Digital identity verification is everywhere nowadays. This has also resulted in emerging identity-proofing products, as well as different companies that strive to be creative, innovative, and effective. 

What Is Age Verification?

Age verification is one of the identity proofing services. This is a system that ensures that the people using a digital platform or a service are above a certain age. In other words, age verification software makes sure that users consume content that is appropriate for their age.

Age verification systems, otherwise known as age gate, offer a variety of different methods in order to restrict certain age groups from viewing materials that might not be suitable for them.

The most popular methods of verifying one’s age are:

• Birth Date Verification
• Credit Card Verification
• Federated Identification
• Face Recognition

Identity Verifying Software

Finding reliable digital identity verification software is not an easy task. But, with the help of Identomat our digital space can certainly become safe and secure. 

Our AI-powered identity verification and KYC solutions offer never-before-seen benefits for companies looking into investing in identity-verifying software. 

Firstly, with Identomat, account activation is a quick and smooth process rather than annoying and time-consuming. Companies often fail to understand that taking safety measures is usually boring for customers. The identity verification process results in a 68% abandonment rate from end-users. It is undeniable that customer happiness is the determining factor of business success, so losing customers over a tedious and slow verification process is disappointing. 

Although, Identomat allows companies to create a more welcoming and friendly atmosphere for new users. Using our software means that the verification process does not require high effort or much of customers’ time anymore. 100x faster account activation and customer happiness are guaranteed with Identomat identity verifying software. 

Secondly, the manual identity verification process means lost opportunities. Because of manual identity checks, over $100B in opportunity costs are incurred. Identomat can save your company from these losses. With the software, businesses do not have to use a massive amount of human resources, transaction time, and revenue. Identomat gives your company employees a chance to focus on other tasks, which results in increased productivity and a gain in opportunity cost.

However, this isn’t all - Identomat’s functionalities are vast and diverse, created to match your needs, prevent fraud, and make identity verification a crucial part of your journey towards safety. Let’s go over some of the key functionalities Identomat offers.

Selfie to ID Match

Nowadays, ID Verification can be found practically everywhere, in all sorts of different ways. This tool allows us to verify not only the identity of the user, but also their age, and the validity of their document.

With the help of Identomat’s Selfie to ID Match solution, and its AI-powered system, a user is asked to capture the front and the back of the ID document so that it can be matched with a selfie according to the similarity score.

Active Liveness Check

Over the past years, liveness checks have gained rising popularity in the digital realm. This quick and easy-to-use tool guarantees the realness of a person by providing a biometric check through the camera.

With the help of Identomat’s Active Liveness Check tool, a user is given a certain motion to repeat on camera to verify their identity in real-time.

According to Identomat, Active Liveness Checks provide the highest accuracy.

Passive Liveness Check

Another way of a liveness check is a Passive Liveness Check functionality that Identomat introduces. This tool allows the user to simply take a selfie in order to verify who they claim to be with a faster, more seamless experience.

Video Verification

Not every identity verification tool is AI-powered. There are times when a company or even government regulations come into play and this is exactly where the Video Verification tool shines.

With Identomat’s Video Verification functionality, there’s another, a human layer that plays a huge part in verifying one’s identity. A built-in video chat tool perfectly paired up with an AI guarantees the visual checks to be performed quickly and correctly.

OCR

Optical Character Recognition, otherwise known as OCR, has been around in the world of identity verification for quite some time. We’ve seen OCR being used in search engines, translation, and photo editing apps.

Identomat offers its users OCR that can make your journey quick, productive, and secure, by allowing necessary information from the documents to be extracted accurately in order to be turned into data.

ID Validity Check

With the assistance of AI-powered technology, ID Validity Checks have never been this accessible!

Identomat introduces an automatic technology that captures ID documents in a high-quality resolution. Additionally, the biometric data and identifiable information is extracted from the document in order for its validity to be fully assessed. 

Sanctions and PEP Screenings

In a digital world, where anyone can claim to be someone they’re not, it is also possible that we encounter those that have a history of fraud, especially associated with money laundering and criminal activities. We understand how concerning this issue is.

This is why Identomat offers Sanctions and PEP Screenings, allowing one to check each prospective client through sanctions lists, as well as politically exposed persons databases, in order to support the safety for all!

Specialized Watchlists

Last but certainly not least, Specialized Watchlist is an important tool provided by Identomat that adds another layer of security. 

Specialised Watchlist is similar to PEP and sanctions screenings. However, this technology is more broad, allowing the software to cross-check every customer’s identity. 

Identomat makes sure that prospective customers are checked against custom databases of high-risk persons. This way your company is safe from being exposed to dangerous individuals and the data is secured. 

Modern challenges require modern solutions - Ideontomat is your modern solution.

As described above, Identomat offers technologically advanced software that enables companies to save time and resources by automating old-fashioned, manual tasks. In the end, identity verifying software attracts more customers, makes them feel safe, and increases customer satisfaction. 

With Identomat software, human error, the chance of betrayal, unforeseen expenses, and tiring slow processes are all eliminated. As depicted throughout the blog, Identomat never fails to recognize risky behaviour. Hybrid, remote, and digital identity verification options and the seven modules listed above make Identomat software a top favourite for modern companies. 

More and more companies are shifting online, and the demand for automated identity checks is increasing. Level up technologically and competitively with Identomat by including identity verifying software in your company’s daily routine. Results, such as decreased labour cost, speedy customer onboarding, and increased revenue, are only the beginning. 

What Is Liveness Detection? 

Liveness detection is a method of verifying that a person is actually present and not just a photo or video. It is a common tool used  in security applications, such as proving that someone is who they claim to be.

In our fast-paced, constantly-connected world, security is more important than ever. The numbers of online attacks and cyber scammers are only increasing and becoming more dangerous: According to the FTC’s Consumer Sentinel Network report, the reported identity theft doubled from 2019 to 2020 and is expected to grow in the coming years. That's why more and more businesses are turning to liveness detection as a way to protect their data and build trust between the company and their customers.

But How Does It Help With Security?

Liveness detection verifies human identity and avoids deepfake scammers by asking the user to perform a specific action, such as smiling or blinking.

Smiling and blinking, in fact, has become one of the most used practices in the liveness detection process. The reason behind the fact is that both of these actions are very specific and it is almost impossible for hackers to imitate each motion of face muscles while the person is smiling or blinking. The movements focus on micro-movements of the individual’s face muscles, making it unique for every single person. 

This is especially important when it comes to KYC (Know Your Customer) processes. By verifying the data, you can help to prevent fraud and ensure that your customer data is safe.

Liveness detection can also be used as a way to verify the identity of someone who is logging into a system. This is especially important for sensitive systems, such as those used by banks or other financial institutions. For example, banks have been using liveness detection systems for many years now. Also, as online national elections are becoming more popular, liveness checks have also become a priority. In addition to key government and public organizations , many apps and services for everyday life, such as dating apps, mobile-banks, and social media apps, have also been actively adopting the liveness detection practices. 

In the past, people have been able to use stolen photos and videos to impersonate someone else and gain access to their accounts. But with liveness detection, this risk of fraudulent actions can be substantially reduced.

What Makes Liveness Check Valid? 

There are several different liveness detection software solutions on the market today. However, not all of them are credible. One of the most important requests for these kinds of systems to be accredited is a ISO/IEC certification. 

Identomat liveness detection software is iBeta tested and holds ISO 27001 and ISO 30107-3 standards. “ISO/IEC 27001 defines requirements for establishing, managing and maintaining an information security management system.” This certification that Identomat successfully earned, proves that the company follows the many complex and critical international regulations for managing security controls.

Moreover, Identomat is constantly progressing and pushing the cutting edge with proprietary technological advancements in identity proofing and KYC compliance pipeline. 

What Are Different Types Of Liveness Detection?

There are two different ways that liveness detection gets done these days: passive liveness and active liveness. These liveness detection types are two ways to ensure you're dealing with a real person.

Passive Liveness Detection

Passive liveness detection is a less “active” way to detect fake identities. Users are not asked to execute additional motion activities due to passive liveness, and users do not know precisely how the system checks their likeness. Fraudsters have a more challenging time finding ways to get around this technology because the process doesn't inform the user in any way. 

Passive liveness detection is based on algorithms that recognize and evaluate elements of an image that reveal its content, including skin, borders, texture, the presence of masks or cutouts, and other clues that a false depiction of a user's face is being utilized.

Most of the time, companies/businesses prefer passive liveness detection to overactive ones. It is believed that passive liveness checks are more user-friendly, quick, easy, and “frictionless.” With passive liveness detection, the user abandonment rate seems to be lower. A 2022 case study by ID R&D learned that when they switched from active liveness checks to passive ones “customer applications went from a 60 percent completion rate to over a 95 percent rate.”

 However, as technology develops, passive liveness detection might not be the best choice for the more prominent brands because “face spoofing” (imitating or using a person’s face to pretend to be that person and trying to trick the biometric identification control systems) has become one of the leading security worries. 

Active Liveness Detection 

Active liveness detection comes in handy when the passive ones cannot handle deepfakes anymore. 

Active liveness usually asks users to perform 'challenge-response' tests that can be a series of actions in front of a camera to verify genuine presence. For example, an active liveness test may ask the users to smile, to look to one side or towards the ceiling, or to look upwards or downwards.

Active liveness detection can be used to detect a variety of deepfake attacks. These checks are happening in real-time and adds a layer of security to data protection. 

There is no straightforward answer to which of these two is better. Each company's consumer base and risk-based approach should be considered when conducting liveness checks. Companies usually strive to avoid a strategy that prioritizes one over the other and make an effort to achieve a balance between the two.

Threat Of Deepfakes To The Online Data Security

Deepfakes are fake videos or images created using artificial intelligence (AI) and machine learning algorithms. They can be used to initiate false or misleading content and can be very difficult to detect.

The internet has become a breeding ground for all threats, including deepfake attacks. Deepfake cyberattacks result in spreading misinformation and/or defaming the person depicted in them. Hackers have used deepfake technology to create fake videos of celebrities, politicians, and even ordinary people. Deepfakes can access any information by scamming the security systems and the data then becomes exposed to various dangers. 

Deepfake attacks can be challenging to detect, as they often look realistic. However, there are some ways to avoid this cyberattack. One way is by using liveness detection software. 

For example, Identomat liveness detection can expose fraudulent attempts by addressing non-living objects that might exhibit human traits and characteristics. These traits are called “spoofs,” and many companies struggle with these scams, such as masks, dolls, pictures, videos, and more.

Identomat software detects deepfakes such as:

• Paper masks
• Digital photos
• Deepfake puppets
• Lifelike dolls
• 3D masks
• Wax heads

It Is Time To Level Up Your Company’s Security Standards

Liveness detection is an essential tool in the fight against deepfakes and other, less sophisticated though more prevalent, identity fraud methods. It's a simple, effective way to keep your customers, business and data safe.

Identomat’sv KYC and Identity verification solution is trusted by industry leaders like TBC Bank, Bank of Georgia, Space Neobank, Aldagi, Silknet, and many more to protect their data and their customers. 

We offer hyper-configurable liveness detection workflows, so you can choose the one that best suits your needs. If you're looking for a way to improve your security and protect your data, liveness detection is a must have. Contact us today to learn more about our liveness detection software and how it can help your business.

The Benefits of Integrating ID Verification with AML/KYC Screening

March 13, 2023

Identomat’s end-to-end solutions enable frictionless onboarding and compliance.

Remote onboarding is increasingly the norm for financial services companies. Customers expect to be able to open an account, apply for financing, secure services, and transfer funds remotely. For companies, this presents a major challenge: balancing customer expectations of instantaneous service with mandatory Anti-Money Laundering and Know Your Customer (AML/KYC) screening requirements.

First, what are the differences between KYC and AML?

KYC verification: companies must collect information from customers, including ID details, collate that information with government databases, confirm that IDs are real and valid, and verify the customer’s identity.

AML screening: customers and their identifying information must also be screened against government watchlists to ensure that they are not subject to government restrictions or require additional due diligence (for example, in the case of PEPs).

Identomat solves for both by partnering with Castellum.AI to integrate its global financial crime prevention solution into Identomat’s ID verification solution.

New York City-based Castellum.AI is the most accurate, reliable and fastest financial crime prevention solution, built by former regulators and Wall Street data experts. They make AML/KYC compliance simple, accurate, and safe.

Why AML screening is a necessary component of onboarding

Businesses, and especially any type of financial institution, are obligated to comply with watchlist screening requirements.

This includes screening customers against relevant national and international sanctions lists, law enforcement wanted lists, export control restrictions, and identifying whether a customer is a politically exposed person (PEP) requiring additional due diligence.

The risk for companies and financial institutions that don’t comply with AML requirements is significant. In addition to reputation damage from violations, fines can reach millions of US dollars.

In 2022, fines issued by the US Department of Treasury’s OFAC alone totaled over $38 million and targeted US and foreign companies ranging from banks to payment processors to hospitality companies like Airbnb.

Moreover, the number of sanctions has grown significantly in recent years. In 2022, over 11,000 new targeted sanctions were introduced. While the majority of which targeted Russia over the invasion of Ukraine, the locations of sanctions targets spread across 106 countries, from Azerbaijan to Turkey to the UAE.

Companies must comply with sanctions enforced in the country in which they operate.

Additionally, if an organization has overseas customers, is providing cross-border transactions or services, or handles transactions in foreign currencies (particularly the US Dollar), foreign sanctions regimes also need to be screened.

In addition to local lists, most organizations also screen The Big Four, which are:

1. UN sanctions

UN sanctions are applicable to all 193 UN member states.

2. US OFAC SDN

All US citizens and corporate entities must adhere to OFAC sanctions. Entities that have US affiliates, trade in US dollars, and/or use US services must also comply with OFAC regulations. The importance of US dollars in global trade and finance extends OFAC’s reach globally.

3. EU sanctions

EU sanctions are applicable to all EU citizens and corporate entities operating in any of the 27 EU member states.

4. UK sanctions

UK citizens and all individuals/entities located within the UK must comply with HM Treasury OFSI (Office of Financial Sanctions Implementation) sanctions. Foreign branches of entities established under UK law must also adhere to HMT sanctions.

Streamlining AML Screening within ID Verification

As part of Identomat’s KYC and ID verification solution, customers’ identifying information is already collected and standardized.

This same information can be screened against Castellum.AI’s risk database to meet AML requirements, including:

Names: Customers’ full legal name should be screened against sanctions lists.

ID Numbers: government issued IDs, including passport numbers, driver license numbers or tax numbers should be screened.

Dates of Birth: this information increases accuracy and minimizes false positives, particularly for common names.

Locations: Customers’ addresses, including street address, city of residence, province, and country – both support identity verification and can be screened against global watchlists.

Identomat’s integrated verification and AML screening solution

Identomat’s integrated AML screening solution provides the most accurate, reliable, and fastest results, enabling businesses to meet consumer expectations for a seamless onboarding process, all while meeting compliance regulations and saving resources.

This partnership encourages:

Seamless onboarding

Improved compliance process

Ease of integration

Global coverage

Flexible coverage

Trial access

In conclusion

This collaboration enables Identomat to access Castellum.AI's extensive library of high-quality and always up-to-date risk data which will assist in augmenting AML screening and monitoring capabilities to new heights

With this partnership, more organizations globally can automate their customer verification and regulatory compliance pipelines and/or equip their compliance officers with powerful tools for making more informed decisions about who to grant access to their services.

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For many, the holiday season is defined by time spent with loved ones, goodwill, and giving.

As retailers rollout their holiday sales,  nefarious actors look forward to snaring thousands of online shoppers with bogus sites, fake social media campaigns, and emails impersonating real brands. These "spoofing" sites and fake messages are designed to entice consumers to spend money on products that they will never receive. These actors are also apt to find victims through other means, including charity and travel scams.

Non-payment or non-delivery scams cost people more than $0 million in 2021 (IC3 report)

Tips  for  Shoppers  to  Prevent  Theft  and  Fraud  

1. be alert
   don't click on any suspicious links or attachments in emails, or on websites and social media. These links compromise your information, such as your name, password, and bank account number. This includes requests from companies asking you to update your account. Additionally, you may unknowingly download harmful malware to your device by clicking on these corrupted links.
2. Verify who you're buying from  
   For each site you plan to order from or donate toward, check to see that the URL is secure and genuine. Optimize a website reputation check, such as URLVOID. Do research and check to see if there are reviews available, avoid businesses or charities with no ratings at all. If you are really wary of a website, look up a business phone number and call them.
3. Be careful with how you pay
   Use a credit card while shopping online and regularly check your bank statements for suspicious activities. Remember to NEVER wire money directly to a seller. Verify the charge with the intended recipient, verify that email address are valid. We also advise against using pre-paid gift cards to purchase items as well.
4. Monitor the shipping process
   Once you make a purchase, always record the tracking number so you can track the delivery process. Learn to identity the red flags and remain vigilant during the season of giving, let's examine the number of creative ways that criminals are manipulating buyers and sellers worldwide.

Business and email compromise

Business email compromise (BEC) and email account compromise (EAC) are elaborate scams aimed at businesses and individuals performing money transfers. While the scams used to involve simple hacking, it has evolved into a much more sophisticated scheme, compromising legitimate business email accounts through tech intrusion techniques to perform unauthorized transfers of funds.

In the past, actors had simply spoofed business accounts. Now fraudsters are optimizing virtual meetings to hack emails and will act as business leaders to instigate fraudulent wire transfers. Often these wire transfers are converted into crypto wallets and are ultimately deposited into anonymous crypto wallets, making tracing extremely difficult for authorities.

Ransomware

Ransomware is an invasive software, or malware, that encrypts unwanted data on a computer, making it unusable. Cyber criminals will withhold the data until a handsome ransom is paid. If the ransom is not paid, the victim’s data remains untouchable.  

$0M lost in 2021, with 3,729 complaints identified with ransomware documented by the IC3

These criminals are willing to go through great efforts to pressure and intimidate victims into paying their fee, and will threaten to destroy the sensitive data or to release it to the public.

Steps  to  take  against  Ransomware  

                        1.  Update your operating system and software                    

Having an outdated operating system puts you at risk not only for business disruptions and system failure, but prime for a cyber attack or security breach as well. Think of it as leaving your back door unlocked. Keep your system safe by regularly updating and upgrading.

                        2.  User training                    

Train your staff to properly identity, avoid, and respond to the signs of a ransomware attack. Even the most sophisticated networks could be vulnerable to an attack if an untrained eye clicks a suspicious link or mistakenly opens an infected attachment. Make it easier for your employees to do the right thing rather than make a mistake.

                        3.  Have an offline backup of your data                    

Back up your data early and often. It is your best line of defense against ransomware attacks. Organizations and individuals who have sufficient offline backup can restore their data and operations without paying the ransom money. However, it is crucial to understand that backups alone don’t ease the restoration process or mitigate extortion tactics. The best solution is to prevent the initial breach.

Tech support fraud

This holiday season, fraudsters will be posing as customer, security, or technical support roles with well-known tech companies, with the intent to defraud individuals.

Victims are deceived by these bad actors into giving away their valuable personal information, and many report being instructed to make wire transfers to overseas accounts or to purchase large amounts of prepaid cards.

Most victims of tech fraud, almost 0%, report to be over 60 years old

The elderly are notoriously targeted by these criminals and they experience at least 68% of the total losses of tech fraud costs (almost $238 million). You can report any fraud targeting older people to the Federal Trade Commission online or at 877-382-4357.

Confidence fraud and romantic scams

These are scams aimed to "tug at one's heartstrings," taking advantage of people's emotions, only to ultimately empty their pockets.

0 victim reports collected by the IC3 in 2021

Con artists are prevalent on most dating and social media channels, adopting an identity to prey on victims, hoping to gain affection and trust. Last year, thousands of reports were taken by the IC3, who received thousands of complaints from victims of online relationships resulting in sextortion or investment scams.

These charming, persuasive con artists weasel their way into people's lives quickly and effectively. These scams are time-tested and heavily-scripted, with the intent to establish a romantic relationship as quickly as possible. There may even be a marriage proposal and plans made to meet in person, but that will never happen. However, eventually, these actors will ask for money.

More than $0 million in losses to confidence/romance scams in 2021

Grandparents also fall into this category. Grandparent scams are when criminals impersonate a panicked loved one and claim to be in trouble, pleading for money immediately. These actors are knowledgable, obtaining pieces of information from the social media accounts of family members, using details as leverage.

Charity fraud schemes seek out donations for organizations that do little or no work, instead the funds are transferred to the fake charity's creator. While these scams could happen at any time during the year, folks tend to be most charitable during the holiday season, and scammers are looking to take advantage of people's goodwill.

To check the validity of a charity, check out  organization CharityWatch or follow the advice provided by the Federal Trade Commission.  

Cryptocurrency

Among the 2021 complaints received by the IC3, ransomware, business e-mail compromise (BEC) schemes, and the criminal use of cryptocurrency where the top incidents reported. In fact, con artists had a landmark year, the IC3 received a record number of 847,376 complaints.

0 complaints recorded involving cryptocurrency (IC3 report)

While that number showed a decrease from 2020’s crypto victim count (35,229), the loss amount reported in IC3 complaints increased nearly seven-fold, from 2020’s reported amount of $246,212,432, to total reported losses in 2021 of more than $1.6 billion.

Record losses exceeding $0 billion, a 7% increase from 2020 (IC3 report)

Global cybercrime costs are expected to grow by 0% per year over the next five years

The most proactive solution against this overwhelming threat is to prevent an attack in the first place. Identomat's AI-generated end-to-end verification solution has helped a number of businesses upscale their KYC and AML routine and helped them achieve success.

If something is too good to be true, it likely is.

The holiday season is not only a hectic time for your business, but it is a bustling time for cybercriminals too. Cyber incidents are absolutely crimes deserving of an investigation, leading to judicial repercussions for the perpetrators who commit them. When in doubt, remember the golden rule of the Internet...

Want to speak with our fraud prevention experts?

Get In Touch

As a banking operative, you have the reputation of helping individuals and families establish and meet their financial goals.

Whether it’s assisting a college-bound student with their first savings account, helping a young couple invest safely in their starter home, or supporting a recent retiree as they plan the tropical vacation of their dreams, the accessibility of your bank’s services directly impacts your company’s reputation. While you want to preserve the stellar interpersonal banking experience that you’ve upheld for years, you should also consider how your client base and their unique needs are evolving, by introducing KYC banking. As tech-natives are becoming a larger part of your clientele, they are used to consuming information digitally through their computer and mobile devices. They want to work in a way that works for them, including their banking-- that's why you need a powerful AI-powered eKYC / AML solution.

Banking should be a frictionless experience for your customers.

Deloitte found that 43% of Gen Z’ers and 30% of Millennials are working multiple jobs to make ends meet, living paycheck-to-paycheck to compensate for increasing expenses and low wages.Customers take notice when their time is being valued, and they will be more inclined to embrace eKYC processes that save them time and that are simple to use. Identomat's AI-powered ID verification solution improves the activation process for your customers, saving them the trouble of collecting documents and registering in person, and effectively onboarding them remotely in mere minutes while providing trustworthy results. Most importantly, you can utilize other features of our remote solution while still preserving a sense of community, no matter the size of your institution.Expanding your digital presence means opening up to a global market while investing in the business health right in your local community.

Share of Loans by Community Banks 

77%

Agriculture Loans

50%

Small Business Loans

Don’t underestimate your power: a Harvard Kennedy School study found that community banks provide 77% of agricultural loans and over 50% of small business loans. 

With so muchpersonal information being easily accessible online, KYC and AML regulations are becoming even more prevalent and overarching.Your bank needs to verify the identities of your customers while improving the user experience, and you can greatly benefit from our eKYC and AML solution each and every day. By offering digital lending services, you can make an impact right in your own community, fueling the economy and growing small businesses like yours.

Our system detects a truthful client profile and can verify and onboard without complications, no matter where your customers are located.

Identomat's solution can do this all the while protecting you and your innocent clients from a breach. Offer your customers digital lending benefits with trusted remote identity checks, and you will be able to make safer, faster business decisions about commercial and investment banking loans. COVID-19 is to blame for a 238% increase in cyberattacks against banks, so with bad actors becoming more confident and efficient than ever, spoofing and identity fraud detection and aversion are vital.Identomat can help you become proactive in your response and block out an attack before it even infiltrates your systems.These looming threats directly affect your bank’s reputation, so it is important to prioritize privacy and never underestimate a bad actor’s skill set. Identomat can provide full identity proofing across the globe, anywhere at any time, and our system recognizes over 8,000 ID types from across 200+ different countries and territories. Understand the importance of KYC in the banking sector, you can’t afford to take the risk of being unprotected.

Cyberattacks can result in costly and, sometimes, irreparable damage and many institutions do not realize the severity of a breach until it is too late. Many businesses believe that they are too small to be affected by a cyber incident, but that is simply not true. In fact, small financial service firms are 300x more likely to be targeted than other companies, according to the Boston Consulting Firm. Forbes states that 35% of all data breaches impact the financial services industry. Investing in cyber security is necessary-- a breach can result in the theft of valuable, sensitive data, but it could end up costing your bank a lot more than that.

The National Small Business Association shows that the average cost of cyber attacks has risen significantly, from $8,699 in 2013 to $20,752 last year—an increase of almost 140 percent in just one year. 

Bad actors are not slowing down, and our services protect your notoriety and preserve your customer’s livelihood and dreams. Industry leaders trust Identomat’s fraud protection for detecting impostor attempts and suspicious accounts.Our system can be used for the verification process altogether or alongside verification experts, all while ensuring seamless KYC and AML compliance in banks.

You're selling, but do you know who you are selling to?

Our services can align with your business goals while providing an effortless onboarding experience for your customers whilekeeping them safe and satisfied.With Identomat, you can still play a role in the verification process by configuring our tools toward your industry-based KYC and AML needs.Don’t allow bots to break your bank. We can make digital-native customer account origination and recovery fast, safe, and reliable for your bank, no matter the size. Schedule a demo today to see how you could benefit from our AI-powered identity verification solution.

Identomat Can Help

Book a meeting to learn more about how to effectively onboard customers, stop fraud, and navigate compliance requirements worldwideRequest Demo

FinovateSpring is returning to San Francisco this coming May to reunite the Fintech community and plot a course for the future. The event brings together financial services professionals, investors and Fintech enthusiasts to spread awareness about new tech advancements in the financial field and try to build better, more sophisticated and accessible services.

Identomat offers a wide range of powerful solutions for streamlining KYC and ID verification process for businesses. Our cutting-edge AI-fuelled platform enables companies of any size safely and rapidly onboard customers, all while being compliant with regulations. As a growing startup that pocketed many achievements during the Covid pandemic in 2020-2021, including raising $3.2M, it is another milestone to demo our ever-evolving platform on a major stage in Silicon Valley.

'It is thrilling to be a part of the company at the cutting-edge of digital transformation revolution and showcasing our progress on such a massive stage. At Identomat, we are dedicated to enhancing and optimizing customer experience in Financial (and dozen other industries) services. While the opportunity to Demo our platform is an honour and pleasure, FinovateSpring is also a great place to connect, learn, grow and gain insights into the future of fintech. It is an incredibly exciting opportunity for all of us at Identomat and we're looking forward to the event.' - says David Lomiashvili, CEO.

'As the Fintech market is expanding and becoming more refined and complex, we are ramping up our resources to adjust to the market needs as quickly as possible. For instance, as the USA and its allies have been ramping up their sanctions on the Russian economy, the need for a somewhat regulated DeFi arose to block the entities or individuals trying to evade the imposed bans. Our system plays a major role in how these circumstances will play out, so it is a big responsibility to be as ready as we can be to take on the duty.' - says Zura Kotaria, COO of Identomat.

Why Finovate Spring?

Finovate Spring 2022 is a great chance to re-connect with the Fintech community and introduce our leaps in the identity verification technology space. It is exciting to showcase how Identomat has become a one-stop shop for all things KYC and how our milestones have propelled our company. Fostering digital transformation is one of Identomat's core missions, so to actually be a part of Finovate and demo for the room that thrives in this field, is an opportunity and an honour.

As the Russian aggression against Ukraine continues, USA and its European allies have been ramping up their sanctions on the Russian economy.

To force the Kremlin stop the war, these packages go beyond just sanctioning government operatives and oligarchs and are designed to cut-off the whole Russian population from the international financial system.

As the financial reality of most Russians is toughening daily, what are the chances of them using Cryptocurrency as the way out of this isolation?

After its invasion of Ukraine, Russia has been sanctioned by the majority of the international community. The aim of economic sanctions is to cut off the country from the global financial system to cause it to end the war and withdraw its military forces from Ukraine. The said sanctions involve removing SWIFT (interbank messaging system) access from Russian banks, prohibiting corporations from doing business with Russian figures and FI-s from the U.S. Sanctions list, etc.

Needless to say, the sanctions have caused the Ruble to plunge, most large multinational corporations have left the country,  and now the Russian business community is scrambling to keep themselves afloat in the financial world.

Based on these circumstances, many fear that Russians (especially the ones with significant resources) can use crypto as an escape route, , since it is not issued or controlled by a central bank entity.

According to Jesse Powell, CEO and co-founder of Kraken, they are not willing to halt crypto exchange for Russians, unless legally required to do so. The company is making sure that the sanctioned individuals don't fall through the cracks relying on the ultimate shield - screening policy of people who sign up for their services. Using global watchlists, transactions and users, from IP addresses that may belong to sanctioned individuals or entities, are blocked and barred from access to crypto exchange. 'cutting out a whole country, people, who may not be supporting the invasion, is not what our company stands for. We take cutting out people from, possibly, their last financial account very seriously. ', - states Kraken.

As the latest news goes, another big crypto exchange company, Coinbase will block 25 000 Crypto addresses, that are connected to the Russians or Russian organizations. After Russia's invasion of Ukraine, Coinbase has investigated addresses that directly or indirectly were akin to sanctioned Russian individuals or entities. As the representative of Coinbase has expressed 'sanctions and their fulfilment are crucial in preventing the aggressor, our company fully supports this decision of our government'.

As per US officials, they are unanimous about the idea of cryptocurrency not being a powerful escape route for the Russian state of sanctioned individuals. The main reason behind that is that Russia is a huge country with a $1.5 trillion GDP, frankly, there just aren't enough dollars in the crypto trading system to meet the needs of a country of Russia's size. Making it implausible that the Russian Federation could evade sanctions using crypto at the scale that would be needed unnoticed.

Though the idea and the fundamentals of Crypto - being decentralized and under no scrutiny of government entities - remains a dilemma. Washington, according to Crypto analysts and leaders, 'doesn't understand how heavily regulated and traceable Crypto already is' and additional centralization could create unnecessary obstacles. Yet, crypto companies assert that all sanctions will be fully met to whom they are imposed on.

To be more realistic, Coinbase and Kraken are one of the largest Crypto exchange companies and it would be easier for them, given their resources, to respond to sanctions accordingly. So, how shall small, new crypto startups operate? It would be challenging for them to be compliant with the imposed sanctions on Russia, all while concentrating their energy on ensuring not only AML, but also consumer protection, investor protection, market integrity and other important safeguards that can and should be applied to businesses who handle funds for people.

As a relatively new startup ourselves, we fully understand the challenges that are being faced. As much as we respect the concept of cryptocurrency, crypto communities and DeFi, we also stand by our strategic allies and as our duty goes, we want to extend our support and give a 3-month-free-of-charge trial access to Crypto startups who are trying to stay compliant and act with the frame of the US and EU sanctions.

Don't hesitate to reach out to our team for more details at info@identomat.com. 

2021 was an extraordinary year for Identomat – starting from numerous new partnerships, and finishing with attending the Money20/20 USA in Las Vegas. Though, the biggest news would be coming at the very beginning of 2022: Identomat and the team behind it raised $3.2 million in seed round, making history by raising the biggest sum as the Georgian-American startup.

We had hoped for the excitement and interest from our partners and the public, but what happened right after sharing these news, exceeded our expectations.

We sat down with Identomat co-founders – David Lomiashvili, CEO, Zurab Kotaria, COO and Rezo Imnadze, CTO – to discuss the inception of Identomat, the road to fundraising success, and what’s to come.

How was the idea to start Identomat born and what purpose does it serve?

DAVID – In 2019, while helping a large financial organization automate their manual credit approval process, we noticed that the biggest source of friction for their customers was identity verification and compliance data collection that were done manually and took up to a few days.

That’s when we realized that helping organizations enable their customers to access their services instantly and remotely was not only going help their bottom line and improve their business resiliency, but also allow them to acquire happier, more satisfied customers and grow their business even amidst the global pandemic.

How did Covid-19 Pandemic fuel the company’s growth since its’ inception?

REZO - When we had started, there was a  gap between our and customers’ sense of urgency. Although, as soon as the pandemic started, local (Georgian) companies reached out to us already knowing what they needed. Yes, Covid did help our cause become more common, but had there not been the health emergency, it was a matter of time that businesses would choose remote customer verification.  

ZURA - The pandemic had an immense impact on Identomat’s growth. Covid-19 just eliminated the need for convincing companies in the benefits of remote onboarding. The question for the businesses was not ‘why to use’ Identomat, but rather ‘how to’.

What was the biggest challenge for your team when it comes to meeting the needs of your customers?

REZO -There are always challenges (laughs). In a way, that's what makes this whole thing interesting. Globally speaking, the main difficulties arise when a partner operates in a region where a considerable portion of their customer base uses outdated, non-standard, identification documents. All of them are particular and need separate or extra elements to be fully analysed and processed. But, once we complete such custom partner/country onboarding, this nuisance actually becomes our competitive advantage. This was the case in Georgia, Ukraine, and several other European and CIS countries.

From the customer’s side, were there any specific needs/wants that you would have to add or work on?

ZURA - Good question. Actually, that is how we operate. There’s a very long wish list of what features we (and potential customers) would want/need to have. So, we are following that list and trying to improve, refine and better our platform. Usually, we prioritize which functions are in the highest demand from the customer side. Practically speaking, there have not been any features in the wish list that were not wanted by the consumer. This helps us to be in-sync with the market.

Identomat is a digital KYC and ID verification platform. It stands on the team of IT professionals. So, as a CTO and a leader of the IT team, what are the values that you instil in your co-workers?

REZO - Goal-oriented, efficient, productive. When facing a problem, not brushing it off saying that it’s impossible to fix – there’s no such thing for me. Also, cultural compatibility with our goals and the company means a lot. There have been instances, when someone would be skilled and talented but culture and values would not match up with us; or the other way round. We are looking for a package deal, all-while knowing that it's a two-way street.

What, do you think, is unique to Identomat that attracts customers?

ZURA - The biggest part is that the entire technology behind Identomat is proprietary. We don’t use third-party services or providers, which grants us with great flexibility in system deployment and process building. As well as commerciality-wise, Identomat is very resilient, which gives us an edge over other alike services. We also take pride in being ISO-27001 certified and GDPR compliant and we also hold the seal of approval from the State’s Inspector Service of Georgia on compliance with the Georgian Law on Data Protection.

What was, in your opinion, the key factor for investors to invest in your company and what was the biggest push-back?

DAVID - There were multiple factors that led to the successful raise. However, if I had to pick one question that we got asked the most, it is definitely - "How do you differ from the competition?".

From what I have seen, which granted, is based on a limited experience, it is usually harder for international founders to convince US-based investors to trust them with their money. And we were not the exception, even though all of the few dozen investor meetings we had were from inbound interest.
That's why we had to present a bulletproof case and that involved having found a product-market fit that led to a strong traction and growth momentum, having a massive addressable market with a lot of room to grow, showing that we have a team that can overcome challenges and deliver on a global scale, and that our technology can compete with anyone on the market.

How did attending international fintech events impact Identomat’s investability?

ZURA - Obviously, it impacted Identomat greatly. It grew the brand awareness as well as the receptiveness. We made sure that we were seen on the international platform, so the decision to attend conferences and exhibitions was a natural continuation. Identomat had to assert itself as THE KYC and identity verification platform so, I think participation in major events definitely accelerated the quality of being attractive and profitable to invest in.  

DAVID - Investors started noticing and reaching out to us right after our first public event when we competed in TC Disrupt Pitches & Pitchers in 2020. That was followed by a rapid growth of our customer base given a very positive word-of-mouth and numerous other conference and trade show appearances. I would especially emphasize exhibiting at the largest fintech show in the world, Money20/20. Announcing our strategic data partnership with Equifax and getting selected as a finalist in NXTSTAGE competition were also big catalysts for investor interest.

Once there was this inbound interest from investors, then all we needed to do was to make our case clearly. This is where "the packaging" matters. Putting together a killer pitch deck and an exhaustive and sensible financial model is not only important for pitching but also for the investors to see that you know the ins and outs of your business both from the financial as well as marketing/PR perspective. Luckily, all of us had extensive experience in this from our previous ventures.

What are the plans for the future of your company?

REZO - Thanks to the funding, it’s going to become possible to expand our coverage across all industry verticals and organization types. We would love to see our platform as the go-to KYC and Identity Verification service. There’s still a gap, I think, between market needs and accessibility of services, so if we could fill that gap, it would be amazing.

ZURA - Expansion, expansion and expansion on the global market. Acting on and answering to the market needs, even further simplifying the verification process, despite taking only several seconds now. I would also want to emphasize that our minds are set on helping out startups that are in need of custom KYC and ID verification service. Identomat is accessible to all types of industries and our team is up to any challenge should it arise. Speaking of our team, we are currently working on a unique verification flow, that we are planning to obtain a patent for. So, this will be one of our biggest focus for this year.

DAVID - This funding allows us to put in motion our longer-term strategy and develop new strategic partnerships to grow market share in the US, Europe, and Central Asia, and enter into Latin America, and Middle East. We will also be putting a substantial amount of effort and resources into hiring new talent. Only by nurturing and growing our already amazing team, can we achieve our mission of making digital identity proofing as ubiquitous and effortless as online payments.

--------

We would like to thank everyone for sharing our success and the continued support. This is a great encouragement for our entire team to keep pushing for more. Identomat will stay true to its values and continue hard work towards providing seamless, easy and, most of all, safe service to its clients.

Money 2020 in Las Vegas this past October was one of the largest live events that has happened since the beginning of the pandemic. Thousands of attendees had the opportunity to interact and connect with potential clients and strategic partners. Hear directly from the industry thought leaders and learn about new experiences of major companies and present their own start-ups at the exhibition. 

The event ran from October 24th-27th alongside panels, discussions and plenty of networking opportunities. 

So, what does it take for a first-time exhibitor start-up to make a splash at one of the biggest Fintech trade shows in the World? This piece covers the do’s and don’ts of preparation, what worked better at the actual event, and finally... would we recommend it as a must-do fintech show? 

Let’s dive in!

Missed Marks 

Making a decision to participate in a large-scale event in the US is not easy.

However, the actual preparation, thinking through all the details and trying to be perfectly ready for everything is a mammoth task of its own. Hence, do start planning months ahead. As soon as the idea to take part in the event arises, begin arranging or estimating what you, as a company, might need. For instance, in our case, we didn’t have enough time to order some of the merch since it would take a longer time to prepare. 

Therefore, be ready for things to go wrong. Even during the actual event. 

‘The exhibition seems like a live organism that moves in its own direction and tune. So, don’t be surprised if something goes awry. In our case, we had our dedicated power line not working in the morning on two occasions, but upon being notified the staff reacted promptly and fixed the problem. So, I’d have the contact information handy.’ – Says Identomat’s CEO, David Lomiashvili.

As mentioned, the event is a great opportunity for making new, meaningful business-connections. To help the networking process, the Money 20/20 team did a great job designing and implementing much needed meeting arrangement and scheduling features into their app. Nonetheless, one shouldn’t fully rely on dedicated event apps, given that for some people it’s not easy to adapt to new tools and user experience so quickly, especially in such a fast-paced environment as Money 20/20. It’s also easy to miss the meeting reminder notifications, while some   folks choose to just cancel the meeting right before or not show up at all. Make sure to salvage your connections during panels, live meet-ups at stands, after-parties and other junctions. Don’t forget to replicate them to an outside medium like LinkedIn, e-mail, etc.  

Panel talks are very appealing to attend and it can be extremely tempting to go to as many as one can. However, be aware that if you’re exhibiting, it will take a lot of time from your plans and wants. Instead, prioritize the talks that you really want or need to attend, that would be useful for your future business prospects and make time for them.  

Keys to Success 

Make sure to choose your merchandise wisely. Make it relevant. 

'For us, the obvious choice were the masks, since the pandemic was still raging and let’s be honest, many people forget to bring one of their own.’ – Says David Lomiashvili.

It’s great to have a well thought-through plan of how to stand out at the event. Videos are generally a great tool that catch many eyes. So, as a business presenting at an exhibition, likely with better funded competitors with shinier booths, it’s only logical that you’re hunting for as many eyeballs as you can.  Do as much as possible to be distinct – one of them is having a quality video demo about your company. 

Alongside merchandise, don’t forget about printed goods, like business cards and brochures. People are not keen to walk around a huge exhibition and collect papers to then carry around, it’s uncomfortable. We’re in the digital age. Consider using small promo cards with QR codes as links to your digital promo sheets, landing pages etc.

Networking at the event and building a relevant base for future prospects is one of the reasons why attending Money 20/20 is so appealing. Some of the most interesting conversations, surprisingly enough, happen when you least expect it. From our experience, it was at the topical private parties. Make sure to go to as many as possible – it’s likely that you will get invited to some by your existing connections, but put effort in seeking some out yourself. 

Now, as for your social media. Planning out your SM strategy is a great idea – diversify your posts throughout the event, be proactive and reactive. Prioritize the platform that has the biggest concentration of your target audience, this way you will get better reach and coverage. Keep in mind that candid photos from the event floor (e.g. behind the scenes) trigger great engagement and reach. 

Don’t forget to brainstorm relevant hashtags, after all it’s the tool to keep your posts easily-seen and identifiable. For more excitement or buzz, it’s great if you can come up with a ‘merged’ hashtag of your company and the event that you’re attending or presenting at. 

“Hunting for eyeballs” probably applies to social media even more so than to the real world these days. So, our marketing team came up with an unusual tactic to showcase our technological concept and the event branding while tapping an underutilized channel - they created a custom, interactive filter for Instagram and Facebook Messenger. Filter allowed users to record a short video reel of themselves being (pretend) biometrically scanned for liveness (assessment of human/non-human). Unfortunately, we published it kind of last minute, so it didn’t have enough time to garner the momentum needed for any level of virality. But creating a custom filter is something not many teams can ideate let alone deliver. So, we’ll put this one down as a viable tactic that needs to be timed better next time. 

‘...creating a custom Filter is something not many teams can ideate let alone deliver.’ – David Lomiashvili

Keep in Mind

While it is easy to get caught up in the event-planning details and preparations for the company, take into account Visa paperwork if you’re traveling. It takes time to collect all of the documentation and arrange the US visa appointment at the consulate. The bureaucracy can be extremely frustrating and time-consuming. 

‘We always planned on going to Money 20/20 with all 3 of us co-founders, but as usual, the bureaucracy intervened. Our CTO, Rezo Imnadze, couldn’t get a US Visa appointment because the consulate was backed up until 2023.’ – states Identomat’s CEO, David Lomiashvili. 

At the end of the day, in business, it’s all about the ROI. So, the big question is: was Money 20/20 USA 2021 a good investment for Identomat? Well, given that we’re already looking forward to next year’s event, the answer is not that hard to guess. 

Collectively,  Money 20/20 USA was an amazing avenue for brand visibility, direct outreach, market research, and competitor analysis. It was also a great learning experience. We are glad that we decided to sponsor a large-scale exhibition, networked with meaningful businesses, and  fostered  strong connections. 

And last but not least, the Identomat team would like to thank the Money 20/20 USA organizers for implementing detailed COVID-19 health and safety guidelines and attendees for upholding them to keep an event of this proportions feel safe and comfortable to attend during an ongoing health crisis. 

If you sit back and really think about the impact of last year, the acceleration of financial and health services has been the two areas that really took off in response to Covid-19 pandemic. Identomat has been gathering momentum by expanding the horizons of easy and accessible online identity verification and KYC and has been waiting for a chance  to be introduced on a bigger platform.

So, without further ado, we are happy to announce that Identomat will be exhibiting at  one of the most prominent Fintech events of all – Money 20/20.

About Money 20/20

For years the event has been described as ‘where money meets technology’, highlighting the point of financial institutions and financial technologies intertwining. In other words, Money 20/20 is the place to be if you’re willing to be the part of the community who will make decisions that shape the future.

Money 20/20 was founded in 2012 by Payments and Fintech veterans from Google, TSYS and Citi. Considering that traditional business conferences were spiritless and unexciting, they brought to the table a new, fresh and unparalleled experience ‘built for the industry, by the industry’.

The event has hosted C-level executives, acclaimed speakers and innovators from across the world who have been in the drivers’ seat of altering the future of money. The 4-day long event in Las Vegas, Nevada has connected the right people, who had the right conversations and made right discoveries enabling start-ups, individuals and organizations to grow, thrive and achieve their goals.

Identomat’s approach

It is very exciting to be living in the era of digital transformation. As a fintech start-up, Identomat team realises the significance of attending Money 20/20 event and meeting service providers who share the value of security, fraud prevention and safe money transfer practice. The event offers more than a high-level view of the global financial industry – its networking and in-depth insights carry immense value. According to the Money 20/20 report, the prior ‘wave’ of financial technology aimed its attention on the digital distribution of existing products and services, but nowadays, it seems like the industry is shifting towards ‘digitally native financial services’.  

As a start-up established only a couple of years ago, Identomat has been lobbying for the normalization of digital-only services across most industries. In fact, our team members have taken part in several conferences covering the topics of the digital onboarding toolset for the insurance industry, future of digital lending, and how customer onboarding should be the new normal via digitizing services. 

“The great thing about Money 20/20 is that financial world shapers are all at one place at the same time. Needless to say, it is an amazing opportunity to showcase our cutting-edge identity verification solution to the leading financial organizations and be seen side-by-side with our biggest competitors. This is one of the few places where getting to speak directly to the potential customers is not about who has the biggest enterprise sales team, but rather about who can deliver the most value for the customer. And it’s already clear that the Money 20/20 team has done an amazing job organizing digital pre-event and in-person on-site networking channels.  It is another great milestone for Identomat and we’re looking forward to the opportunities the event will present. There are only a few relevant large-scale fintech conferences in the world and Money 20/20 is definitely one of them and the place to be.’ – says Identomat’s CEO, David Lomiashvili.

The Identomat team is thrilled to share mutual goals on such a worldwide platform and go back home richer with more information and like-minded connections. 

Do you wish to connect with us and gain knowledge about fast-developing best practices in identity verification and KYC in post-pandemic industries? Swing by our booth K1923 at The Venetian Resort in Las Vegas., anytime between October 25-27. Follow the link below for details about Identomat’s booth and more:  

UAINSUR.TECH DAY - Eastern Europe’s premier event of the year in the field of insurance innovation was held on June 30th and Identomat’s COO, Zurab Kotaria was invited to present about the subject of digital customer onboarding in the insurance industry.

UAINSUR.TECH DAY is the window into the industry’s most influential views that shape the future of insurance transformation and InsurTech’s direction. Covid has forced almost all sectors of business and the economy to swiftly change and adapt to the new reality. By accepting the inevitability of implementing the latest digital solutions and working with digital channels, insurance companies are able to expand their customer base, generate new sources of income, and offer innovative products. 

Zurab’s speech began by highlighting how the global insurtech industry has developed through the years, making it easier for the public to access it and for businesses to provide it. 

Before diving into separate topics, Zurab reviewed the process of customer journey upon receiving an insurance policy: onboarding, data collection & input, risk assessment & categorization, insurance score-based pricing and policy purchase; 

‘ Each of these components can be automated or digitized, including even the claim processing and insurance history/score update. As a result, these services are provided remotely, making them less time-consuming. ’ 

Online insurance tools can be divided into three main categories: 

• ID verification and KYC
• Customer scoring and risk-based pricing
• Claims processing and policy maintenance. 

What is KYC and why do companies subject their customers to identity proofing? 

The main reason behind it is fraud prevention: businesses must make sure that customers are truly who they say they are online. For example, how Identomat approaches KYC is, it asks the user to take a selfie, take a photo of their ID and within seconds (thanks to cutting-edge Artificial Intelligence) they receive a yes/no answer and are safely onboarded with access to their desired goods. 

The second component, customer scoring and risk-based pricing, has several inner layers: health insurance, life insurance and auto insurance being three in the highest demand. In its core, insurance score factors cover credit rating, health history, driving and criminal records etc. and based on these, risk category, policy options and pricing are determined. 

Last but not least, claims processing and policy maintenance, naturally, occurs after an insurance case (life event). In order to avoid piling up endless documents, receipts, reports etc. document OCR and Data API integrations make these processes extremely quick and analytically precise. As for the claim processing, for the majority of cases, it can be done through visual analysis using AI. For example, vehicle damage assessments and property value estimations can be self-initiated and completed within the provider’s app, using a common mobile phone camera and sophisticated machine learning algorithms. 

‘Claim processing can be fully automated or use the human-in-the-loop workflow -  for especially high-value cases, appraisers will be able to double check and avoid potential error.‘

So, what should insurance businesses' DX (Digital Transformation) toolset look like? First and foremost, a robust DX toolset should enable and amplify digital, remote and automated business activities. Furthermore, it should have flexibility to customize, provide modular architecture and adaptable pricing policy, good back-office dashboard to manage customer cases, have access for all major platforms like iOS, web, Android etc. 

How do insurance providers benefit from Digital Onboarding Toolsets? 

According to Zurab, insurance providers who go through digital transformation attain a far more transparent and faster decision-making model. This leads to accelerated customer onboarding and policy sales. Thanks to digital channels, target markets are vastly expanded. Due to fast and reliable service, customer satisfaction is higher and brand image improves proportionally. With AI based scoring, businesses are enabled to predict and mitigate losses deriving from risk exposure. 

Another side of the coin, and what makes digital toolset so striking and attractive, is that customers have a lot to gain too. They avoid long lines and waiting time is cut to virtually seconds, no need to collect stacks of paper documents and most importantly - instant claims and processing are widely available. 

What obstacles are there to overcome? 

Lack of trust in digital platforms remains one of the main challenges for the public. Understandably, in the age of frequent ransomware cyberattacks and corporate data leaks, trusting companies with personal information is not the easiest pill to swallow.  

On the government's side, the regulatory base is very dated in most parts of the world and needs refurbishment to be in line with the newest industry standards. And when it comes to companies, unwillingness to change organizational processes and the needed effort for workforce participation come to play a huge role in modernizing and streamlining business processes. 

As the market leader in up and coming Georgian insurance business, the biggest insurance company Aldagi has adopted Identomat to safely onboard customers remotely. The company was one of the first in Georgia to move to digital onboarding when Covid-19 first hit the country. Since then, other businesses followed in its footsteps - expanding Identomat’s partner network. Soon after, Identomat was officially approved by local and international regulators, such as National Bank of Georgia ; Recognized as compliant with the Georgian Law on Data Protection, GDPR (General Data Protection Regulation) and ISO-27001 certified. 
If you wish to learn more or have any questions regarding Identomat, our KYC modules, or pricing, don’t hesitate to reach out to our team by visiting our website: https://identomat-329a23.ingress-baronn.ewp.live/

The Open Web Application Security Project (OWASP) Tbilisi was held on June 10th and Identomat’s CTO, Rezo Imnadze presented his insightful take on customer onboarding in the Digital Age. 

OWASP works to improve the security of software through its community-led open source software projects by hosting local and global conferences as well as through many other resources. Identomat was invited to present at such a platform to highlight the importance of Know-Your-Customer and Anti-Money Laundering processes. 

The presentation began with the explanation of KYC and Identification and how it helps secure businesses from financial fraud through Identomat’s example. Before delving into how KYC has changed the client onboarding process, Rezo focused on prior KYC tendencies and the associated challenges, such as long queues at service branches, the need of gathering many documents etc.

‘ The interesting thing with digitizing services is that not only does it give an edge to companies, but also makes it easier for customers to access services without leaving the comfort of their home and saving funds. ‘

As for businesses, they are able to better secure their data, have a digital footprint of all actions in their workflow and also cut their expenses all while accelerating processes. 

So What Is KYC And How Does It Work?

Unfortunately, online fraud has been growing these past years and criminals are getting more and more creative with their techniques. What KYC does is that it  ensures that the person is truly who they say they are by using the latest AI technologies. For example, Identomat identifies hoaxes, such as corrected MRZ and papers, printed documents, other people’s documents shown through the screen. But since this is just one part of compliance, biometric parameters need to be taken into consideration as well. Therefore, masks, recorded videos, photos and other techniques are easily detectable by AI. 

Organizations need a reliable way to determine that the user is indeed who they claim to be online. To take our system for an example:

• The user is asked to take a photo of their ID
• A photo of themselves (selfie)
• The software checks the ID validity, cross-checks watchlists, performs liveness or similarity checks 
• If all the information matches, the customer is safely onboarded 

To ensure that the AI system does not go over the line, certain laws and regulations are in effect. GDPR (General Law on Data Protection) is one of them. Being GDPR compliant means that you, as a business, are required to protect the processed personal data and privacy. Another similar safety measure  is the ISO-27001 certificate that allows companies to demonstrate to regulatory authorities and the public that collected information is fully secure and adequate tools are in effect to address possible risks. Identomat is proudly ISO-27001 certified and GDPR compliant  and has the seal of approval from the State’s Inspector Service of Georgia on compliance with the Georgian Law on Data Protection. 

What challenges is KYC facing? 

According to Rezo Imandze, the main difficulty is distrust from the public’s side in digital services. Another major topic is the inaction from companies to change organizational practices. Though, the process was kickstarted by the pandemic and the need for business to adapt to the new reality in order to stay afloat. 

‘Overall, the greatest wall that we have to overcome is the public’s perception. The market size is huge, so we really need to tap into the unsalvaged territories that will truly make customer onboarding much safer.’

If you wish to watch the full OWASP Tbilisi 2021 meeting in Georgian, visit this link. 
If you have any questions about Identomat, our services or pricing don’t hesitate to reach out to our team by visiting our website: https://identomat-329a23.ingress-baronn.ewp.live/

These last couple of years blockchain technology has witnessed extensive progress in terms of acceptance by the authorities. In particular, crypto companies are now conditioned as conventional Financial Institutions when it comes to Anti-Money Laundering and KYC laws and regulations. One major field that doesn't fall into the traditional asset exchange category but is being increasingly hit in such circumstances is DeFi.   

Before we dive into it,  let’s specify the meaning behind DeFi; It is short for Decentralized Finance and signifies that cryptocurrency entrepreneurs are able to at minimum recreate traditional financial instruments in a decentralized architecture, outside of companies’ and governments’ control. DeFi’s potential and breadth of use cases go way beyond CeFi (centralized finance), the topic which we will try to cover in the near future. Before that, let’s take a quick look at a brief history of DeFi: 

What does the new outlook mean for DeFi

Nowadays, data security and compliance with emerging regulations means that you, as a company, are sober to potential risks coming your way. Taking purposeful actions to contain the risks, puts you on the good side of the law. This positioning also opens room to attracting institutional and/or corporate customers, who are adamant about safeguarding themselves and their data. Demonstrating that you are following with KYC and AML compliance regulations can be used to expand your customer base. 

DeFi has managed to augment automated market making and liquidity pooling through massive decentralization and very clever algorithms, but if it wants to match CeFi’s fraud prevention and security levels, its community needs to adopt AML measures.

- David Lomiashvili, CEO of Identomat.

"DeFi is all about taking the middleman out of financial transactions. As much as decentralized, open markets with efficient capital turnaround and higher average yields are enticing, they come at a significant cost to market security. Let us not forget that traditional financial organizations that act as middleman play an important role in mitigating these risks. DeFi has managed to augment automated market making and liquidity pooling through massive decentralization and very clever algorithms, but if it wants to match CeFi’s fraud prevention and security levels, its community needs to adopt AML measures. I don’t expect this to happen, though, until we have similarly decentralized KYC solutions that live up to the values of DeFi community – creating censorship-proof  open markets that foster true financial inclusion.  That is why Identomat is working hard with our partners to kickstart this next chapter in the unstoppable DeFi revolution. " - Says David Lomiashvili, CEO of Identomat. 

Expert takes on DeFi’s potential vary significantly, however, the consensus seems to be that it is realistic to expect traditional financial markets be eventually overtaken by decentralized ones, given that government regulations are complied with. Whether DeFi breaks into larger markets (shown on the chart below) and eventually approaches $400 trillion global financial market, depends on the level of adoption of financial and security regulations including KYC/AML.

KYC shouldn’t automatically be interpreted as centralization. A DeFi app can facilitate decentralized financial transactions and simultaneously give access to verified users. 

Pitfalls of mass adoption of unregulated DeFi

Since DeFi platforms are expanding their use horizons, the FATF has an unyielding determination to disallow further operations of exchanges and DeFi platforms without KYC.

According to CipherTrace report notable DeFi hacks in 2020 included: 

• bZx
• Akropolis
• Axion Network
• Balancer
• Bancor DEX
• Bisq
• Cheese Bank
• COVER
• Finance
• Harvest Finance
• Lendf.Me
• Opyn
• OUSD
• Pickle Finance
• Uniswap
• Value DeFi
• WarpFinance
• wLEO

The same research states that "the exponential explosion of capital and lack of regulatory clarity have attracted criminal actors to DeFi, ultimately resulting in the most DeFi hacks in a year to date". To put this statement into numbers, there was $516 million in 2020 thefts, DeFi added $129 million to crypto thefts. 

The above example alone is enough to state that the field will not be able to reach commercial and legal sustainability sans KYC and AML protocols. 

But the problem lies with the ‘D’ - standing for ‘Decentralized’, which, in first, was the most attractive part for many. So, who or what can regulate a concept that in its core, shouldn’t be regulated? 

Bad Blood: Can DeFi and KYC cooperate? 

One of the main components of DeFi has been anonymity. The complication here is that FATF  has made it clear that undisclosed financial transactions open a window to criminal exploitation. Therefore, treating owners/users of a DeFi app as Virtual Asset Service Providers (VASPs) would be the way-out. This directly means that DeFi platforms will have to put into operation the KYC process or otherwise be confronted by regulatory sanctions.

Now, DeFi owners and users are facing a tough decision whether to take in KYC standards or decide how important being compliant to the regulation is at all - which may lead to a divide: DeFi that is regulated, compliant, transparent and more reliable and DeFi that is anonymous and, therefore, unregulated. The bottom line is, that at some point, DeFi will have to accept the neglect from a part of its target market. 

Identomat is working hard with our partners to kickstart this next chapter in the unstoppable DeFi revolution.

- David Lomiashvili, CEO of Identomat.

Ultimately, the process should be directed in favor of regulations if DeFi platforms wish to stay active and engaged with the bigger financial market.

With the ever-growing achievements in Artificial Intelligence and Financial Technologies, AI has tapped into yet another area - lending decisions - taking on an even more important role. Credit scoring is a process carried out by financial experts enabling institutions to accept or decline a loan application depending on the assessment of the client's ability to pay off debt.  Financial Institutions are always trying to optimize and streamline their business operations, which comes down to speeding up customers’ access to money, not turning away creditworthy clients, and reducing default rates. It seems like AI is ready to best the humans on all three fronts.

AI credit scoring decisions rely on any number of customer’s data points. These often include a person's income, transaction analysis, credit history, and other information. In fact, the more the merrier. As a result, credit scoring performed by AI provides a more intricate and individual credit score, allowing more people access to potential loans. 

Generally, financial institutions depend on a scorecard approach, which means that the borrower has to have some type of loan history to be graded as ‘scorable’. The main disadvantage of this method is that sometimes even creditworthy borrowers are denied loans because of absence of such credit history. Whereas AI credit scoring takes into consideration the ‘real-time’ indicators, for instance, current level of income, earning potential etc. Therefore, the likelihood of being included in the credit programs shoots up, while smart AI models ensure precise profit predictions bearing ‘in mind’ the potential risks. 

Let’s dive into how you may leverage integrating AI into scoring. First and foremost, precise customer targeting, meaning that AI will allow you to focus on the right segment of clients. Banks and financial institutions are given large-scale, detailed insights about their customers, which results in better and more realistic risk assessment. This directly leads to a much higher number of customers getting access to loans. Manual scoring limits companies in numerous ways, whereas AI enables making data-driven decisions and margin maximization is its focal point. As a result, companies end up with a surge of customers and, coresspondingly, profits, whilst borrowers receive a wider and faster access to loans. 

Identomat has recently introduced AI credit scoring to its system. The added new feature comes at an opportune time, considering the tendency of promoting faster, crisp and more precise services, instead of reverting to manual processes. 

‘Adding this transformative new feature to Identomat is a great milestone for us, as we focus on our main goal of further development. Machine-learning based credit scoring is truly an opportunity for businesses to shift to much more insightful and nearly-instantaneous decision-making processes. 

Our cutting-edge AI credit scoring solution has two main distinguishing features: Allowing financial intermediaries to collect, process and use massive amounts of data, therefore, unearthing hidden patterns and relations between key indicators; and secondly, outperformance of traditional ‘card’ scoring methods in predicting risks, losses and defaults. Offering AI credit scoring service along with Identomat’s Identity Verification & KYC solution enables us to aid financial companies further increase the pool of credit-worthy customers without significantly increasing their risk exposure.’ - Says CEO of Identomat, David Lomiashvili. 

Making AI part of your company’s credit scoring will become a powerful tool to gain more in-depth insights, in drastically shorter time, and into previously overlooked data sources. 

Whenever there is a new policy regarding digital identity, the whole industry is listening as it shows signs of where governments and legislators are at regarding the future of the sector. The UK Government has recently published a new framework, detailing new digital identity use cases and how people can verify their identity online, in an attempt to offer clarity on and increase public confidence in the rapidly developing sector. 

The new ‘trust framework’ includes principles, policies, procedures, and standards attempting to regulate and manage and administer the use of digital ID. More importantly, the new policy wants to clarify the way information is shared amongst public authorities and private firms.

In an official statement, Digital Infrastructure Minister, Matt Warman outlined the motivations behind this policy as following:

“Establishing trust online is absolutely essential if we are to unleash the future potential of our digital economy. Today we are publishing draft rules of the road to guide organisations using new digital identity technology and we want industry, civil society groups and the public to make their voices heard. Our aim is to help people confidently verify themselves while safeguarding their privacy so we can build back better and fairer from the pandemic.”

The document is currently in draft form and its next iteration which is believed to be enacted as law, will be published in the summer of 2021. As it currently stands, the paper proposes specific standards and requirements for organizations providing or utilizing digital identity services.

Here are its main proposals: 

• A clear data management policy outlining how data is created, obtained, disclosed, protected, and deleted
• The establishment of industry standards regarding information security and encryption 
• A transparency policy informing users about changes to their digital identity details
• A clear account recovery process 
• Guidance on how to select secure authenticators

While all of the above sounds good, what’s more interesting is that digital ID services providers will have to publish a yearly report breaking down their demographics. 

Here’s what Emma Lindley, Co-founder of Women In Identity, had to say:

“We believe that digital identity systems should be inclusive and accessible for anyone that chooses to use them.  This collaborative approach by the government in designing the trust framework is a step in the right direction towards accountability across all stakeholders who are involved, and ensures no one is left behind.” 

Another point referenced in the paper is the idea of ‘vouching,’ a practice that proposes individuals can be identified through trusted people within the community. Who are these people? The list provided by the UK Government outlines dentists, doctors and accountants amongst others. This obviously begs the question, “Does your profession ensure your trustworthiness?” which is something the government will need to address in its next iteration.  

“Products that help digitally to verify a person’s identity are becoming increasingly important as more areas of our work and home lives move online,” said Cabinet Office Minister Julia Lopez. “Creating a common trust framework will give greater clarity and certainty to organisations who want to work in this field about what is expected of them. More importantly, however, it will help to deepen users’ trust and confidence in digital identities and the standards we expect in the safeguarding of their personal data and privacy.”

Even though what has been released is still a draft, the paper does show promise for a more transparent digital identity community. The UK government recommendations are in line with the latest developments in the both perception and technology surrounding the sector. What remains to be seen is the next iteration of the framework and above all, enforcing it. 

Following the coronavirus digital boom, businesses have realised the need to find the right software to help them with customer onboarding, due diligence and anti-money laundering investigations. What are they looking to get out of this software? Decreasing onboarding times, achieving perpetual KYC, decreasing false positives, and aligning with AMLD6, the European Commission’s latest directive on AML. 

What enables a software to successfully provide these solutions is the efficient use of APIs. Application programming interfaces (APIs) are one of the main cogs in the KYC and AML tech and today we’ll have a look at 5 ways they are helping the industry develop. 

1. Onboarding Customers Instantaneously

 Customer onboarding has been troubling businesses, banks and merchants since its inception since it is a rather lengthy, tedious and unpleasant process. The problem with customer onboarding is that it is necessary and unavoidable and at the same time it is the first point of interaction between customer and business. 

Just so you get an idea of how bad the onboarding issue is, a recent report from Signicat shows abandonment rate increase by 23% compared to 2019 with one in five abandonments being attributed to a lengthy and complicated onboarding process. 

How do APIs help with this problem? APIs can speed up the onboarding process by providing aggregated and analysed global KYC data, automatically building a risk profile for new customers in a few minutes. Data APIs are crucial in gathering information, eliminating manual labour and automating the process of filling out gaps such as UBO, shareholder or directorship information.

2. Centralizing Information & Having One Single Profile

One of the most common KYC problems of the modern era is that information is divided amongst different teams, platforms and mediums. Data silos are blocking effective KYC as businesses use different softwares to gather, view and store customer data, transaction data, PEP & sanctions checks, and more. APIs can help alleviate that problem. 

APIs can unify these datasets and create one customer profile, one main location where everything and anything you need to know about the customer is there. By doing so, you immediately have clarity on the risk profile, you have a better allocation of human resources and a streamlined, polished process.

3. Establishing Automation & Eliminating Manual Tasks

Can you imagine the amount of time, effort, spreadsheets and email threads required for manual KYC and AML? It is a battle lost before the battle is fought as there is no way humans, no matter how bright and skilled they are, to manage the volume and frequency of information when it comes to building risk profiles. 

APIs are paving the path of automating many manual processes in KYC and AML. Here is an example: using Robotic Process Automation (RPA) to access data that are behind paywalls,  via scanned documents supplied by customers or even the world wide web. Artificial intelligence can even “learn” how stored information such as company registration details. The possibilities are endless but what APIs can do is automate huge parts of the process and free the hands of compliance professionals that can use their skills to make informed decisions rather than hunt for data. 

4. APIs Are Both A Product & A Foundation For Custom Solutions

When it’s time to establish your KYC process, the question of whether you outsource or build your own is often on the table. KYC is a core company need and it’s always worth questioning whether you should invest in creating something in house. 

APIs provide a middle ground between the two options since they can act as both a ready-made product you can use as well as the building blocks for building your own custom solution. For example, using KYC and AML data APIs can have an instant impact on client onboarding and building a complete risk profile but they can be the first block of a much bigger solution since their architecture and functionality can be the blueprint for more solutions such as monitoring alerts. 

5. Transparency, Manageability & Usability

APIs are easy to manage, monitor and use. It’s a technology that can scale without any additional burden and additionally, it provides the required transparency to help regulators, auditors and internal staff to understand how and why data was collected. There is a digital audit trail that allows interested parties to investigate each and every step of the way.

What’s more, APIs offer a standardised approach to collecting data, eliminating the inconsistencies of a human, DIY approach. Data is captured automatically — the same way, every single time, improving both consistency and accuracy. KYC & AML processes are by nature very sensitive and prone to error so finding technologies that can remove these elements is essential. 

One of the most underrated and painful (for the merchant) parts of the KYC process is PEP screening and sanctions checks. A mistake in the PEP and sanctions step of the process could be translated into nefarious activities such as money laundering, terrorism financing, corruption, and bribery.

Now, more than ever, merchants and organizations can’t neglect PEP and sanctions screening in order to avoid taking a hit on their reputation, revenue and capital. Just how much of a hit could they possibly suffer? Let’s look at some examples that can contextualize the damage for you.

The Cost of Disregarding Sanctions Lists Checks & PEP Screenings

• US-based watchdog Financial Industry Regulatory Authority (FINRA) fined BNP Paribas Securities and BNP Paribas Prime Brokerage $15M, for failing to provide sufficient anti-money laundering (AML) and supervisory systems.
• In 2015, Barclays PLC was fined over £72 million for poor handling of financial crime risks by the Financial Conduct Authority (FCA).
• UniCredit was fined $1.3 billion to settle U.S. sanctions probe.

The numbers are hard to swallow and even harder to digest. What’s the only way to stay away from such scary scenarios? Make the most of Artificial Intelligence (AI) solutions that can once and for all put your PEP and screening worries to bed. 

Before investigating how this technology can help you, let’s get some definitions out of the way. 

A comprehensive screening approach includes both types of checks:

• PEP screening is the process of picking out Politically Exposed People or other high-risk individuals who are eligible for Customer Due Diligence (CDD). 
• Sanctions screening is the process flagging the names of individuals who are found on sanctions lists, stopping them from making financial transactions.

What is a Politically Exposed Person (PEP)?

According to the FATF Recommendation 12, “a PEP is an individual who is or has been entrusted with prominent public functions.” That could be a President, a Prime Minister, or a government official. Due to the seniority of their position and the power associated with it, PEPs hold the keys to influencing major decisions and are therefore more prone to things like bribery, corruption and money-laundering. Due to their sensitive positions, PEPs, as well as their families and close people should be regularly checked and screened. 

What is a Sanctions List? 

A sanctions list is a record of people, businesses and countries that are wanted for or have committed illegal activities. These lists are usually published per country and/or regions and go public in order to help countries stop international financial crime. 

As an organization or a merchant, screening potential customers against sanctions lists is essential in order to eliminate the risk of doing business with entities that are flagged for illegal activities. 

We can sense what the next questions will be: 

• Where can we find these lists?
• How can we keep track of when those are updated? 

This is where technology comes into the picture. PEP and sanctions lists come from places such as Her Majesty’s Treasury, the European Union, the Office of Foreign Assets Control (OFAC), United Nations, and even more regulatory bodies. As you can imagine, doing this manually is mission impossible. Let’s see how artificial intelligence can simplify and automate this process. 

How Artificial Intelligence Is Simplifying PEP & Sanctions Checks

First and foremost, the service provider you choose to partner with will be digitally connected to the databases and external data sources of the PEP and sanctions lists. If you are thinking about a simple search, filtering the results, you are only getting the first part of the process correct. 

A traditional name search is too simplistic for the era we live in. Companies need way more than a name. They need context, they need analysis, they need conclusions and more information in order to build comprehensive risk profiles for their potential customers. 

This is where Natural Language Processing (NLP) and Artificial Intelligence (AI) technologies come in, in order to analyze unstructured data and extract the information from these lists. The tech is able to optimize and automate the process, making these lists multi-dimensional uncovering layers and layers of information that would otherwise remain undiscovered. 

Identomat PEP & Sanctions Checks

Artificial intelligence is at the core of the Identomat offering and PEP and sanctions lists is something we know very well. It is a part of our solutions and our team is always available to discuss how you can include it in your KYC process.

2021 is already underway and even though the pandemic has us all under its lethargic spell, the world of digital identity verification has not stopped moving. To make any assertions about how the year will develop would be laughable at this point, considering how last year turned out, but there is one thing we can say with confidence - companies are moving towards Zero Trust Security.

What Zero Trust Security? 

Zero Trust Security is an IT framework that calls for all people, even those employed by an organization, to be authenticated, authorized, and validated in order to access applications, files, data and other resources on a private network. This strict approach combines several technology solutions such as multi-factor authentication, identity and access management (IAM), and cutting-edge endpoint security technology to verify the user’s identity. 

Why Is Zero Trust Security Suddenly A Trend? 

Because the way we store and manage data has changed. For the longest time, organizations used to store their own data and the perception was that people on the inside could be trusted and threats could only come from the outside. Natureally, security measures and verification processes adopted a perimeter-based model, safeguarding what’s within. 

Now, applications and data have moved out and mainly exist in the public cloud which means there needs to be a revision of the security and identification approach. Let’s clarify something here; the reason organizations are moving towards the Zero Trust Security model is not based on the lack of trust for the people they employ. Zero Trust Security is a mindset, an IT culture change that takes a holistic, no exceptions type of approach to security in order to deter outside threats from even attempting to breach company security.

Verizon’s latest Data Breach Investigation Report revealed that 69% of data breaches and malicious attacks were perpetrated by outsiders while only 34% involved internal actors. What numbers clearly show is that outside perpetrators are exploiting weaknesses in perimeter-based, legacy IT security infrastructures to penetrate networks that have not adapted well to the use of the cloud. 

A recent IBM-sponsored study showcased that the average cost of a single data breach is over $3 million. These numbers are jaw-dropping and it’s easy to see why the need for a stricter security approach is now becoming a requisite as companies can’t afford to take such risks. 

Is Zero Trust Security Just A Theory Or A Realistic Solution? 

The 2020 Zero Trust Progress Report surveyed 400+ cyber security professionals including technical executives and IT security practitioners from organizations across multiple industries. The findings showed that 72% of organizations plan to assess or implement Zero Trust capabilities in some capacity in 2020 to mitigate growing cyber risk, while (47%) of partakers lack confidence applying a Zero Trust model. 

That goes to show that even though there is the appetite and willingness for implementing the new framework, companies are still unsure regarding the tech and the actual steps required to make it work. 

Gartner’s Market Guide for Zero Trust Network Access (ZTNA) is another great source of information regarding the potential of this new school of thought. Here are some interesting stats: 

• By 2022, 80% of new digital business applications opened up to ecosystem partners will be accessed through zero trust network access (ZTNA)
• By 2023, 60% of enterprises will phase out most of their remote access virtual private networks (VPNs) in favor of ZTNA 
• By 2023, 40% of enterprises will have adopted ZTNA for other use cases described in this research 

In some of our previous posts we have discussed the role of KYC in the battle against cybercrime but as it’s becoming very clear, digital identity verification is also a cornerstone in establishing the Zero Trust Security approach. 

What Are The Main Zero Trust Security Principles & Tech?

It all starts with the fundamental philosophy behind zero trust. The framework operates on the assumption that threats exist both inside and outside of the network. Nobody is trusted and all entities are required to undergo the same verification steps and processes.

Coupled with that is the idea of least-privilege access. Least-privilege access is the principle of sharing as much access as users need, keeping them on a need-to-know basis. By doing so, people are authorized to access the specific parts of the network they need, minimizing each user’s exposure and the risk for breaches. 

Zero trust networks also make use of microsegmentation. Microsegmentation is the method of building small security zones in a network in order to create different access points. What that means is that multiple users might be operating within the same domain of a network but only have access to a specific section of the domain. 

The core breed of technology utilized by Zero Trust Security is multi-factor authentication (MFA). What MFA does is ask for more than one piece of identification proof from the user in order to authenticate them. MFA is common practice for personal account protection but is now making its transition to the enterprise and organizational world.  

Last but not least comes the strict controls on device access. The ebay way to understand this? Think of your Netflix subscription and the parameters set on how many devices are registered under one account. Similarly, Zero Trust Systems monitor the number of devices accessing their network and ensure that every device is authorized and belongs to a verified user. 

Recap

2021 might still be trying to find its way through the coronavirus dust, but identity verification is suddenly taking center stage in the Zero Trust Security trend. The Identomat team is always at your disposal in order to discuss the latest tech digital identity verification innovations and how they can help your organization take the next step.

Digital identity verification has always been thought of as the cornerstone of easier, faster, and more efficient customer onboarding. As we move deeper and deeper into the digitization era, it becomes very apparent that digital identity verification might hold the keys to unlocking another business sector: remote hiring.

Is Remote Work A Trend, Or The New State Of Affairs?

Pre-pandemic, working from home was categorized as a company perk, a benefit someone would come across when dealing with companies of the likes of Google, Amazon and Facebook. What the pandemic has managed to do is normalize working from home and enable a new status quo for work and hiring.

Companies are not looking at their city, town or even countries to source talent. The pandemic has globalized working with people working from the comfort of their own home for companies in different timezones.

To give you some context, a Gartner survey revealed that 80% of company C-Level executives plan to resume remote work in some capacity even after the pandemic is over while 47% of them will allow it full time. Moreover, a PwC survey of 669 CEOs, found that 78% of them do not see remote work as a trend or a short-term solution but as something that is here to stay. 

How Can Digital Identity Help With Remote Hiring?

In the exact same way it has helped with traditional KYC and customer onboarding. The most valuable feature of digital identity verification is the elimination of manual process and the creation of a smooth, seamless and functional customer onboarding process. Taking that and channeling into a remote hiring setting could replicate the exact same results. Let’s look at some numbers. 

A study from company review site Glassdoor found that a positive onboarding experience could be the deciding factor for employee retention by increasing numbers to 82%, productivity by 70%, but most importantly that only 12% of new hires are satisfied with onboarding procedures. 

The Glassdoor research concluded that manual processes were the main reason behind the low satisfaction numbers. Manual processes are causing slow onboarding, lack of clarity and frustration. Can you imagine being asked to travel to an office for an interview, the provision of your CV, or your identity verification? What about social distancing rules? What if you live a few hours away, or what if you live in a different country? Should that be a barrier to getting a new job? 

Fortunately, digital identity verification technology can provide the tools and solutions to overcome these logistical difficulties, and enrich their talent pool. These solutions include facial recognition and videoconferencing technologies. Here at Identomat, for example, we have created a remote user verification solution built using artificial intelligence (AI), machine learning and liveness detection. While the tech was primarily directed at merchants and financial institutions, it goes without saying that it could be used by human resources teams during the onboarding process to scan and validate identification documents. 

Providing smooth, trouble-free remote hiring processes is not an adjustment move due to the pandemic. It’s the natural evolution of recruitment. A PwC report found that 49% of people that reached the final interview stages ended up rejecting employment offers due to poor recruiting experiences. 

By leveraging digital identity solutions, companies can significantly decrease that number and create frictionless, seamless, secure remote hiring processes. 

Remote Recruitment & Digital Identity Verification: There is a Market For It

A recent study of more than 500 hiring managers found the following: 

• 56% hired employees remotely for the first time since the pandemic broke out. 
• 51% interviewed candidates remotely 
• 42% extended job offers

What the survey was also able to do was shed light to the challenges and concerns C-level executives have about the future of remote hiring. Most of the concerns had to do with employee onboarding and getting them up and running. 38% of respondents expressed their worry about coordinating technology onboarding and setup, including the verification of employees identities. 

What the numbers make abundantly clear is that this is not the last we will hear about the relationship between digital identity verification and remote hiring. Stay tuned and check back to see how this one develops. 

In case you want to discuss how Identomat can help you explore that relationship, our team is always ready and available to talk to you.

The entire financial and banking world has once again been shaken to its core. It’s only been a couple of months since sources at Buzzfeed and the International Consortium of Investigative Journalists (ICIJ) broke the story about the FinCEN papers. 

The FinCEN papers are documents that point to an industrial level money laundering scheme run and assisted by some of the world’s biggest banks. 

From the Panama Papers, to WikiLeaks and the Paradise Papers, the past decade has not been shy of big revelations and document leaks. 

What makes this leak even more important than the aforementioned scandals is the fact that FinCEN papers do not just concern a couple of companies but a number of banks assisting Ponzi schemes, and terrorists in their attempts to launder money. 

The list of revelations is jaw-dropping:

• HSBC permitted the illegal circulation of dirty money, disobeying the advice of US investigators (ICIJ)
• JP Morgan authorized a $1bn London account without basic KYC principles. It is believed that the account belonged to a criminal on the FBI's 10 Most Wanted list. 
• A close friend  of Russian President Vladimir Putin was allowed to use a Barclays bank account to avoid sanctions which prevented him from using any sort of financial services in the west. (BBC) 
• The husband of a donor with contributions of more than £1.7 million to the Conservative Party was secretly funded by one of President Putin’s closest associates. (BBC) 
• An excess of 3,000 UK companies are found in the FinCEN files. (ICAEW) 
• Famous Russian Chelsea owner Roman Abramovich had a stake in rival footballers through an offshore company. (BBC) 
• UAE central bank failed to prevent Iran sanctions evasion. (BBC) 
• Deutsche Bank acted as a money laundering shield for organised crime, terrorists and drug traffickers. (BuzzFeed News)

The names and the severity of the crimes are staggering. The role of KYC in the battle against cybercrime will suddenly become a headline, instfead of a byline as banks have dug themselves in a hole. 

What has held banks afloat amidst the FinTech revolution has been people’s affinity to tradition and habit. Banks built equity with people, winning over their trust after years and years of being the only way to handle, store and manage their finances. 

With revelations like these, that trust is going out of the window. Not only are banks going under the microscope on their ability to perform basic KYC, identification and money-laundering mistakes, but a lot of questions will need to be asked about their intentions, credibility and trustworthiness. These incidents were not mistakes, but organised incidents from people on the inside. 

The FinCEN files leak shed light on a broken system. It’s not about a specific incident, a specific person or a specific bank. Here’s what Rachel Woolley, director of financial crime at regulatory consultancy Fenergo, had to say about the leak. 

“The FinCEN files exposed systemic failure across the entire financial system and industry. Fines are on the up, over $40 billion since the financial crisis, but is this really a deterrent to the financial institutions that facilitate money laundering? In comparison to the trillions of dollars that illegally move around, these look like a simple cost of doing business.”

What Can We Learn From The FinCEN Files Leak?

Winston Churchill famously said “Never let a good crisis go to waste” and this couldn’t be more fitting than this crisis. The FinCEN files exposed the shortcomings of an entire industry, pointing to the fact that we might have been looking at KYC wrong this whole time. 

For any of this to make sense, we firstly need to talk about the broken process that led to the whole FinCEN incident in the first place: Suspicious Activity Reports (SARs). 

SARs are filed by organizations and financial institutions to flag any unusual transactional or financial behaviour by a customer. This report is meant for the authorities and is designed to ensure that financial institutions can share suspicious information with a law enforcement agency. By sharing this information they not only have help in clearing out the nature of the unusual behaviour, but they are also clearing themselves as possible accomplices to corroborating criminal activity. 

As you can imagine, the intended use of SARs and the actual use of SARs were two completely different things and this is exactly why the FinCEN files leak happened in the first place. 

Below, you will find a set of questions that if and when answered, can give us the foundation to learn and fix the broken process:

• Are SARs merely used to tick a box in the KYC process? How many of these reports were actually investigated and led to an escalation involving law enforcement? 

• If any cases were opened due to SARs, how many of those led to actual convictions or court rulings? 

• What are the reasons stopping law enforcement being involved in this case? Is the SARs process defective or are law enforcement agencies not given the authority they need to intervene?
  
  
• How can we structure the SAR system to make it more effective? How can we shorten the distance between filing a SAR and law enforcement taking things into their own hands?
  
  

Recap

Wherever there is money, there will be malicious intent and criminal activity but that shouldn’t stop us from striving to perfect safeguards and processes. If there is anything the FinCEN files incident has taught us is that technology will once again play a major role in combating financial crime and enhancing proper KYC processes and reporting.

Another day, another milestone for Identomat - we are proud to confirm that we have received the ISO 27001 certification. This designation is globally recognized as the most distinguished standard in information security management systems.

The team behind Identomat has been working towards this certification from the moment the project was conceived. As our vision relies on handling and processing sensitive client data, we have always known that we need to build our processes up to the highest possible standard. Achieving the ISO 27001 certificate shows that we have achieved this goal. 

ISO 27001 allows companies to demonstrate to regulatory authorities that collected information is fully secure and adequate tools are in effect to address possible risks. The standard aids to protecting client and employee information, managing risks to information security effectively, and achieving compliance with other known data protection regulations.

Online verification has its own league of regulations and laws. Especially during the pandemic, when every business is urged to relocate online, customers are increasingly seeking assurance of the company's information security and data protection capabilities. Compliance to all data protection standards requires platforms to build a virtual fortress to shield data from all possible risks.

Identomat and its founding entities  hold information safeguarding within the company in the highest regard. Using AI, secure coding practice (OWASP), proxy/VPN detection and more of the latest developments in technology, Identomat ensures the confidentiality and integrity of customer’s data at all times. Trusted by Lazika Capital and Aldagi, Identomat managed to be acknowledged as fully compliant to the Georgian Law on Data protection. ISO 27001 is another professional milestone that highlights the reliability of Identomat.

‘Having the ISO 27001 certification, specifically in the times when online services are in high demand, is a great boost for Identomat. We have been working towards this goal for quite a while, and the timing could not have been better. The landscape of online threats grows rapidly and we have implemented many tools to ensure data protection and data processing. The ISO certification will immensely help us with maturing the existing practices. Trust in ID verification service is crucial, but demonstrating that the platform is independently examined, further solidifies it.’ – Says CEO of Identomat, David Lomiashvili.

Achieving the ISO 27001 is a very complex process, which makes it even more rewarding. Identomat takes great pride in obtaining another landmark moment and will continue providing seamless, easy and, most of all, safe service to its clients.

AI startups are at the heart of the tech revolution rapidly transforming industries around the world. More and more companies are transferring their services online, with artificial intelligence playing an integral role in this development.

In a world where AI competition is growing rapidly, Identomat is lucky to have been accepted to the NVIDIA Inception program.

NVIDIA Inception provides support to pioneering tech startups that are transforming the tech-industry via AI. Tailored to specific business needs, Inception aids company growth with its expertise, technology, and network, regardless of the startups’ funding or AI proficiency.

The program offers networking with fellow startups, VCs and leaders of the industry at exclusive member events, support from respectable incubators and accelerators, and NVIDIA marketing channel assistance.

Identomatis a KYC and Identity verification solution. The AI-powered platformautomatically matches the applicant’s selfie with their photo ID to providetheir authenticity score in seconds, as opposed to hours or days, enablingorganizations to quickly onboard their customers remotely and ensure businesscontinuity even during a global health crisis, all the while cutting relatedcosts over 10-fold.

Recently, Identomat competed in TechCrunch’s “Pitchers & Pitching” event and took part in the Disrupt2020 conference. The company has gathered momentum by enrolling into the NVIDIA Inception program. Adopted by the leading Georgian insurance company Aldagi, Identomat has reached several important milestones, such as being fully compliant with the Georgian Law on Data Protection, in just several weeks since the company’s inception.

‘Joining the NVIDIA Inception program enables Identomat to utilize relevant go-to-market support, expertise and technology, alongside opportunities to reach out and partner up with innovative AI startups. It also gives us an opportunity to enhance the infrastructure and improve Identomats’ AI models. It truly is a huge milestone for Identomat and we are ready to take on the challenge of further development and refinement of our services’ – David Lomiashvili, CEO of Identomat.

NVIDIA Inception is a program that helps startups during critical stages of product development, prototyping and deployment. Every Inception member gets a custom set of ongoing benefits, such as NVIDIA Deep Learning Institute credits, marketing support and technology assistance that provides startups with fundamental tools to help them grow.

About Identomat

Identomat is a Georgian-American companyproviding KYC (Know Your Customer) and Identity Verification solutions. Relyingon its proprietary technology, based on the latest advances in ArtificialIntelligence and Machine Learning, Identomat streamlines the customeronboarding and biometric authentication processes, providing organizations andbusinesses with reliable identity verification and fraud prevention solutions.Please visit https://identomat-329a23.ingress-baronn.ewp.live/  

2020 has been a rollercoaster. Since the beginning of the pandemic, the need to flip to remote services have been at an all-time high, meaning that AI companies managed to thrive, grow and develop.

KYC and identity verification solution Identomat is no exception to growth and is proud to add a new professional milestone during this tumultuous period - becoming an AWS Activate Portfolio member company - its top level membership. 

AWS Activate provides startups with a host of benefits, including AWS credits, AWS support plan credits, and training, to help grow business. AWS Activate benefits are designed to give the right mix of tools and expert support to succeed with AWS while optimizing performance, managing risk and keeping costs under control.  

Identomat is an AI-powered KYC and Identity verification solution that automatically matches the applicant’s selfie with their photo ID to provide their authenticity score in seconds. It enables quick, remote onboarding and ensures business continuity even during global health crises, all the while cutting related costs over 10-fold.

Identomat, as a young, but fast-growing company, has fully utilized AWS cloud services for innovative solutions, and via its top-notch KYC and identity verification solution has reached important milestones in the first year of its’ existence, including being featured in TechCrunch Disrupt 2020, Pitch & Pitchers event, StrategEast Eurasian Forum and UAFIC Digital Banking Conference.

Moreover, it was accepted by the NVIDIA Inception Programme – an exclusive programme for AI startups. To add to that, Identomat has been adopted by Georgia’s leading insurance company Aldagi and by Lazika Capital, the leading microfinancing organization of Western Georgia.

These business achievements and developments resulted in Identomat getting the $100,000 in AWS credits that comes with the membership. It includes receiving AWS Business and AWS Developer Support from AWS experts, including platform architecture guidance, enhancing cloud development skills and knowledge and obtaining material and training for further development of Idnetomat’s cloud engine.

“Receiving the AWS highest level membership ensures Identomat’s further development and enables us to tap into the opportunity of enhancing the existing infrastructure. Improving our AI models will lead to better, easier and safer remote onboarding. It truly is a huge milestone for Identomat and we are ready for the next step of refinement of our services” - says Identomat CEO David Lomiashvili. 

AWS membership is another growth experience for Identomat to pursue new aspects of AI services and fully seize the new opportunities that are coming its way.

Cybersecurity and KYC used to be two different worlds. Cybersecurity has been traditionally associated to antiviruses, firewalls and any other means by which a company would try to to shield itself from outside threats, whereas KYC was the process by which companies ensured that their customers pass all the security checks and ticks all the security boxes before they are fully onboarded. 

These two worlds are now merging into one. The Coronavirus pandemic has caused a surge in online business with cyberthreats becoming a part of everyday life for organizations. 

In a recent survey by Check Point Software & Dimensional Research, findings showed that 71% of IT and security professionals globally report an increase in security threats and attacks since the Coronavirus outbreak started. 

What is the role of KYC in the battle against cybercrime and how should companies address the changing landscape? 

KYC Should Be Paired With A Cybersecurity Policy

The 2020 Global Identity and Fraud Report by Experian found that 57% of businesses report higher fraud losses associated with account opening and account takeover. 

It’s becoming very apparent that threats are infiltrating the KYC process. Companies can no longer treat cyberthreats as one-off instances. It’s clear that the KYC process needs additional layers of protection.

There is a burning need to truly identify digital identities for all customer touch points. How can businesses do that? Here are a couple of ways: 

• Knowledge: Enrich the number and difficulty level of questions used to verify online identities.
• Documentation: Invest in the technology used to identify documentation. Machine learning and artificial intelligence are at the forefront of this sector. 
• Biometrics: Use fingerprints, voice, and facial characteristics to verify a user’s identity.
• Database cross-reference: Use any online databases you can to verify a customer’s identity. From social media to credit bureaus, make sure that facts check out. 

By adding extra security padding to your KYC and onboarding process, cybercriminals have less cracks to sneak through. 

KYC Staff Training 

The role of KYC professionals is constantly changing. From manual checks and boring data import, the KYC professional has been asked to become a data evaluator and a decision maker in the span of a few years. 

It should come as no surprise that the role is taking a step towards further evolution. KYC staff should stay up to date with the latest breaches and criminal trends. Their role is no longer limited to identifying customers who are unfit to be onboarded. Now, they will be asked to also identify fraudsters posing as customers. 

Don’t Sleep On B2B Operations

Know Your Business (KYB) is as important as KYC. Engaging with other businesses should never put your mind at ease when it comes to cybercrime. 

Your process should be as strict, if not stricter, as when you are onboarding a new customer. You should ensure they have the right processes and frameworks in place to block, sustain and recover from cyberattacks.

Whether you are entering a partnership with another company or you are acquiring them, their KYC and/or cybersecurity mishaps immediately become yours. Review their data protection and cybersecurity practices and apply the necessary changes. 

Phishing, Ransomware & Fake Documentation

Phishing activity has surged through the pandemic and so has ransomware. Not to mention fake documentation. The pandemic has created opportunities for cybercriminals to thrive and is simultaneously creating new security demands for businesses. 

Businesses are asked to adjust their risk tolerance and this is where technology comes into place. Businesses using flexible KYC and cybersecurity platforms will be able to toggle controls, operating at a lower level of trust. They will be able to analyze and understand fraud risk in real-time. Only artificial intelligence and machine learning technologies have the ability to problem-solve at such high clip, once again proving that they are the future of the industry. 

Recap

KYC and cybersecurity can now be used in the same sentence. The pandemic has shifted the security paradigm, asking a lot more from companies that want to keep their customers, data and reputation intact. 

Don’t let your guard down and always keep an eye for the technology solution that is diverse enough to drive your company forward.

Perpetual KYC is not another buzz word thrown around in the compliance world. It’s the future of KYC and today we’ll lay down all the reasons that make it so important. 

Are you ready? Let’s dive right in. 

What Is Perpetual KYC?

Perpetual KYC refers to a continuous review of clients and entities. Traditional KYC has been conducted in periodic reviews, allowing a vast window of opportunity for change. What perpetual KYC does is track and monitor entities in question, giving you real-time data.

Perpetual KYC: The Benefits

Perpetual KYC is essentially changing the paradigm of an entire industry. What does this mean for businesses? In layman's terms, this means a huge investment in fintech. 

To even begin discussing achieving perpetual KYC, businesses need to look at top-of-the-range platforms that can manage, monitor and analyze data. 

Cost is the obvious change but not the only one. Businesses will have to make a huge switch in their internal structure, strategy and culture as well as train staff to bring them up to speed with the new technology. 

Perpetual KYC is asking a lot of businesses, but what does it have to give back in return? The answer is a lot more. Here are the benefits of perpetual KYC that bill it as the future of KYC. 

Say Goodbye To Remediation 

KYC remediation refers to the process of frequently updating customer data and profiles in order to keep them up-to-date in terms of accuracy, regulatory requirements and risk mitigation. 

That sounds like a cumbersome process because...it is. The whole process drains internal department resources, engaging a lot of staff. Human resources is not remediation’s greatest pitfall. 

According to research from Lysis Group, remediation will range from £1500 for a mature process with appropriate systems and controls, to upwards of £600+ for an institution with complex and inefficient processes.

How does perpetual KYC tie into this? It essentially negates the need for remediation. The whole idea behind perpetual KYC is the regular updating of customer data and profiles. You’re constantly up-to-date with your entities, never having to revisit them and conduct research from scratch. 

You’re always following regulatory requirements and you’re always able to assess the true risk associated with an entity since the data you have on them is accurate. 

No More Angry Customers

Here’s how the KYC process has been working since...forever. Whenever it’s time for the periodic review of a company, customers are bombarded with emails requesting documents, proofs, excel files and all the other beautiful things that end up getting lost in long email chains. 

As you can imagine, digging through paperwork is not the most enjoyable of endeavours for people, especially when it’s not related to any profit-making activity. What ends up happening is that these requests do not get prioritised, managers send follow-up emails, creating friction between the two. 

Perpetual KYC resolves this relationship problem since customer information will be updated based on event-based triggers and not periodic reviews. There will no longer be a need for this messy back and forth.

Customers will focus on their job and the KYC process will run in the background, automatically updating data. 

Reducing Overall Risk

Timing is everything when it comes to calculating risk exposure. Picture this: you have a client that you have always labelled as low-risk. You only do a full KYC check every 2 years since the reports and data always come back squeaky clean for them. 

Do you know what that means? That you are essentially trusting that client to remain lawful and clean for 2 entire years. Your KYC review is outdated the moment you finish it. 

Assessing risk is not a one-time exercise, it’s a living, breathing organism. It’s something that you need to be on top of at all times. The word trust has no business in this type of business. Risk is something you can’t take risks with and the only way to ensure you have your bases covered is by letting data lead the way. 

Transaction Data 

Transaction data is an extremely important source of information in building a robust customer profile. It allows you to have insight in behavioural patterns and draw conclusions on the risk level of your entity. 

During the current mode of operation, businesses are not able to do that because looking at transaction data retrospectively does not offer the same value. 

With perpetual KYC, you are ensuring that any transaction abnormality can be run against the customer’s profile and raise a flag for further investigation. This could be a change in a customer’s self-reported data, an change detected from an internal source, or an anomaly in their transaction behaviour.

Recap

The race to perpetual KYC is a marathon, not a sprint. It will take the right technology and the right implementation within organizations. One thing is for sure: the race is on and you don’t want the competition to lap you. 

Stay tuned as we will be back with more on this topic.

Let’s just say that nobody is sad to see 2020 go. For a lack of a better word, the past 10 months have been...challenging. The world has changed, we have changed and businesses all around the globe have changed with us. 

The pandemic shifted the way we live our lives, the way we do business and the way we think about the future. In the case of KYC, Covid-19 might just have redefined an entire industry. 

Know Your Customer and client onboarding might not have shown symptoms of the weird virus that has dominated our newsfeed but its effects on an industry that was just hitting its digital stride, will echo for years to come. 

In today’s article, we will take a look at how 2020 has shaped the KYC industry. Let’s dive right in. 

Agile Client Onboarding

The term “agile” is closely related to software development. It refers to a very particular way of writing code, building products and working within a team that follows a very “fail fast, fail early, fail safe” mindset.  

Agile development usually includes early project delivery, and continual improvement, encouraging flexible responses to change. How does all of that relate to KYC? Let us explain. 

Covid-19 has made remote work the norm and onboarding clients had to follow suit. Marrying the idea of the agile methodology with client onboarding, what you get is risk-light implementation of digital KYC.

Digitising your client onboarding is no easy task. There is considerable cost, risk and resources associated with such a roll-out which is why not every company is diving head first into it. 

With agile client onboarding you will be essentially drawing expertise from different teams and departments such as UX/UI, customer support, IT  and more by creating cross-functional teams collaborating towards specific objectives. That accelerates the process and brings you closer to a proof of concept. 

What 2020 managed to do is showcase the need for the agile development, deployment and use of KYC tech. Moving forward, businesses and end-users alike will have to adjust to this new value proposition.

FATF Paper on COVID-19-related Money Laundering & Terrorist Financing

A few months into the pandemic, global money laundering and terrorist financing watchdog FATF, released a paper directly related to the new reality created by the pandemic. 

The paper focuses on the new and increased threats stemming from Covid-19-related crime and offers suggestions on how to mitigate risk and implement measures. 

Here is how, according to the report, Covid-19 is creating an environment that’s attractive to criminal behaviour:

• Increased remote transactions
• Unfamiliarity with online platform
• Unregulated financial services
• Exploiting stimulus measures

If you take the FATF recommendations and combine it with the behaviour of the masses during the pandemic, you quickly realize why KYC suddenly becomes paramount for business and customer protection. 

Here are a few of the trends and patterns in customer behaviour during the pandemic:

• People withdrawing hard currency in a state of panic 
• Increased use of mobile banking apps 
• Uptick in the volume of virtual currency 

These shifts are making it harder for companies to decipher between legitimate activity in a time of crisis and illegal transactions.

The FATF Report wasn’t a precautionary measure. The pandemic caused an uproar in online crime with fraudulent emails up more than 600% since the end of February according to some reports and 56% increase in ransomware attacks according to others. 

The pandemic has essentially fast-tracked the process of digitisation, online payments, and remote business. While KYC was already trending towards that direction, it’s safe to say that now it has become more of a necessity than a general direction. 

Integrated, Automated Solutions

Remote work made the use of API-connected solutions a must-have. 

Companies need solutions that communicate with each other via technologies like application programming interfaces so that customer onboarding, KYC and compliance screening can occur without compromising AML/CFT risk.

API integration is not the only attribute companies will be looking out for going forward. Companies are forced to jump from the era of manual processes and printed documentation to needing sophisticated compliance tools powered by automation, machine learning and artificial intelligence. 

Takeaways

2020 is coming to an end and KYC is coming through the other side stronger than ever. The change caused by the pandemic is a positive one. The industry is evolving fast and so should your business. 

What the pandemic has managed to do is showcase the importance of having a tech-savvy, agile, regulation orientated partner that can provide you the necessary tools to set up your KYC and customer onboarding process. 

Times are changing and those who will survive are those who can learn and adapt on the fly. Companies are finding out that they don’t need someone that will simply sell them a product/service. 

What they need is a partner, a confidant, a consultant that will be there to advise them when things change as abruptly as they changed during this past year. Sophisticated compliance technology is the ultimate solution but not without the wisdom of KYC professionals that will help you implement it. 

Our team here at Identomat prides itself in not only producing top-of-the-class AI-powered KYC solutions, but offering clients the guidance and support they need to navigate their unique compliance environment. 

If you wish to enter 2021 with confidence around your KYC processes, do not hesitate to contact our team and have a discussion regarding your needs.

The year 2020 is likely to go down in history as the year of COVID-19, multiple crises and the memes that go with them. Jokes apart, 2020 has amplified and brought to the surface issues such as identity fraud and the limitations of the healthcare system. 

Recent data breaches, combined with the growth of the dark web and identity theft, have empowered cybercriminals to more easily impersonate legitimate patients. The concept of KYP (Know Your Patient) is not new, however, the developments of 2020 make it more vital than ever. After all, seeking remote medical assistance, or filling a prescription online is becoming a regular activity for millions of patients all over the world.

Online identity verification is used in a number of industries. When it comes to healthcare, here’s how AI-powered KYC/KYP solutions improve the quality and efficiency of the patient service: 

• Protect sensitive medical information, test results and prescriptions by only allowing access to the actual patient.

Identity Verification Benefits For The Healthcare Industry

The areas where online identity verification and KYP are essential for the medical industry are:

• Online Prescriptions - US government regulations require online pharmacies to verify the identities and ages of patients requesting their prescriptions to be filled.
• Insurance Fraud - insurance companies rely on digital identity verification to avoid fraudulent claims and subsequent legal fees, while also protecting patient identity and privacy. This approach is actively spreading around the world. For example, Georgia’s leading insurance company, Aldagi, has fully adopted online onboarding and KYC via Identomat’s AI platform. Now Aldagi is able to verify customers’ identity, accurately extract data from submitted documents, and process it according to all legal requirements and standards of Georgia in online security and data protection.
• Patient Intake - even for in-person hospital treatment, digital identity verification is key to reducing the potential for human error while verifying new patients, especially in stressful or emergency situations where every second counts. 
• Reputation Management - healthcare is a very sensitive industry, trustworthiness and reliability projected by service providers make a major difference in the patients’ comfort, peace of mind, and, ultimately, recovery. Showing patients that the protection of their personal data is taken just as seriously as their health can go a long way in building lasting relationships between patients and healthcare providers. 

The huge leap that AI has taken in the last years has greatly influenced fraud prevention tools, helping various industries, including healthcare, avoid fraud, protect sensitive data, and provide their clients with more efficient and reliable services. 

After all, dealing with medical issues is stressful enough, and Artificial Intelligence can take the stress out of data protection and patient verification for hospitals, insurance companies, pharmacies, and other healthcare providers. Reach out to see how Identomat can fit into your patient onboarding and identity verification process.

Know your customer (KYC) processes have become a standard for businesses of all sizes and industries. In its classical form, KYC is comprised of three stages: 

• Customer Identification
• Customer Due Diligence
• Ongoing Monitoring

While KYC is more than enough in order to secure your business’ comprehensive onboarding system, there’s an extra layer of security. Say hello to Know Your Customer’s Customer (KYCC).

Before we dive into this specific iteration of compliance, let’s first make sure we are on the same page regarding traditional KYC, by clarifying its three main stages. 

What Is Customer Identification?

Customer identification is the process of establishing and verifying a customer’s identity by using reliable data, information and documentation. Some of the components that need to be identified in this process are name, surname, date of birth, address, taxpayer identification number. 

What Is Customer Due Diligence? 

In simple terms, customer due diligence is a background check that aims to determine the risk associated with the customer in question. This risk is usually tied to illegal activities such as money laundering or terrorist financing. 

A normal customer due diligence process would see the customer’s name being run against PEP and sanctions lists as well as investigating their beneficial ownership relationships. 

What Is Ongoing Monitoring?

Ongoing monitoring involves the frequent review and evaluation of existing and new information regarding a customer you have a business relationship with. Due to the resources and complexity associated with ongoing monitoring, this is usually a process applied to high-risk customers. 

Now that we’ve dealt with the traditional version of KYC, let’s dive into KYCC and see when and why it’s necessary. 

What Does Know Your Customer’s Customer (KYCC) Actually Mean?

Know Your Customer’s Customer (KYCC) is the process of identifying, verifying and investigating the identity and activities of your customer’s clientele. This is considered to be an extra level of compliance, a step towards building a more comprehensive risk profile for your customers. 

Understanding the complex relationship between your customers and those that they do business with will allow you to stay away from shady business dealings such as money laundering and reputational damage.

Think of your customers as the tip of the iceberg. This is what you see. It’s what’s easy to understand and digest. 

As we all know, the biggest and most dangerous part of the iceberg is the bottom part. That bottom part is your clients’ clients, their suppliers, their partners, the beneficial owners and every single entity that exists within their business ecosystem. That’s where the real danger lies. 

To Know Your Customer's Customer has been introduced as an idea about 5-6 years ago. At that point it was more of a recommendation, more of a suggestion for companies. What changed the general stance and mood towards KYCC were the increasing scandals that led to the continuous revision of regulations.

One could argue that since the Panama Papers megascandal, KYCC came into the spotlight. Allowing the owners of shell companies to hide their identities and revealing the complex structure of businesses that facilitated money-laundering, were the two gaping loopholes in the KYC process. 

What the Panama Papers scandal made obvious was that KYC alone might not be enough to ensure peace of mind. Knowing who is in control of a company is, essentially, knowing who the company is transacting with.  

KYCC: How Policies Are Gearing Towards It

Some could say that the birth of KYCC brought about these policies whereas others might say that these policies are the reason KYCC is starting to become a necessity. 

5AMLD

The Fifth Anti-Money Laundering Directive (5AMLD) came into force on January 10, 2020. It is the fifth installment of the European Union Anti-Money Laundering Directives (AMLDs) which serve as the primary resources all banks and FinTech companies should refer to when creating their customer due diligence processes. 

What the 5AMLD brings to the table in comparison to previous iterations are elements related to virtual currencies, high-value transactions, Beneficial Ownership (BO), high-risk third countries and Politically Exposed Persons (PEPs).

Each and every iteration of these directives shows a clear interest and direction towards KYCC. Europe is making a concerted effort to identify the complex relationships between principal clients and their business structure. 

6AMLD

The 6AMLD will come into force on December 3, 2020 for EU members and on June 3, 2021 for entities that operate outside the EU. The main changes proposed by 6AMLD will be:

• Clearer definitions of crime and their penalties
• Extend criminal liability to legal persons and companies, with more severe punishments
• Businesses will be required to cooperate with one another in the prosecution of money laundering-related crimes, not allowing the withholding of information
• Businesses will be required to protect customers from cybercrime and tackle terrorism finance
• Contribute to the fight against cybercrime and money laundering

As it becomes very apparent once again, Europe is gearing its legislation and policies towards deeper, more detailed KYC. 

FATF 40 Recommendations

Forty recommendations on money laundering is a document released by FATF in the 90s including global standards for AML and CTF. It covers criminal justice, law enforcement, cross-border cooperation, and it is frequently revised to stay up-to-date with the needs of modern business. 

Recap

KYCC is starting to become the norm and less of a recommendation. Businesses are asked to dig deeper on the clients they work with and reach new levels of inquiry and investigation. Onboarding a client is no longer as simple as name, surname and picture. 

The only solution to this problem is obviously high-end technology. Platforms that can do the dirty work for you. Algorithms that can ensure safety and peace of mind. 

Our team is always open for a discussion. Do not hesitate to reach out.

A new study by crypto intelligence firm CipherTrace has shown that at least half of virtual asset service providers (VASPs) have weak or porous KYC. 

The data from the survey come to solidify an idea that has been floating around for quite some time - crypto exchange is the next big KYC market. 

Only a couple of months ago, the Commodity Futures Trading Commission (CFTC) also brought civil charges against the founders and five other entities behind BitMEX for failing to register with the agency and for not implementing AML procedures.

In an interview with “Unchained Podcast” on Oct. 13, United States Securities and Exchange Commissioner Hester Peirce told host Laura Shin that the recent charges have put the international crypto industry on notice about AML and KYC regulations.

“I think that the message has been coming to the industry fairly loud and clear on the AML/KYC front, and I’m sure it will continue,” said Pierce. “It’s definitely sending a message to the crypto world that when there are U.S. users of a product or a service, there’s going to be enforcement of U.S. laws.”

Many crypto-to-crypto exchanges, even those with high trading volume, like Huobi and HitBTC, do not have KYC processes in place and this is something that is about to change.

Why The Crypto Market Is A Money Laundering Haven

Crypto is still relatively new territory for users and regulators alike. 

The unclear nature of crypto has allowed it to evade the eyes of the law for quite some time. Is it money, is it an asset, a product, a property? Both the technology and user applications of this new sector have a lot of grey areas that are now coming into the light. 

The unclear status and makeup of the technology make the crypto market a money-laundering haven. 

Want some proof? Look no further than CipherTrace’s third-quarter report for 2019, recording crtypto losses in the range of $4.4 billion.

It’s no surprise that it didn’t take long for governments to jump on this giant, gaping loophole and address the issue at hand. 2019 was the year of responding to crypto but it seems like there’s a lot more to come. 

The Cryptocurrency/AML Paradox

When you sit down and converse with a cryptocurrency purist, it won’t take long to fall in love with the idea behind the crypto -  a decentralized finance technology that was created to free currency from central authorities and give total power and authority to the people.

In a nutshell, cryptocurrency promises anonymized, secure transactions. That sentence might bring a smile to your face, but you know who is reading that sentence with even greater joy? Criminals around the world.

Crypto technology makes it easy to hide identities and illegal activity, creating a platform that can be exploited by the black market, criminals, terrorists, convicted felons and anyone with malicious intent. 

Let’s talk numbers just so you get an idea of how big that smile is. A recent report from Australian University academics showed that approximately 25% of all bitcoin users and 44% of bitcoin transactions in 2018 were associated with illegal activity. 

After digesting those staggering numbers it’s easy to see why crypto is considered amongst the most unregulated markets in the world, why it needs some sort of regulation and where the paradox is created. 

The same technology that was created to liberate people from the oversight of traditional financial institutions is the one that needs the most oversight. That’s quite something, isn’t it? 

The Escalation Of Crypto Regulation

First, you had the guidance paper regarding virtual assets, and virtual asset service providers from the Financial Action Task Force (FATF).

Then you had the joint statement from the U.S. Commodity Futures Trading Commission, the Financial Crimes Enforcement Network, and the U.S. Securities and Exchange Commission, reminding persons engaged in activities involving digital assets to establish and implement an effective anti-money laundering program, adhering to recordkeeping and reporting requirements. 

As you would expect, Europe joined in with its paper “Regulation Of The European Parliament And Of The Council on Markets in Crypto-assets (MiCA).”

Things have been escalating in recent months with countries addressing the crypto issue like dominoes. First, we have the French commerce court ruling Bitcoin as currency, determining its legal status once and for all. 

Then, we have the announcement from German financial watchdog BaFin that Bitcoin and other cryptocurrencies are now officially classified as legal financial instruments in Germany. BaFin’s new guidelines define crypto assets as:

“A digital representation of value which has neither been issued nor guaranteed by a central bank or public body; it does not have the legal status of currency or money but, on the basis of an agreement or actual practice, is accepted by natural or legal persons as a means of exchange or payment or serves investment purposes; it can be transferred, stored and traded by electronic means.”

In Australia, a court agreed that a crypto exchange account can be used as security for potential legal expenses. 

You can see where this is trending, right? The atmosphere around cryptos has escalated from guidance reports, to court rulings. 

With all of the above in mind, let’s shift our attention to the huge commercial opportunity that arises for FinTech companies around the globe.

Cryptocurrency: The Big KYC Opportunity

KYC technology has been growing rapidly over the past decade and has expanded its reach to industries well beyond financial services. 

While there is still a big opportunity for regtech and more specifically KYC technology to take over in all those verticals, the most obvious opportunity is cryptocurrency.

This is untouched territory, an industry that brings its own set of challenges and presents a riddle that nobody has found the answer to. Here at Identomat, we love challenges and the crypto market is something we have been studying for a long time now. 

Our technology is built to solve problems and our team is ready to answer any questions you have regarding the KYC-crypto match. Reach out and let’s discuss.

Lazika capital, the leading microfinancing organization of Western Georgia is adopting Identomat, identity verification and KYC system to remotely onboard customers. The process has kicked off following the approval from the National Bank of Georgia. According to Georgia’s main financial regulator, Identomat is eligible to be used by Lazika capital in their business practices. The collaboration will be monitored by the National Bank of Georgia to ensure customer protection and that digitally transformed business practices are in line with the Georgian legislation. The news is timely given the global health crisis, making it even more paramount to embrace online ID verification to streamline the onboarding process.

Lazika Capital was founded in 2000, with the aid of International British Organization Oxfam and other donor organizations. It operates in Georgia’s Western region with more than fifteen service centres and offices in Batumi, Kutaisi and other major cities. From the beginning, the main focus of Lazika Capital has been low and average income farmers and entrepreneurs; providing them with a broad spectrum of financial aid and helping to adhere with the small and average business standards. 

‘The exact effects of coronavirus cannot be foreseen; As time elapses, the aftermath changes and evolves, but social distancing has always been the key element in containment of the outbreak. Therefore, the urgent necessity of simple, fast and safe client authorization and digital identity has been outlined.’ - states Lazika Capital. 

Identomat is an end-to-end solution for KYC and Digital Identity Verification that helps businesses onboard customers using advanced AI technology. Created with the mission to improve, simplify and secure the authorization process for all stakeholders, Identomat has become a high-in-demand product amid the virus outbreak, being adopted by the leading Georgian Insurance Company - Aldagi. Priority of Identomat has always been safety of collected data and fast and simple onboarding. Being a perfect fit for industries such as retail, IT and telecom, banking, financial services and insurance, government and defense, healthcare and others, Identomat has become a key element in providing easy and quick user experience for its partners. 

"We take great pride that we have been approved by the National Bank of Georgia as a relevant and appropriate platform for Lazika Capital. We make it our mission to enable our partners to offer frictionless remote onboarding to their customers. In addition to significant cost-savings and improved user experience, Identomat’s automated digital identity verification has become a critical tool for business continuity in the times of a pandemic. Since their inception, Lazika has been a great facilitator of small business growth in Georgia and we hope to see their continued success and would like to think of ourselves being a part of it," says Identomat's CEO David Lomiashvili.

Identomat tirelessly works in the direction of expanding its horizons and offering refined and advanced technology to simplify client onboarding without jeopardizing security. Having a partner like Lazika Capital is a stimulus to keep on improving our technology to provide businesses with a reliable ally in safe identity verification. 

About Identomat

Identomat is a KYC (Know Your Customer) and Identity Verification solution, developed in Tbilisi, Georgia. Relying on its proprietary technology, based on the latest advances in Artificial Intelligence and Machine Learning, Identomat streamlines the onboarding process, providing organisations and businesses with reliable identity verification and fraud prevention solutions. Please visit https://identomat-329a23.ingress-baronn.ewp.live/

About Lazika
Lazika Capital started operation in 2000 as a small credit project launched by Oxfam GB. In 2003, the project separated from Oxfam and started independent operation. Lazika Capital as a microfinance organization provides access to the large spectrum of financial services to small scale rural and semi-urban entrepreneurs and farmers and operates 18 branches across western Georgia. Please visit https://lazikacapital.ge/

Here’s the million dollar question for businesses in 2020: Can you make your customer onboarding faster, more efficient and convert prospects into customers? 

That’s not the million dollar question? You’re wondering why you should care about customer onboarding in the first place? Ok. Here are some stats that might get your attention:

• You’ll lose 75% of your new users within the first week
• 40 to 60% of free trial users will use your product once and never come back
• Happy customers become your top referral sources

Is that convincing enough? Your onboarding process can simultaneously become a sales and a retention funnel. It is one of the most important processes of your business as it is the first official point of interaction between your business and customers. 

Today, we will divulge five tips that can have immediate impact on your onboarding process.

Before we get into it, we want to state that we understand customer onboarding differs from business to business and it certainly differs depending on the industry your business operates in. 

This is exactly why our tips are carefully researched and thought out in order to be applicable for businesses of all types, sizes and industries. 

Let’s get right to it. 

Customer Onboarding Tip #1: Assess Your Current Customer Onboarding Process 

This is one of the simplest, yet most difficult steps in improving your customer onboarding process. Why? Because it involves detaching yourself from something you might have played a huge part in building. 

Being critical and unbiased is hard to pull off in business but it’s a true difference-maker for those who are able to pull it off. 

Take a step back, remove yourself from the position of the business trying to sell, and put yourself in the position of the customer trying to buy. 

When reviewing your current process, ask yourself the following question: 

• How long is the process taking, end-to-end? 
• As a customer, at what point of the process would you most likely quit and why?
• Are there unnecessary steps? 

By answering the following questions, you already have the blueprint of what you need to work on. The questions identify the same pain points that can drive a customer away from your business and into the sales funnel of a competitor. 

Customer Onboarding Tip #2: Display Progress To The Customer

Time is currency these days and people are very careful about how they spend it. 

This is exactly why you need to not only make the onboarding process as short and concise as possible, but you need to to give them a sense of how long it will take.  

The only thing that’s worse than offering customers a long, arduous onboarding process, is leaving them in the dark regarding its duration. 

There are many creative ways in achieving the desired result. 

Include a progress bar that loads as people move through required fields. Identify the steps they have covered and clearly display the remaining steps. Provide an approximate estimation of the time remaining until the completion of the process. 

Don’t let your customers walk in the dark. Show them the light at the end of the tunnel and above all, indicate the time it will take to get there. 

Customer Onboarding Tip #3: Optimize For Mobile

More than half of all web traffic is mobile. Whether you are building a website, an eCommerce store or an onboarding process, you are essentially addressing people using mobile devices. 

People are busy and on the go. They rarely have time to sit in front of desktops outside of work, in order to address their personal matters. Your onboarding process should factor that in. 

Use experience is key and if people are having trouble to load, navigate or make sense of the onboarding, they will probably move on to the next provider. 

Steps and call-to-actions should be clearly defined and the customer should be able to click, type and complete the process in a fast and efficient manner. 

Even though optimizing for mobile is an entirely independent project, it still falls under the assessment of your current process mentioned in tip #1. Try to access and go through your process from a mobile device, identify the loopholes and start improving it immediately. 

Customer Onboarding Tip #4: Authorize Social Sign-In

We know that this is not applicable for industries like banking and financial services but what if...it was? 

Social sign-in is a very popular method of speeding up proceedings for the customer, as they don’t need to re-enter their basic information from scratch. All they have to do is use their already built social profiles to create a new account with your company. 

Whilst that is ok for when creating a profile for an online clothing store, the same can not be said for opening a bank account. The bank needs a lot more information most notably, it needs to perform a thorough KYC check. 

How do we bridge the gap between the two? Social sign-in can be used to automatically populate the early stages/steps of the onboarding process, giving the customer a sense of speed and progress. 

With a simple click, they can find themselves on step 3 of the process, creating a different energy, a different dynamic between customer and company. 

In using social sign-in, customers see a feature they are familiar and accustomed with whilst you get them to start the process with a positive mindset. 

Customer Onboarding Tip #5: Simplify Password Creation & Recovery

Here are some interesting facts for you:

• A study from NordPass found that 30% of people find resetting passwords as stressful as the stress of retiring. 
• According to the same source, 67% of respondents agreed that losing passwords is as stressful as dismissal or changing jobs.
• A research conducted by HYPR in the last two and a half years all around the United States and Canada, shows that 78% of respondents required a password reset in their personal life within 90 days and 57% of respondents required a password reset in their work life within the same period. 

What’s the takeaway? People don’t remember passwords and helping them recover should be a critical part of your onboarding process. 

Security is crucial but setting too many parameters for customers when they are creating a password can prove to be detrimental for your conversions. 

Similarly, recovering a password should be a matter of a few clicks, helping the customer reduce stress and anxiety. 

Recap

Here you have it. Five tips that can uplift and revolutionize your onboarding process. 

Our team here at Identomat, is always at your disposal to discuss ways in which you can improve customer conversion and retention. 

Our state of the art proprietary technology can help you build on these tips, automate and digitize big parts of the customer onboarding process. 

We look forward to hearing from you!

When signing up for a new account with a company, there’s usually a process of providing personal information. Name, surname, email, ID and more depending on the type of company and account you are opening. 

In most cases, you are asked to take a picture of your ID, front and back. The process of extracting the written information from any document, whether in digital format or physical format, is called Optical Character Recognition (OCR).

This breed of technology has allowed businesses around the globe to speed-up, optimize and streamline their onboarding processes. It is one of the most underrated tools in the era of digital KYC and today we will take a look at both its functionalities and benefits. 

How Does OCR Actually Work?

OCR is the process of scanning, analysing and translating a picture that contains text into actual text. The extracted text comes in a TXT or DOC, machine-readable file.

OCR usually uses an algorithm for feature detection that defines characters by assessing their lines and strokes. Alternatively, the algorithm proceeds into pattern recognition by identifying entire characters.

Optical Character Recognition: How Does It Help With KYC? 

Before diving into the multitude of ways that OCR enhances the KYC process, it would be wise to say that this is the type of technology that translates into many industries and use cases. 

OCR is diverse and malleable enough to improve processes in many different contexts. First, let’s take a look at some prominent use cases.  

• Business documents data: checks, passports, invoices, bank statements, receipts, etc.
• Passport recognition in airports 
• Scanning Insurance documents 
• Create digital images of printed documents searchable: Google Books

Then, you have the different industries in which it can be applied.

• Financial services: checks
• Healthcare: medical history
• Supply chain: quality control documentation
• Legal: affidavits, judgements, filings, statements, wills and other legal documents

Now that we have established the diverse nature of the OCR technology, it’s time to look at the benefits it affords to the KYC process. 

Speed 

Document verification used to be a long and arduous manual process. Can you imagine the stress this would put on an organization with numerous new client inquiries per day? 

This was a logistical nightmare for companies and a reason why some people would abandon the onboarding process and choose a faster alternative. 

With OCR, the process is automated and instantly becomes faster and more efficient. The document is scanned, the information is stored and the verification can happen almost instantly. 

Searchability

Harnessing and storing the necessary information is simply the first part of the process. OCR also allows you to have complete control over your data by converting them into searchable formats such as.doc,.rtf,.txt (simplest), pdf. 

Cost Savings

Following the point made earlier regarding manual work, speed is not the only parameter affected for businesses. Having people manually work on document verification and data extraction puts a stress on your costs. 

By utilizing OCR technology, businesses can either cut back on their spending, or reallocate their human resources into more meaningful tasks. 

From Paper Backups To Bytes

The fact that we would be mentioning storing valuable information into paper form in 2020, is something we could have never predicted. The truth of the matter is that OCR allows you to digitize and store information in a manageable manner. 

Stop looking for colour-coded files and dossiers, and start looking for servers. 

Accuracy & Efficiency

Let’s start with accuracy. By removing the human element from this process, you are essentially decreasing the room for error. Automating the process using technology ensures a uniform result with no discrepancies. 

When it comes to efficiency, there’s a lot to discuss. First and foremost, you are instantly solving a huge headache that is translations. 

Not only did compliance departments had to manually extract information from official documents, they had to pass it on to qualified translators in order to verify what every single word accurately meant. 

With optical character recognition, you are immediately afforded the luxury of searching, digitizing and translating your information in the language of your choosing.

Recap

It comes as no surprise that everyone is quick to jump on the bandwagon of artificial intelligence, blockchain and different digital intetity trends, as they are the hottest commodities in the KYC world. 

Here at Identomat, while we are aware, educated and true believers in the latest technology, we never overlook any steps in the process. OCR is a core part of our offering and while it might not be as “sexy” or trendy as all the other tech advancements, it is equally as important. 

Our team is always available to discuss any questions on how this technology can help your company take the next step in its compliance evolution. Do not hesitate to contact us at any point in time.

The year 2020 has been a rollercoaster so far, and we don’t see any signs of it slowing down. The same can be said for the industry. With all the recent developments, it’s crazy to think that Identomat was launched just 6 months ago. We have pried our CEO David Lomiashvili away from his busy schedule to share his insights from the recent TechCrunch event and its virtual format, what VCs and big-name investors are looking for these days, and what’s next for Identomat.

Can you share your impressions of the TechCrunch Disrupt2020 event? Was it what you originally expected?

The event was good. Granted that it’s our first TechCrunch event, and with the virtual format, introduced due to COVID, I truly didn’t know what to expect. Yet, TechCrunch has managed to assemble a great community, the topics of the sessions have been great, and I truly feel that the week had been well spent - even though I wish it hadn’t been for Covid and we could enjoy the good old-fashioned real life interactions.

Did the virtual format affect overall the experience? What’s your take on this format (since it seems like we’re stuck with it at least for some time).

Of course - the virtual format dictated the whole event experience, and in my opinion it has a lot of pros and cons. For instance, sessions and talks were super easy to attend. There had been a lot of great content, and it was easy to consume. You can easily switch between the topics and speakers, and pick out the aspects you’re most interested in. It would have been impossible to run between the physical pavilions, so in this case, the virtual format was a huge advantage.

And what about the disadvantages?

Those events are usually made awesome by people. We may be living a seemingly comfortable life in the digital space but there’s no substitute for in-person interaction, those random conversations you strike up while having coffee, or something. So, the networking was hard. I found it unnatural, to be honest. Developers of the platform have tried hard to recreate the experience of a physical pavilion, so from time to time people were matched up to chat. But if you, for example, miss that opportunity, there may not be another one. 

Also, the booths didn’t feel the same. Being a digital experience, the booths are easier to prepare - you don’t have to worry about setting up the physical booth and keeping your fingers crossed that there are no last-moment printing mess-ups. Those digital booths do generate traffic and interest from the attendees, however, you cannot get too creative. Of course, no merchandise and branded freebies, and the only type of offer a digital booth could support were discount codes. I wish there had been more but believe that with the pace this online event technology has been developing, we would be in for a better ride in 2021. That said, it would be great for life to get back to normal. 

Tell us more about the Pitchers and Pitches part? What was it like to pitch to the movers and shakers of the industry?

For me personally, the Pitchers and Pitches session was the highlight of the event! It was a unique opportunity to have your pitch examined by the key figures of the industry. Investors were sharing some truly valuable insights, so it was amazing and led to a huge value, especially with the virtual format.

Were you nervous during your pitch, and did it help that you could do it in the comfort of your home?

No, to be honest, it didn’t :). Don’t get me wrong, being able to enjoy this opportunity from the comfort of your couch is amazing and in a way mindblowing. But, when it comes to the actual pitch, this live human interaction is missing. Also, with the pitch being just one minute long, any delay in connection or some kind of a glitch will kill your effort on the spot. So, just thinking of that, got me nervous, even though it wasn’t my first pitch to VCs. However, with this format the margin of error was non-existent, and this just adds another layer of stress. 

You’re not a newbie when it comes to the startup scene and raising funding. Given that, what was the biggest thing you have learned?

I have been sharing some brief takeaways on Identomat’s social media, but of course there’s much more. The startup scene is changing constantly, and some of those changes are happening in real time. For instance, 5 years ago all startups tried to market themselves to investors as “the Uber for X…” (whatever their focus was). Not so long ago, it was all about the sharing economy and untapped business opportunities. We saw this approach backfire more than once, so things have changed. Right now the trend is remote delivery of services.

Does it mean it’s harder to differentiate yourself? What are investors looking for?

Yes - differentiating a startup has become a challenge. But what investors are really looking for these days is the niche product and the niche market. Basically, VCs want you to master something, and then expand. Many startup founders want to hedge their risks and believe that spreading into a wider market could save them if things don’t pan out immediately. That said, this is where you can lose focus, so from an investors’ perspective they want you to be the “big fish in a small pond” - in the niche you know well. One of the questions we heard so much during the event was along the lines of knowing a certain secret. Basically, you need to know something that others don’t, and this will make investors go with you.

Has Covid impacted the investor-startup relations?

It definitely has. Before Covid, you had very low chance of an investor personally looking at your pitch deck. Right now, many of them actually have time to do it. So, your chances of getting in front of someone’s eyes are higher, but so is the competition. 

Are any areas of technology particularly “hot” these days?

Yes. I’ve been told a lot that Artificial Intelligence is THE direction many VCs are looking at. Every technology has its own infliction level, and for AI, it’s now. Investors are looking for projects offering the application for Artificial Intelligence on an enterprise level. And this is exactly what Identomat offers. 

What’s next for Identomat?

Just last week, we were accepted into NVIDIA Inception program for AI startups and are very excited about this opportunity. This virtual accelerator for AI Startups offers go-to-market support, expertise, and technology for program members through deep learning training, exclusive Inception events, preferred pricing on hardware, and more. We’re working on further developing the product and adding new features as we aim for a major expansion in the US market. So, a lot of time is spent on shaping our go-to-market strategy. Our international team is growing, and I feel that we’re in for a truly exciting ride.

Let’s start with some definitions and stats to set the scene. 

What Are False Positives In A KYC/AML Context?

False positives are legal and lawful transactions or customer profiles that are flagged as suspicious by a company’s monitoring system. As a result, the transaction, account or profile associated with a customer is blocked and/or suspended. 

What follows a suspicious activity report (SAR) is the long and arduous process of manual reconciliation. Banks spend an enormous amount of time, money and internal resources to verify whether these alerts are indeed something to worry about. 

61% of finance organizations are “highly dependent” on spreadsheets, according to an IMA survey. We live in a digital era and depending on manual processes is a serious problem. 

The False Positive Problem: Just How Bad Is It?

Here’s a few highlights from a recent Celent white paper:

• “A flood of false positives and heavy reliance on manual processes are making AML programs costly, inefficient, and unsustainable.”
• Banks typically report 90–99% of all alerts are false positives, while those with advanced tuning capabilities report a lower, but still high figure of 80–85%.

Then you have this incredible stat by IBM: 

• As much as 90% of notifications about potential suspicious activities do not result in the filling of a suspicious transaction report.

KPMG adds more reasons for concern by reporting that: 

• Despite recent advancements and investments in new technology, 51% of banks still reported a high rate of false-positives, resulting from their technology solutions, decreasing efficiencies in fraud detection.

As you can see, this is not merely a problem, it’s a plague. FIs are caught between their attempt to follow the letter of the law, protect customers and their own brands, and untangle an operational nightmare. 

Enter artificial intelligence. 

AI is the new frontier to the problem of false positives and today we will examine 3 ways it is going to revolutionise the AML/KYC space. 

Before we dive into it, here’s a 2017 article by McKinsey, foreseeing this change:

“...banks should invest in three areas: efficient data-aggregation platforms, advanced statistical modeling (such as machine learning-based risk scoring and alert-generation engines), and automation of processes (such as investigator visualization tools).

“...false-positive alerts can be brought down from over 90 percent to below 50 percent.”

Now that we have identified both the concept and impact of false positives, let’s look at the solutions. 

Identifying Customer Behavior Changes

Traditional systems use rules-based transaction monitoring solutions. While the rules are configurable, they are not particularly proactive in analysing data and distilling useful insights.  

On the contrary, artificial intelligence has the ability to develop models that track customer behaviour in real time, build specific profiles and identify changes that are deemed to be irregular. 

The system won’t flag a transaction based on a number-threshold but rather on whether it fits the profile and behaviour of the customer in question. 

The most fascinating element about this approach is that the algorithm will keep on learning, becoming more “knowledgeable” as time goes by. The more transactions a customer completes, the more data for the algorithm to make its alert more accurate.  

Harnessing Unstructured Data

Verifying the identity of the new customer is simply the first step of the KYC process. In order to build a comprehensive customer profile before onboarding a new client, companies need to search for and collect a diverse range of information. 

Here is the most common background information and data companies look to collect: 

• Professional 
• Political
• Social
• Institutional
• Financial

The obvious question that comes to mind is, where do they get this information from? Again, the job of harnessing this data is difficult as it is scattered around in different places. 

• Online and offline media
• Public archives
• Social networks
• Open-source data sources
• Firewall libraries
• Paid subscription directories
• Government portals

While locating and gathering this information is a tall task, it is actually not the hardest part of the process. Discovery is only the tip of the iceberg for companies that if and when they do get their hands on this data, they need to make sense of it. 

They need to draw connections, come to meaningful conclusions, connect the dots and distill the meaning from the unstructured data they just gathered. This is where artificial intelligence and natural language processing (NLP) come into play. 

It is the technology that finally gives companies the insights they had to manually had to deduct for themselves all these years. It cross-references information from all these different sources, automating the building of a true risk-based profile for each customer. 

By managing to mirror the most up-to-date profile for each client, companies can decrease their exposure to false positive alerts. They are in the unique position to know the risk-level attached to each entity and validate the truthfulness of the alerts that come from their activity.

Learning, Adapting, & Responding 

Much like NPL, machine learning is yet another subset of artificial intelligence that will play a huge role in battling false positives in the near future. 

Machine learning has the distinct advantage of creating unique fraud detection systems. This allows the technology to make educated predictions without being explicitly programmed to perform a specific task.

What the program essentially does is estimate the behaviour of an entity, anticipating a certain action. If the action falls way outside the predicted framework, the technology can then begin to assess the risk factor associated with the entity. 

Takeaways

Is this actually working or is it just a beautiful idea that can’t be implemented? 

Well, if numbers are anything to go by, machine learning is actually producing results. A case study from Teradata showed that the implementation of machine learning reduced false positives by 60%, and was expected to rise to 80% as the model continued to learn. 

That’s both impressive and promising. Artificial intelligence is revolutionizing the entire KYC/AML industry one but at a time. At Identomat, we leverage the powers of AI on a daily basis when building our proprietary technology. 

We understand the value it brings to your company and we strive to stay on top of the latest advancements and developments in the field. If you have any questions about the technology, our solutions or the ways it can help your company, do not hesitate to reach out and inquire. 

Our team is always ready and willing to give you the answers and solutions you’re looking for.

Blockchain technology is mostly associated with cryptocurrencies. That’s what brought attention to it and what most people think it’s synonymous to. The truth of the matter is that blockchain is a new breed of technology with limitless potential, able to redefine entire industries. 

It is a network that encrypts and stores all types of data in blocks, making it diverse enough to be used across many industries. 

Whilst most people associate it with financial institutions and currencies, the KYC industry has something to say about that. Today, we’ll look at how blockchain is changing the KYC process and more specifically, client onboarding.

How Does Client Onboarding Actually Work On The Blockchain? 

According to Deloitte, 38% of new banking customers will abandon the onboarding process if it takes too long or requires more information than they are prepared to disclose. 

At least 26% of those customers feel that “easy enrolment and login” are the most important criteria on which they decide who to bank with. 

Client onboarding is a business driver. It can make or break your business and this is exactly why interested stakeholders have been looking to improve it for quite some time now. 

It comes as no surprise that the European Commission has been funding blockchain projects through the European Union's research programmes FP7 and Horizon 2020 since 2013. Up to 2020, it will fund projects that could draw on blockchain technologies for up to €340 million.

Client onboarding is one of the most challenging parts of KYC for businesses and FIs alike. Before opening an account, a prospect needs to be vetted in more than one way in order to assess their viability. 

Here are some of the boxes that need to be ticked before onboarding a customer:

• Identity verification
• PEPs screening
• Sanctions screening
• Beneficial ownership or Director in a Company

Companies and FIs are currently using an amalgamation of online platforms and manual processes to check these boxes. This process is time-consuming, complex, costly, prone to error and redundancy. 

What Distributed Ledger Technology (DTL) can do to change that is allow companies and businesses to upload data on the network's blocks, where they can be updated by consensus between the participants. 

By design, DTL maintains only “one version of truth” for sensitive client data. When an employee is searching for a piece of data on the blockchain, they only get the one version that actually exists. 

That version is checked and verified automatically by the blockchain platform. Employees don’t need to talk to their coworkers, look for older versions of the customer profile or try and combine information from different databases. 

The code itself is taking care of maintaining one truthful client profile with all the necessary information. 

What Is The Value Of a Blockchain-KYC Pairing?

What that manages to accomplish is information that is transparent, auditable, immutable and cannot be changed on a whim. 

Apart from the business side of things, there is the customer side of things to consider. Users are guaranteed control over data, elevated security and freedom of choice as to how their data are used. 

Examples of the successful pairing between KYC and blockchain are confirming our analysis. OCBC Bank, HSBC and Mitsubishi UFJ Financial Group (MUFG), together with the Infocomm Media Development Authority (IMDA), managed to complete a proof of concept for (KYC) blockchain. 

Customer’ information encrypted on the shared ledger is cross-referenced with government registries, tax authorities, credit bureaus and other sources of information to update profiles. 

Another parameter that is important to consider is the one of regulation. The blockchain solution is not only streamlining the process for businesses and customers, but also for regulators. 

According to KPMG’s white paper “Could blockchain be the foundation of a viable KYC utility?”, the value for regulators is immense: 

“A blockchain KYC utility could also offer regulators a better understanding of how customers have been onboarded and the application of underlying KYC information. This would, in turn, enable regulators to better understand customer activity. All actions by financial institutions and customers would be fully recorded and tracked, while activity data on the platform would be fully auditable. 

From a customer standpoint, a financial institution's use of a KYC utility would enhance the customer experience and improve their overall satisfaction by making processes more timely and efficient.”

Recap

KYC and client onboarding are evolving, and blockchain technology is offering the industry a great chance to do that in a manner that is efficient, scalable and trackable. 

This relationship is relatively new but is already showing signs of promise and it is something we will keep an eye on. Stay tuned for more updates.

Following our highly-coveted participation at the Pre-Disrupt 2020 Masterclass, Pitchers & Pitches! at the beginning of the month and the ongoing TechCrunch Disrupt 2020 event, we come bearing more exciting news.

Identomat will be represented in the 2nd StrategEast “State and IT” Eurasian Forum taking place in Tbilisi on the 15-16 of September. Today our CLO, Natia Gvazava will be featured in a panel of experts discussing "The Digital Financial Solutions", alongside the Deputy Minister of Finance of Georgia, the Co-Founder/CEO of the Georgian Information Security Association and other esteemed industry executives.

The panel will assess the new state of affairs for the financial industry after the Coronavirus pandemic. Financial institutions and consumers were forced to utilize online services during the lockdown and whilst that is encouraging, it does pose some challenges. How can FIs maintain the proper level of cybersecurity and what steps should they take to ensure consumers do not lose trust in them? 

Identomat is proud to be involved in such an influential and impactful technology conversation, sharing our expertise to promote meaningful change. 

The event is becoming one of the most influential IT events in the Eurasian region, giving professionals, governments and businesses the opportunity to join their powers and share valuable knowledge regarding IT, its relationship with governing bodies, legislation, taxation and IPR and more. This year’s event will look at technology as a remedy and what needs to happen in order to help the economy of the region take the next step.

The Forum features a wide array of participants such as senior representatives of the USA and the EU governments, global IT companies, VC funds, investment banks, heads of IT associations and thought-leaders of the IT sector from the region.

We believe that the month of September is only a precursor of what is to follow for Identomat as our team is working relentlessly behind the scenes to deliver some noteworthy results. 

Stay tuned. 

The omnichannel principle refers to a user’s seamless experience across different platforms, channels and devices. 

Whether a user chooses to interact with your company through their tablet, their phone, a browser or an app, the experience should ideally be characterised by continuity. 

Here are some interesting stats regarding the impact of the omnichannel principle in business: 

• The purchase rate of campaigns using three or more channels during a campaign is 287% higher than those using a single channel. (Omnisend) 
• Omnichannel strategies drive an 80% higher rate of incremental store visits. (Google) 
• 9 out of 10 consumers want an omnichannel experience with seamless service between communication methods. (UC Today)

Omnichannel commerce and user experience are a real thing. They already have a big impact but what’s even more impressive, is their potential going forward. 

This is not something businesses can overlook or look the other way from. It’s not a trend but a reality and sooner or later, any business that wants to stay competitive will embrace the omnichannel principle. 

Omnichannel Verification: A Unique Challenge 

What’s the challenge of omnichannel customer verification? The countless touchpoints between business and customer. 

Whilst offering the customer the opportunity to interact with the company and seamlessly switch between platforms during their user journey, that’s a security and logistical nightmare in the backend. 

Just pay some attention to the different point of interaction between business and customer and try to imagine the considerations regarding platforms, devices and channels: 

• Web
• Mobile
• In-store
• Over-the-phone
• ATMs 
• Chatbots
• Digital assistants (Siri, Alexa) 
• Social media

How can you automate this matrix? 

Goodbye Passwords, Hello Biometrics

Passwords have never been the optimal way of verifying user identity. It was more of a means to an end and everyone involved in tech and business it wouldn’t be long before the new frontier of identity verification will arrive and it seems like it has. 

In one of our recent articles, we identified the “Top 3 Digital ID Trends Heading Into 2021” and biometrics were one of the three trends to make the list. Why? Because they offer an elevated security product and a more user-friendly experience. 

What we can now add to the list of biometrics advantages is their technical malleability and modality. They are adaptable pieces of technology that make them ideal to plug into a comprehensive, omnichannel presence.

The industry findings on the state of omnichannel fraud and the potential impact of biometrics are staggering. 

In a recent study by Forrester titled “Navigating The Omnichannel Fraud And Authentication Landscape”, results show that a business employing an omnichannel strategy is more vulnerable to online fraud and attacks. 

Let’s look at some numbers: 

• 82% of firms agree that authentication across channels is increasingly critical to fraud prevention. 
• 84% say their ability to prevent fraud on any one channel is nearly or fully optimized, showing a worrying overconfidence.
• 45% of firms experienced a 4% or greater increase in the rate of fraud on their mobile applications and websites in the past 24 months.

Whilst legacy identification methods like passwords and personally identifiable information still rank at the top of the list when it comes ro preferred identification methods, it’s encouraging to see that biometrics are not far behind: 

• 73% fingerprint biometric authentication 
• 73% behavioral biometric authentication 
• 66% voice biometric authentication 
• 64% face biometric authentication

Biometrics are a natural fit for omnichannel authentication. It’s not a matter of if businesses should use them, but a question of how. 

Biometrics are separated into two categories: server-based and device-based. 

The differences between the two are probably the subject of a different blog post but we if you really want to dig deeper, have a look at this white paper by Aware, titled “Mobile biometric authentication: Device-centric vs. server-centric architecture.”

Recap

The bad news is that omnichannel verification is a beast of a challenge for any business. The good news is that not only is there a solution, there are companies that have taken it upon themselves to develop and perfect it. 

Identomat’s proprietary technology was built to facilitate an omnichannel presence, ensuring that customer onboarding and the overall customer experience are smooth, intuitive and seamless. 

Have a chat with our team and tap into their experience regarding this very technical and sensitive issue. Remember that managing to set up a robust omnichannel verification process will help your business with:

• Cost reduction for fraud investigation
• Higher customer satisfaction
• Reduction in reputational costs
• Decrease in direct monetary losses due to fraud

Looking forward to chatting with you! 

We come bearing some exciting news: Identomat has been selected to participate in the pre-Disrupt 2020 pitching masterclass, Pitchers & Pitches! Our company will be one of 6 startups to participate in this high-profile event with our CEO, David Lomiashvili representing us at the event.

This fintech gathering brings together six early-stage startups with a panel of top venture capitalists and savvy TechCrunch editors, for a rapid-fire pitch competition with comprehensive advice to turn the pitches into the key to unlock the opportunity.

The participants have been selected from exhibitors in the Digital Startup Alley, and are now putting final touches to their pitches. The judges will critique each pitch and offer tips to sharpen it to perfection.   

The prize? The winning startup will get an exclusive coaching session with cela, a company that brings together early-stage startups and accelerators/incubators in order to help them grow and expand. 

The panel of judges waiting to be impressed includes two top VCs — Konstantine Buhler, partner at Sequoia Capital, Anne Gifford, investor at Tusk Ventures — and two pitch-savvy TechCrunch editors, Anthony Ha and Darrell Etherington.

The best part? The master class can be watched online, and the tickets are FREE. You can REGISTER HERE and watch the event at at 4 p.m. ET / 1 p.m. PT. Free advice from experts of this caliber does not come by often, and we’re more than ready to take notes, learn, grow and take the next step in our journey.

Startups need as much advice, guidance and feedback in the early stages of their lifetime in order to pivot, adapt and grow. Here at Identomat, we don’t take events like this for granted. It’s an amazing opportunity to show the world what we have been working on relentlessly for the past couple of months and at the same time, a chance to learn from some of the brightest minds in the industry. 

May this be the first of many similar events. See you at the masterclass!

According to McKinsey:

• 110 billion hours could be potentially saved through streamlined e-government services, including social protection, enabled by digital ID.

In a different report by McKinsey, these digital identity stats come to light: 

• In Estonia, over 30% of individuals vote online, of whom 20% say they would not vote at a physical polling place.
• In 2030, digital ID has the potential to create economic value equivalent to 6% of GDP in emerging economies on a per-country basis and 3% in mature economies, assuming high levels of adoption.
• The state of adoption of digital ID is mixed, indicating room for improvement and growth. Forty or more national or non-national digital identity programs exist today.

These stats reveal a few important things about the future of digital identity verification:

• It has untapped potential
• Its value to the private and public sector is unquestionable 
• It’s something that will continue to develop over the coming years

Today, we will investigate 6 trends that will drive digital identity in the years to come. 

Digital Identity Reason #1: Mobile-First Solutions

52% of global internet traffic is mobile. (Statista)

The way we consume the Internet is officially, more than 50% mobile. This is a trend that won’t decelerate any time soon. 

Tech giants such as Google frequently drop hints about the growing adoption and potential of mobile usage. 

This reality is something that will directly affect digital identity solutions moving forward. 

Much like responsive web design has been integral for the digital viability of businesses, adapting, adjusting and streamlining identity solutions for mobile, will be key.

Digital Identity Reason #2: Security, Security, Security

Securing personal data and information has been one of the hottest topics across the globe for the past two years. 

These are the events that have brought security at the forefront of the tech world:

• Cambridge Analytica scandal - Facebook’s biggest mishap to date saw millions of user profiles collected without consent by Cambridge Analytica for political advertising. 
• Canva - Graphic design tool Canva endured a cyber-attack that exposed email addresses, usernames, names and cities of residence of their clientbase. 
• Sina Weibo - China’s version of Twitter suffered one of the most notable data breaches to date. The real names, site usernames, gender, location, and phone numbers of 172 million users were auctioned for sale on the dark web.

The General Data Protection Regulation of May 2018 (GDPR) for the European Member States is a great sign of where things are headed. 

The GDPR’s main goal aims to give EU citizens more control over their own personal data, improving their security both online and offline.

The past couple of years have seen a global turn towards legislation that will secure digital  identity and it’s a trend that will continue picking up steam. 

Digital Identity Reason #3: Smart Cities

It started with the smartphone - a device that gives us access to digital versions of our finances, entertainment and communication.

It continued with smart houses - a house that obeys the smartphone and allows us control over the TV, heating, water temperature, music and so many other amenities. 

Now, the next step to this digital evolution is the smart city - an urban area that through the use of the internet can automate services and resources that previously needed manual involvement. 

How does digital identity feed into that? It’s the key that unlocks the smart city. 

Digital identity in conjunction with e-government can unlock the true potential of cities, making it possible to achieve a more luxurious and seamless way of living. Here are two examples:

Example #1: Healthcare

We are turning to healthcare for an example as it is something everyone can relate to and it can shed some light on the meaningful impact of digital identity to society.

Imagine a world where medical practitioners can access detailed medical records whenever they need them, while patients can be tracked in the comfort of their own home and supplied the right medication at the right time. 

Healthcare is by nature a very admin-heavy sector and the introduction of a digital identity can surpass the admin hurdles and create a simpler path to healthcare services. 

Example #2: Parking

This might seem as something trivial, but it's more of an example showcasing the potential of digital identity rather than the actual parking solution. 

Picture a scenario where you park in dedicated parking spots and your bank account is automatically debited with the parking fee. No parking ticket, no machine, no manual labour. 

Digital Identity Reason #4: Public Authorities Assume Responsibility

Digital identity exists as a product or a service in the private sector but the truth of the matter is that in order to become a legitimate idea, governments need to be actively involved. 

Here’s an example of what authorities can do. The European Union’s eIDAS Implementing Regulation (2015/1501) established that the minimum data set of unique identity attributes for a natural (i.e. a physical) person: 

• Current family name(s) 
• Current first name(s)
• Date of birth
• A unique identifier which is as persistent as possible in time 
• Place of birth
• Current address
• Gender

This is merely an example of what is expected of the government. In order to create a viable  digital identity ecosystem with strong privacy and security safeguards, it is necessary to have: 

• Statutory regulation that will clearly define the reasons for the processing of personal data.
• Enhanced security requirements and sanctions for data breaches and security incidents in general.
• Protocols and standards that empower government bodies to oversee procedures and incidents of data breaches. 

Government and international governing bodies need to be fully immersed in the definition, application and management of the digital identification process if this is going to flourish. 

Digital Identity Reason #5: Millennials Will Drive The Change

The millennial generation is disrupting the digital identity field and is considered to be the main driver behind this change. 

The IBM Security : Future of Identity Study surveyed nearly 4,000 adults from across the U.S., Asia Pacific (APAC) and Europe and the findings are eye-opening: 

The study showed that while 75% of millennials are at ease with using biometrics today, less than half are using complex passwords, and 41% reuse passwords. 

Millennials are trending to become the largest generation in today’s workforce. Their input and preferences regarding digital identity will directly impact the way technology companies develop their products and services. 

Takeaways

The industry is changing in the near future and we’ve compiled the reasons this change will come about: 

• Mobile-First Solutions
• Security
• Smart Cities
• Public Authority Involvement
• Millennials 

Our team here at Identomat is always open and available to discuss the possible impact these changes might have on your business and bottomline. More importantly, our team is equipped with both the knowledge and the experience to advise you about the most suitable course of action.  

We are excited to announce that the Identomat team will be attending TechCrunch Disrupt conference, which will take place on September 14-18, 2020. 

We had a perfect headline for this announcement, had the year 2020 gone differently. If it was not for COVID, we would have written something like “San Francisco Calling”, or ‘When you’re Going to San Francisco...”, to announce our participation in one of the industry’s hottest events, TechCrunch Disrupt 2020. And we’ll still be doing that - albeit in a virtual format, as Disrupt 2020 is going virtual this year, due to the global pandemic. 

Here’s a word from the organizers: ‘As you can imagine, this is largely due to the impact that the coronavirus has had on the world. But it also gives us a chance to make our event even more accessible to more people than ever before, and we’re incredibly excited about that. And Disrupt will stretch over five days — September 14-18 — in order to make it easier for everyone to take in all the amazing programming.‘

Identomat will be exhibiting in Startup Alley, and we are incredibly excited to present and pitch our AI-Powered KYC and Identity Verification Technology. Virtual or not, what’s more exciting for a fresh tech startup than presenting its brand and technology at the event that had launched the glory of brands like Dropbox, Cloudflare, and Fitbit, to name a few? 

As Disrupt puts it, ‘Zuckerberg, Benioff, Musk, Kalanick, Mayer, Dorsey and many other startup stars have been on the Disrupt stage long before they were in the headlines. TechCrunch continues to keep the pulse of the startup world and knowing which rising stars to cast for the bright lights of our stage is what makes Disrupt the must-attend event for the ecosystem. Disrupt delivers for founders who want to master Silicon Valley’s equations and provides an experience for enthusiasts who want to be a part of what's happening and relevant now.’

‘Kicking off Identomat’s publicity at Disrupt 2020 is absolutely invigorating”, says Identomat’s CEO David Lommiashvili. “It’s true, we envisioned introducing the company to the world in the format of real-life interactions with the audience, but, after all, the technology gives us luxury to make the most of the launch even in these tough times.”

Stay tuned as we'll be bringing you full TechCrunch Disrupt 2020 event coverage.

If it wasn’t obvious that digital identification procedures were becoming a focal point for businesses, the Coronavirus pandemic made sure to shed some light on it. 

During the lockdown, companies turned the online key to full blast and it didn’t take long for the digital identification part of the equation to reveal its importance. Companies need a robust, trustworthy, and seamless digital onboarding process in order to have a fighting chance in the digital world. 

Data scandals such as the Facebook scandal and the Marriot data breach are perfect examples that even the biggest players in the game are susceptible to online threats. Finding the answer to the security conundrum is a never ending battle for players no matter of size and experience. 

It seems that if there’s ever going to be a sustainable solution to this problem, it’s going to be regulation. In order to create a secure data-processing world, digital identity needs regulation to be its ally and slowly yet steadily, build a framework where this technology can thrive. 

Today, we’ll investigate the current regulatory environment surrounding the technology and the friction it causes with user experience. 

Comfort vs Safety: A Neverending Story

This idea isn’t new - the safer something is, the longer it takes, the more it costs and the less fun it is. The most advanced and latest iteration of digital identity verification is video KYC in conjunction to liveness checks. 

This is definitely a step up from the humble beginning of online KYC, but it’s still far from perfect. These processes are usually expensive to acquire and you are essentially sacrificing a slice of comfort in the alter of safety.

To put it simply, the process is still long and not particularly enjoyable for the end-user. 

Financial Sector Can Act As a Guide...of Sorts

The financial sector is one of the most highly regulated sectors regarding KYC, AML and digital identification. Here are the most notable FI regulations:

• AMLD6 - The European Commission’s Latest Directive on AML
• The FATF Guidance on Digital Identity - A guide to help governments, financial institutions, virtual asset service providers and other regulated entities determine whether a digital identity (ID) is appropriate for use for customer due diligence (CDD)
• eIDAS (electronic IDentification, Authentication, and Trust Services) - An EU Regulation that sets out rules for electronic identification and trust services. These services help verify the identity of individuals and businesses online or the authenticity of electronic documents

As you can see, the financial services sector is not leaving anything chance. It seems that this would be the ideal place to start a digital identity regulation crusade, right? Yes and no. 

Yes, it is a good place to start because the financial sector has been proactive and has paved the way for setting industry standards. No, it’s not a good place to start because despite it being a heavily regulated sector, financial institutions “boast” the biggest scandals and mishaps. 

A recent study from Juniper Research showed that businesses in eCommerce, airline ticketing, money transfer, and banking services, will cumulatively lose over $200 billion to online payment fraud between 2020 and 2024. 

Numbers like that do make you scratch your head and wonder why fraud is escalating at a crazy pace when more and more regulation is set in place to prevent exactly that. If we had to create a reasonable argument as to why this is happening, our answer would go like this. 

It’s a matter of speed. The speed at which regulation is created, but most importantly enforced, is much slower than the speed at which fraudsters are able to decipher and break through the newest technology. 

If the digital identity sector has anything to learn from FI regulation, is that it needs to be more flexible, adaptable, and quicker to respond. 

If you’re looking for a good sign on where things are headed, here’s one. 

The European Commission recently launched a public consultation on the eIDAS regulation, taking into consideration the latest technological and policy developments, such as the increased reliance on doing business online.

Want another one? 

Onfido’s latest report calls for a unified EU regulatory framework for digital identity verification. A system that supports different use cases across different industries. 

Signs are promising but the volatility of this industry will never let it take a breather. Regulation is a huge factor in how vendors and technology companies will evolve their offerings. What will happen remains to be seen but you can rest assured we will be here to pick it up and relay it back to you. 

In a business world where finding a unique selling point is as hard as finding a needle in a haystack, digital identity verification might just be the market with the most untapped potential. 

Digital identity verification has long been seen as a necessity rather than a business driver. A process deemed obligatory for the operation of any business with an online presence. 

The coronavirus pandemic came to change this notion completely. Businesses were forced to operate remotely and embrace the online world, putting even more weight and emphasis on digital identity verification. 

Suddenly, onboarding customers from remote locations became a business driver and an area that could literally make or break your business. Looking closely at recent stats and surveys, it becomes very apparent that digital identity verification is a deciding factor in whether customers choose to stay with your brand. 

The stats show an impressive inefficiency of the current onboarding methods which means only one thing: opportunity. The market is currently underserved and the businesses that manage to figure it out first will be the ones to come out victorious. 

Now let’s look at some stats.

Digital Identity Verification is a USP in The Making

IDology’s Third Annual Consumer Digital Identity Study has revealed some impressive stats regarding the ineffectiveness of the current identity verification process and its impact on business: 

Percentage of American adults who abandon the signup process for a new online account: 

• 2018 - 42%
• 2019 - 37%
• 2020 - 48%

Here are more stats that highlight the opportunity at hand: 

• 57% of online adults are extremely worried that they will be victims of new account fraud (NAF)
• 2/3 of Americans want companies to do more to safeguard their personal information 
• 77% of participants are more likely to do business with a brand that uses advanced digital identity verification methods

According to a report by McKinsey Global Institute (MGI), using digital ID verification processes could reduce customer onboarding spending by approximately 90%.

We could keep unearthing stats and surveys for you but it’s not hard to get the gist. People value the onboarding process and give it more attention than you think. 

If you are of the mindset that this is something customers have to do in order to open an account, which means it doesn’t matter how arduous or unrefined the process is, you’re mistaken. 

People have a choice and they won’t hesitate to abandon their online verification process if they find it too challenging in order to give another vendor a shot. 

Here’s where your mind should be at: 

• People are seeing the online verification process as a “test” of whether they will stay or not with the company
• We, as a company, should revisit the process and try to make it simpler, easier, and faster
• User experience and design should be driving the rethinking exercise
• Let’s turn digital identity verification into a USP
• We should be tracking conversion rates and measuring at which part of the process people are falling off in order to fix it

Successful businesses are the ones that focus and execute on details and take every opportunity they get to become better. Customer service, digital identity verification, and payment checkout are parts of almost every company in the world and the reason why companies don’t pay as much attention to them. 

This is where the opportunity lies. Taking something the whole world is overlooking and redefining it. 

Trust is Not Bound To One Location

If we had to play the word association game, “trust” would be the first word that comes to mind when talking about digital identity verification. The digital identity verification process is essentially a trust-building exercise between company and client. 

The company is trying to verify whether the client is eligible to do business with and the client is gauging comfort, offering, and value. 

To validate this theory comes a recent  PwC survey showing that only 25% of consumers believe companies handle their sensitive information responsibly. Additionally, 87% will choose a competitor if they don’t trust a company to handle their personal information as they should.

Achieving to automate and streamline this process won’t just get you brand loyalty but it will open the doors to acquiring new business. Trust knows no boundaries and tuning the digital identity process into your USP will be a driver for new business.

It’s the passport every business is looking for in order to operate globally. Building such a transparent, trustworthy onboarding process gives customers all around the world the confidence to place their faith in you.

But how exactly do you build that solution?

Finding The Right Dance Partner 

The theory is great - turn the digital onboarding process into your USP. How do you it, though? Where do you start? Where should you be looking at?

The answer is simpler than you think - find the right technology provider. Digital identity verification is a beast of its own and a breed of technology that’s developing fast. To try and do it on your own would be an entirely new business venture in its own right.

Thankfully, the eKYC market is growing and the choice is aplenty. Before you take a shot at a prospective provider, make sure they tick some boxes. Make sure they bring to the table a solution that fulfills your needs and will truly give you a USP. 

What you should be looking for in your digital identity verification provider are the following: 

• Agility - The ability to tweak and tailor their offering to your needs
• Proprietary technology -  Someone who created their platform from scratch. It shows skill, dedication, and knowledge. 
• Evolution - A company that enhances and develops its offering as time goes by. 
• Constant support - Look for a company that doesn’t sell you a product, it helps you find a solution. Meaningful customer support is as crucial as the platform itself.

Our team here at Identomat is always available for a chat. Reach out and start a conversation that might change your company’s onboarding process forever. 

We’re passed the halfway point of 2020 but it might as well be the year 2023 with all that has transpired this year. 

From Brexit and the US-China trade to a worldwide pandemic that’s still spreading insecurity and volatility, we’ve been through a lot.  

To try and predict what the future world for Digital ID, or any other topic for that matter, is indeed optimistic on our part. What we’ll do instead of predicting, is engage in informed guessing, based on the information we have right now. 

Let’s dive right in.

1.Access To Data Is The Name Of The Game

We might be living in the golden age of information, but when it comes to KYC/AML, Google will simply not do the job. 

When it comes to identity verification, anti-money laundering checks, and fraud prevention, companies are looking for information that is not readily available on the world wide web. When conducting a background check, a company is usually looking for information in:

• Corporate registries
• Sanctions lists
• PEP lists
• Government documents 
• Dark web

Access to these information sources usually requires passwords, verification steps, and several other highly impenetrable steps. Couple that with the fact that this kind of data is spread across different territories and languages, and you immediately realize that accessing data is far removed from a simple Google search. 

Googling information for KYC purposes might sound laughable to you but it’s a sad reality. A recent survey by KYC/FinTech powerhouse Arachnys has revealed that 85% of AML & KYC analysts use Google for due diligence purposes. 

The number is staggering and it goes to show that we’re still at beginning of a trend that will change the way digital identification is executed. 

2021 onwards will probably see digital ID verification companies partnering with FinTech platforms and vendors such as Arachnys in order to broaden their access to data. Digital ID providers will essentially have to enhance their offering by not just identifying that the person who they are onboarding is who they’re saying they are, but also ensuring that they have a past that doesn’t incriminate them or make them a threat for the company in any way.

2. Artificial Intelligence Will Continue To Drive The Industry

Much has been said about AI and the eKYC sector and believe us when we say that the hype is real. Artificial Intelligence has been commercialized and commonly accepted as the technology that will drive the sector forward for years to come. 

The FATF Guidance on Digital Identity was a major step in normalizing and legitimizing AI within the digital ID community but there’s more to come where that came from. 

All you have to do is look at the White Paper on Artificial Intelligence: a European approach to excellence and trust from the European Commission and you quickly realize that this is not a trend that will spike and fall. This is the new state of affairs. 

What will become more apparent in the years to come, is the human role in the digital ID process. A common misconception about AI, in general, is that it replaces people in the workplace. 

This couldn’t be furthest from the truth and it’s surely not the case in the KYC vertical. As AI continues to evolve, so will the role of compliance professionals. 

The space of Behaviour Analysis is becoming more and more prominent as a result of AI use in ID verification. Companies are now trying to understand their users and create a balance between security and convenience. 

Let’s give you an example. 

If you buy your lunch from the same place, every single working day and you are suddenly buying lunch in another country, the system will be able to pick up on the irregularity and immediately request an extra layer of identity authentication.

3. Biometrics Are The New Tech Frontier To Look Out For

For those of you not familiar with the term, biometrics are processes of identity verification that identify physical and behavioral patterns. Iris recognition, face recognition, and finger geometry recognition are some of the most popular biometric examples. 

Biometrics became a prominent topic of discussion during the coronavirus pandemic. The social distancing and remote working conditions enforced in most major markets created a breeding ground for online fraud. 

This new state of affairs created the need for new, improved digital identity solutions. 

Enter Biometrics. 

This new breed of technology is coined to be the ideal solution for the situation created by the virus for a number of reasons. First and foremost, it provides an extremely high level of security and assurance as everyone has access to a unique set of biometrics. It makes it virtually impossible to steal or fake someone’s “credentials”.  

Then, there’s user experience - an area where biometrics excel with their convenient and fast offering. Users can simply use their phones to scan their physicals characteristics and give the platform the data is needs to confirm their identity. 

The seed has been planted and it seems that 2021 onwards, biometrics will start to become even more of a commercial solution. 

According to Technavio, by 2024 the demand for mobile biometrics and m-commerce, combined with the technology’s efficiency in preventing fraud, will be the main driver for the increase in the global mobile biometrics market. The estimated increase is $15.63 billion at a CAGR of 19%.  

Not only is the industry set to boom in terms of commercial demand and supply, but regulation will come into play too. The regulations surrounding AML and KYC, including 5AMLD and 6AMLD, make provisions and have clear pointers for remote authentication, opening the door at biometric usage even more. 

Recap

There you have it: an informed assessment of what the future might hold for the digital ID sector. If history is anything to go by, you can never be sure about what’s in store in business but what you can do, is prepare. 

Companies that had remote working protocols in place where the ones to do well during the crisis, showing once again how being proactive will always serve you well rather than be reactive. 

Whether these trends will pan out, only time will show but what you can do, is consider them in your planning going forward.

The process of vetting customers before onboarding them is not a novel idea. 

Know Your Customer (KYC) and Anti-Money Laundering (AML) processes have been around for a long time but since merchants have started moving their businesses online, the world of KYC is changing. 

Now, businesses need to factor in the digital element of these processes and embrace the era of eKYC and online identity verification. Let’s dive right into it. 

eKYC is Becoming a Regulatory Prerequisite 

One could argue that a few years back, electronic know-your-customer processes were nice to have. Today, that is no longer the case. 

The dynamic regulatory environment is asking more of compliance teams and the only way to stay in line with these demands is through eKYC. Automating the online verification process is not just a sales tool - its meaning to the company goes well beyond onboarding clients faster. 

FAFT’s guidance paper for digital ID systems is a prime example of that. The paper paves the way for regulatory technology and eKYC. 

Then you have the AMLD 6. The Sixth Anti-Money Laundering Directive opens up the scope and money-laundering offenses list, creating more work for compliance teams around the globe. 

If you take into consideration that these events took place in 2019, it becomes very apparent that sorting out your compliance process isn’t really an option, it’s a necessity. 

eKYC is capable of automating previously manual procedures, processing more information in less time and ensuring that the company and employees alike, fall in line with the growing scrutiny and regulation. 

eKYC is Already Making Some Noise

The fear of the unknown is a real thing and when it comes to reimagining your entire KYC process, it’s no surprise that you wouldn’t know where to start or how to go about it. 

Thankfully, others have done it before you and there’s a lot you can learn from them.

Bank Negara Malaysia released their eKYC Guidelines draft in December 2019. On June 30th, 2020, the Bank took the next step and released the first part of their official Electronic Know-Your-Customer (e-KYC) Guidelines. 

Here’s one of the many important points made in the document: 

“e-KYC solutions may utilise artificial intelligence, machine learning, or other forms of predictive algorithms to ensure accurate identification and verification. This may result in the automation of the decision-making process for customer identification and verification, thus reducing the need for human intervention.”

The significance of such moves is massive as it shows that eKYC is no longer an idea, but a plausible, enforceable and very much real solution to digital identification and customer onboarding. 

eKYC Cuts Costs & Increases Profit Margin For Companies

Companies exist to make money and there’s no other way around it. eKYC can be a major contributor to that cause and there are facts to prove that. 

A recent World Bank report points out the reduction in average verification cost per customer from $23 to a staggering $0.50. 

If that’s not enough to prove the jaw-dropping effect of eKYC on the businesses’ balance sheet, then how about this? Electronic customer verification will take a few seconds to take place compared to 5-7 days when done manually. Jaw-dropping. 

Customer Acquisition or Customer Retention? How About Both?

It’s a rare phenomenon to come across a piece of technology that serves as both customer acquisition and a customer retention tool - eKYC does both. 

Onboarding customers has traditionally been a customer acquisition nightmare for the following reasons:

• It required the physical presence of the client in opening a new account
• It was time-consuming
• It was complicated

Companies would invest a lot of money in their marketing efforts, driving interested clients to their websites/physical store, only to have them drop out at the onboarding stage. 

Enter eKYC. 

By digitizing the process, companies are essentially investing in a conversion tool. The onboarding process is the first real interaction between the company and the client and the first real opportunity to win them over. 

By offering them a fast, easy and intuitive process, eKYC becomes as much of a sales channel as it is a compliance one. 

And then there’s retention. 

Online identity verification is your first retention test. Getting customers over the line and making part of your company’s ecosystem counts as a retention win as you’re essentially earning their trust. 

KYC is by its very nature a very tedious and tiresome process. Managing to turn it into a quick, seamless procedure will only win you brownie points. 

Conclusion

The online identity verification frontier is no longer a novelty, but common practice. Companies that understand the value-altering capabilities of this new technology have a head start over their counterparts.

In an era where getting an advantage over competition comes at a premium, eKYC gives you the opportunity to increase the value of both your brand and offering. 

Our team here at Identomat is focused on building identity verification for businesses from the ground up. We don’t create products that we then try and sell to businesses. We build products according to business needs and then help businesses implement them. 

Reach out and let’s start putting together the eKYC process that will propel your business.

Artificial Intelligence (AI) is one of those things that everyone recognizes as a name, but very few people seem to really know what it does. 

It’s something to do with smart robots, thinking for themselves that if we’re not careful enough, could turn into a Terminator sequel, right? Wrong. 

Don’t laugh just yet as misconceptions about artificial intelligence go well beyond The Terminator parallel universe. They are nothing more than a product of misinformation about this generational breed of technology.

Today, we’ll address 4 popular myths and give you the cold hard facts about what is true, and what is pure fiction. Let’s begin.

AI Myth #1: Artificial Intelligence is For NASA, Tesla & MIT 

AI sounds something out of a space movie and it comes as no surprise that most people think of it as untouchable, as something only the few can access and use. 

That couldn’t be further from the truth, as AI has come a long way since its inception, slowly yet steadily becoming a commercial product. Today, AI is found in everyday business tools that can transform your brand. 

Here are a few examples: 

• Conversica - with its army of Intelligent Virtual Assistants, Conversica helps organizations drive and convert customers at scale. The software can engage with leads, schedule meetings, and turn them into paying customers
  
  
• x.ai - your personal scheduling done right. x.ai is integrated to your calendar and emails and takes over the scheduling of your life without your involvement.
  
  
• Recorded Future - this is one of the best cybersecurity products on the market. Recorded Future provides real-time tracking, and analysis of massive data sets to detect potential threats and breaches of information.
  
  
• Identomat - with KYC being as dynamic of an industry as it is, Identomat has managed to streamline the onboarding process, building a solution that adapts and serves businesses of all industries and sizes. 

AI Myth #2: Artificial Intelligence Will Replace People in The Workplace

One of the most common misconceptions about AI is that it will end up taking away jobs from people. 

Once again, this is normal as AI does a lot of things that were traditionally performed manually. The truth is that AI will not steal jobs. On the contrary, it will create jobs. 

According to the World Economic Forum’s (WEF) 2018 Future of Jobs report, AI will be responsible for 133 million new jobs by 2022. 

The generational nature of AI technology means that job roles will evolve, not be abolished. People will have to adapt their skill-set and take on more decision-making positions. AI is not an enemy, but a friend. 

AI Myth #3: Artificial Intelligence Operates Autonomously

We’re back to the whole “machines taking over the world” argument. Don’t sweat it just yet. 

There’s a big difference between automation and completely autonomous machines. AI is great at making sense of large data sets, personalizing them to the user’s habits, and providing a seamless, faster, smarter user experience. 

When it comes to matters of critical importance such as healthcare and the military, the human element is still essential. Going back to the previous point, AI is creating jobs for people to create, operate, and interpret it. 

The whole idea behind the technology is predicated on the notion that a human will be at the tail-end of the process to make sense of the data and have the last say. 

IBM’s Senior Vice President for Watson and Cloud, David Kenny, stated the following in IBM’s Open Letter to Congress on Artificial Intelligence: “Critical decisions require human judgment, morals, and intuition—AI does not change that.”

AI Myth #4: Artificial Intelligence is a Digital Version of The Human Brain

This is a very inaccurate positioning of AI’s nature and capabilities. This misconception stems from the fact that we have frequently used the words “learn” and “think” in our descriptions about the technology.

That is a very free-form way of explaining the complex workings of artificial intelligence but it’s essential to understand the things that separate it from the human brain. 

Thankfully, a recent paper in Minds and Machines by David Watson of the Oxford Internet Institute and the Alan Turing Institute comes to the rescue. The paper goes into detail, analyzing the major differences in the level of understanding and perception between AI and the human brain. 

Here’s a quote by Watson that summarizes the essence of the paper: 

“Algorithms are not ‘just like us’... by anthropomorphizing a statistical model, we implicitly grant it a degree of agency that not only overstates its true abilities but robs us of our own autonomy... It is always humans who choose whether or not to abdicate this authority, to empower some piece of technology to intervene on our behalf. It would be a mistake to presume that this transfer of authority involves a simultaneous absolution of responsibility. It does not.”

Conclusion 

AI is no longer the future, it’s the present. It has infiltrated almost every single industry and it’s an essential cog of the business world. 

As it becomes more and more prominent it’s good to start familiarizing ourselves with what AI is, what it can do, and how it can ultimately help our business. 

Knowledge is power and debunking these myths is not just cool for a watercooler convo but the beginning of an exploration journey regarding AI. Our team here at Identomat are always ready and available to answer any questions you might have on the subject of AI.

Feel free to contact us. 

Online KYC has come a long way - from sending printed paper proof that was manually examined, we have reached a point where KYC onboarding happens in a matter of few clicks using the camera of your phone, pictures, and videos. Whilst this has been a brilliant first step for online KYC, it’s proving to have its shortcomings. 

The Problem

Passive liveness checks have been popular amongst online businesses as they have significantly reduced operational costs, abandonment rates, and onboarding time. Where’s the problem, you might ask? Online fraudsters and scammers have targeted the new technology and they have slowly yet steadily picked it apart. 

For the most part, liveness technology is structured around 2D projections that analyze images as flat. Whilst that type of tech can still detect movement, it can’t scan and process for depth and micromotions.

That immediately opens the door to several copycat techniques that are used to bypass the test: masks, printed images, pre-recorded videos, and avatars. What’s the solution? An active liveness check. 

Active Liveness Check

Active liveness detection mechanisms require the user to follow a more demanding process. These mechanisms usually consist of mirroring a certain movement on camera, smiling tilting your head, or replicating a gesture with your hand. 

Implementing these mechanisms has proven to be bittersweet for companies. On one hand, there’s no doubt that they raise the bar and quality of the identity verification process. On the other hand, they impede the speed and efficacy of the onboarding process, increasing abandonment rates. 

ID R&D’s whitepaper titled “The Important Role Of Liveness Detection In Face Biometric Authentication”, companies report abandonment rates as high as 50% for active liveness. The difficulty for companies does not stop there. 

Companies have to also consider the industry standard and regulation. The ISO/IEC 30107-3:2017 dealing with information technology — biometric presentation attack detection — testing and reporting, has been coined as tough and challenging to pass. The ISO/IEC 30107-3:2017 is not the only benchmark around.

The NIST contest known as FRVT 1:1 is one of the most reputable and credible benchmarks in the biometric and face recognition industries. Being ranked in their database is a hefty goal for companies, making the conundrum between quality onboarding and commercial success even tougher to crack. 

Where Do Liveness Checks Go From Here?

As you might have realized, there are two camps in the liveness check world: the commercial side and the technology side. From a commercial standpoint, companies want onboarding to be fast, easy, and user-friendly, converting customers. 

The technology side of the equation is a bit more cynical, focusing on the security of information, trying to make the onboarding process as robust and bullet-proof as possible. In an ideal scenario, a provider should be able to combine the best of both worlds and give you a mixture of passive and active liveness checks for optimal security and user experience. 

For more information on our technology, feel free to contact a member of our team. 

In the current times of uncertainty, not many would take the risk of starting a new business or expanding their existing venture. Covid-19 has hampered growth for many ventures, replacing potential with uncertainty. Yet, in some areas, the old adage that crisis equals opportunity has been proven to be true once again. The country of Georgia is one such example. 

If one goes over the statistics of how the pandemic had been handled by East European and Caucasus Region countries, it is clear that Georgia has been on top of the game. With one of the lowest infection rates in the Caucasus and Central Asia, the country has been praised by the Asian Development Bank and others for its early actions to combat the virus.

As businesses start to reopen, many research companies have begun studying the post-Covid countries and the likelihood of life going back to normal, the pace and how the tourism and business are going to recover. What may come as a surprise to some, Georgia has been named twice in such rankings Firstly, Tbilisi and Batumi as the Safest European destinations of 2020 (ranking 1^st and 7^th accordingly), according to Forbes.

The second mention concerns the potential of Georgia. Emerging Europe, a powerful news hub focused on social, economic, political and cultural issues of the Central and Eastern European region, has featured Tbilisi as the Number 1 in the Economic Potential category among 75 European cities . Highlighting the region’s innovation news, sustainability, challenges, opportunities and noteworthy projects, Emerging Europe is an online business-oriented hub of news to watch for, and the leading ranking of Georgia’s capital, based on a number of indicators, is quite an honour.

This title adds to the previous ranking carried out by the World Bank in 2019, naming Georgia the 7^th among 190 countries in the Ease of Doing Business.

Georgia has always been focused on improving and modernizing existing services to simplify the day-to-day, mundane processes for its citizens and businesses. And honestly, the country has been continuously thriving in this area. For instance, Identomat, an AI-based KYC and AML platform that helps businesses onboard their customers in a fraction of time. 

Simplifying customer experience has always been the focal point for any company. Take Aldagi, the leading Georgian insurance company. Aldagi has fully adopted Identomat’s AI technology and now, thanks to it, customers can renew their insurance agreement without the need of going to the branch office. These processes and multiple similar examples are the proof that innovation and modernization is the driving force of progress, which cannot be stopped even by the global pandemic. 

Since around the world, technology and financial business have merged and become Fintech, Georgia has quickly adapted the trend and showcased the readiness to become a reliable partner and a leader among the best. Being named Number 1 in the Economic Potential Category gives Tbilisi the recognition and acknowledged in this and many other fields, promising further growth and potential for Georgia and its capital.

Did you know that 40% of customers drop out during the onboarding process? The statistics are staggering, but we would be lying if we say we weren’t expecting it. To put it lightly, identity verification is a hassle for most people — providing ID documents, taking selfies and photos that are often declined. You would hardly call this a fun activity. The lack of clear directions and overall bumpy user experience create a frustrating procedure that almost half the people that go through it, decide to quit.

Could you, as a business, avoid the identity verification step of the onboarding process and immediately see your conversion rates skyrocket? Sure, if you are willing to bet your whole business on it. Identity Verification is an absolute must-have for your business. Besides being a legal requirement in a growing number of industries, it’s a necessity in the era of digital transformation, large-scale data breaches, identity theft, and account takeovers. Businesses need a reliable way to determine if a user is indeed who they claim to be online. The challenge is, how do you provide identity verification in a way that does not make your potential customers leave?

What you should be looking at is not trying to avoid the process, but rather reinvent it in a way that keeps the customer engaged.

How do you make the KYC process interesting enough so that customers don’t drop out?

At Identomat, we believe that it’s possible to turn the KYC process into a truly rewarding experience for the customer. Our flagship product was put together with the mission of enabling businesses to onboard customers faster and easier while maintaining the highest level of security. The secret to success is a minimal intuitive design and frictionless automation that can empower the user to seamlessly go through the process without roadblocks or hiccups.

In saying that, we understand that every business is different and brings its own set of challenges. This is exactly why we offer an end-to-end KYC & Identity Verification solution with enough flexibility to meet your unique business needs.

In the year 2020, where everything moves fast and people’s attention span keeps shrinking with every new app that comes out, having a cumbersome onboarding process can literally break your business. You can’t expect customers to compile documents that require any sort of manual processes. The entire procedure should happen online and this is exactly what Identomat can do: simplify and automate the process.

The latest advances in facial recognition and biometrics are creating ways for online business owners to run identity verification checks quickly and easily. A selfie, a photo of a government-issued ID/Passport/ Driver’s License, and a biometric check could save both the users and the operator numerous steps and time.

The idea that AI is a tech breed for the elite few is a thing of the past. You no longer have to run a Fortune500 company to offer it to your clients. With Identomat, you can easily help companies improve conversion rates, comply with AML and KYC regulations, and better detect fraud while delivering a definitive yes/no decision in seconds using artificial intelligence.

Identomat brings you the benefits of:

• Simplifying the user experience without compromising security
• Eliminating manual identity verification processes
• Accelerating customer onboarding and transactions
• Catching fake IDs and prevent fraud
• Industry-leading data extraction accuracy
• Omnichannel verification

https://youtu.be/jw5ZYSOiXs8

Your customers deserve a better onboarding process. Identomat delivers.

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The fight against financial crime is much like the 100m dash. Pardon our awkward analogy and give us an opportunity to explain. The 100m dash is a straight line foot-race were first and second place are determined by milliseconds. More often than not, the winner can’t even be determined in realtime, needing the assistance of video replay. The margin of error is minimal. How does that relate to financial crime, you might ask? 

Financial crime and KYC/AML security are exactly like the two athletes competing for the first and second position in the 100m dash. The margin for error is nonexistent and if one of the two blinks, the other one wins. The history of the rivalry is well-documented - from phishing scams and account takeovers to fake identities and financing terrorist activity, financial institutions have been asked to deal with a lot since the Internet became a big player in the way people and companies conduct business. 

The biggest ally in the world against financial crime is also the foe - technology. Tech has come a long way since the inception of the Internet and is the weapon both sides use to steal/safeguard data and information. Today, we’ll have a look at 3 challenges faced by financial institutions in their fight against financial crime, and the ways in which they go about resolving them. 

1. Irregular Regulation 

Whilst regulators around the world are essentially tackling the same issues and challenges, they are all doing it in isolation. Different jurisdictions call for different laws, and policies, creating a maze of compliance requirements for financial institutions and businesses. Take sanctions screening, for example, were each jurisdiction issues its own lists of sanctioned entities, making it increasingly difficult for FIs to check and investigate cases in realtime. 

Last year’s white paper by The Wolfsberg Group titled “Wolfsberg Guidance on Sanctions Screening” is a perfect example of the challenges that FIs need to maneuver through in order to not only comply with regulation but actively protect their organization from a possible threat. The need for a more uniform set of regulations is evident and has been the prominent industry subject for quite some time. Just have a look at the white paper by the  Institute of International Finance and Deloitte LLP titled “The global framework for fighting financial crime.” Here’s an excerpt from the paper, emphasizing the need for more consistent regulation:

“There is growing consensus that the current global framework for fighting financial crime is not as effective as it could be, and that more needs to be done at the international, regional and national levels to help identify and stem the flow of illicit finance.”

The solution is as clear as the problem. The only thing that remains that’s required, is action. 

2.Cybercrime & Protection of Client Data

Let’s start with some facts. 

In an article by USA Today, 2019 was coined as the worst year ever for data breaches with a 54% year on year increase in the first half of 2019. The article wasn’t wrong as what followed was a series of front-page, cyber-crime cases that have shaken the industry to its core. In July, came the New York Times exposé on the shocking Capital One data breach scandal compromising data worth over 100 million. In August, Monzo urged 500,000 customers to change their pin numbers, due to the internal mishandling of data storage. 

What’s the moral of the story? Financial cybercrime is at an all-time high and it needs to be addressed immediately if FIs want to keep their clientele. Security and confidence in their financial provider are two of the most important factors for people. In FIS’s “2019 Performance Against Customer Expectations (PACE)” findings revealed that 1/3 respondents surveyed has been a victim of fraud. Unsurprisingly, 90% claimed that a bank’s ability to keep their transactions safe and secure is a “very important” factor when choosing a financial provider.

The literature on how to avoid internal data breaches is endless but no matter how much you read and stay up to date, nothing will ever protect your company/FI better than an actionable plan. Cybercrime and client data protection go hand in hand and can prove to be critical in determining who comes out the other side as the winner. 

3.Rethink Operational Silos

Going back to our 100m dash comparison, much like athletes evolve, adapt, and break records, so does financial crime. The threat has become so diversified that it now looks like the Lernaean Hydra, the multiheaded monster from Greek mythology. What that means for FIs, is that they need to rethink their outdated operational silos. Compliance should stop operating in a vacuum, and it should take on an advisory role in the internal structure of the company. 

The legal, sales, and operations team should work in tandem with compliance and understand that they need each other to be more productive, safer, and more effective. Upper management needs to reinvent their roles and understand that their contribution in setting up a robust internal strategy system is essential. Compliance departments have always been considered as a defensive mechanism for companies, teams that react rather than proact. This paradigm is slowly yet steadily changing. Proactive governance reduces reactive compliance and the sooner FIs adapt, the sooner they will have a fighting chance against financial crime. 

Conclusion

Financial crime has been slowly yet steadily been growing over the past couple of years and COVID-19 has only escalated things. In a recent BIS white paper titled “Financial crime in times of Covid-19 –AML and cyber resilience measures,” this point was perfectly put forward and analyzed:

“The lockdown increases the scope for criminals to exploit vulnerabilities and commit financial crime. The increased online presence of virtually everyone has led to new, and in some cases more naïve, targets for online fraudsters. Work-from-home arrangements with remote access to corporate networks have significantly expanded the attack surface for cybercriminals. Money launderers can also take advantage of the increased need for financial institutions to identify and onboard their customers online. In normal times, cyber-attacks and AML violations expose financial institutions to significant operational and reputational risks. In exceptional circumstances like the current one, those risks could be further exacerbated.”

The challenges that could otherwise be set aside, can no longer be overlooked. If ever there was a time to address the challenges, regarding financial crime, the time is now. Depending on the phase your business is at, feel free to contact our team of experts and we will resolve any problem or question you have regarding KYC/AML.

The Financial Action Task Force (FATF) is the global money laundering and terrorist financing watchdog. This inter-governmental body is one of the most respected players in the field of online fraud and AML. With over 200 countries and jurisdictions committed to implementing its recommendations, it comes as no surprise that when the FATF Guidance on Digital Identity was released earlier this year, the world of KYC was listening.  

Let’s extrapolate some of the key points of the report. 

Bank The Unbanked By...Identifying Them 

One of the first, and strongest points of the guide is that traditional identification is limited, and is one of the main reasons, 1.7 billion people are unbanked. Growing up in developed countries, most of us take a lot of things for granted - a birth certificate for example. It’s something that most of us never even considered to be a luxury. A birth certificate is one of many documents required from a bank in order to open a simple bank account. 

According to UNICEF data, one in four children under age 5 do not officially exist in developing territories such as sub-Saharan Africa. This might come as a shock, but taking some time to think about it, will actually make sense of the whole situation. How long will it take for a farmer living in these territories to travel, on foot, in order to reach the city supplying a birth certificate? Even if they do, how much will it cost? Then, what about proof of residence? Is the farmer paying bills like electricity and water? 

It’s as if the banking system never thought of including people that live in developing countries. And this is where the FATF guide comes into play. The report mentions the following: “a robust digital ID can allow individuals without a traditional identification to nonetheless have a sound form of identification to access financial services and improve financial inclusion.”

It goes on to give examples of how this could actually work in developing countries. “For example, under the US National Institute of Standards and Technology (NIST) standards, ‘trusted referees’—such as village heads, local government authorities, judges/magistrates and employers can vouch for the applicant as a form of identity evidence.”

Whilst the humanitarian facet of this recommendation is both commendable and touching, there’s a business side of things that should concern every single business in the world. The companies that will manage to perfect the digital identification process will essentially unlock a  humongous, untapped market. The opportunity is big and the potential even bigger. 

A Need For Internationally-Agreed Standards For Developing Digital ID

Whilst the report makes mention of the need for a robust, internationally agreed framework for developing a digital ID, it does not go into great length in explaining what that would actually entail. Thankfully, this is a subject that has been floating around for quite some time, meaning there is the literature to explore it. 

The G20 Digital Identity Onboarding Report is a goldmine of information regarding the relationship and approach of governing bodies and the private sector, regarding the issue of digital ID. Here are two of the seven policy measures, that governments should consider in order to have an identity effective ID system that meets the needs of the financial sector:

1. Support and empower development of private sector led services to leverage the legal ID infrastructure for building out digital layers. In doing so, the public authorities should ensure that these services are safe, reliable and efficient; these services are interoperable; and that the market is competitive;
   
2. New approaches to ID are constantly emerging and public authorities should closely monitor these developments with a view to share knowledge and establish common legal frameworks at both the domestic and international level.

What becomes very apparent from these recommendations, is the need for collaboration and rapport between government and private sector. The good news is that governments are starting to pay more attention to digital identity. Norway-based telecommunications company Telia and identity verification experts Signicat partnerned and managed to reduce fraud cost by 4 million NOK in 9 months by leveraging digital identity. If that’s anything to go by, the potential is limitless. 

There is a Favourable Technology & Its Name is Artificial Intelligence

Going back to the FATF guide, one can’t help but notice the following statement: 

“The FATF Standards remain technology-neutral. We highlight examples but do not favour any technology or specific requirements for digital identity to be used for AML/CFT purposes.” 

The decision to stay away from siding with a specific breed of technology might have a lot of reasons attached to it but we’re not here to investigate those. What we are here to investigate, is the aptness and suitability of artificial intelligence in solving the problem of digital identity. The power of AI in shaping digital identification has been a subject in major conferences, reputable publications, and research. It is clear that AI has already taken the world of digital identification by strom and it’s only a matter of time before it becomes the de facto tech regarding digital IDs.

Our team here at Identomat is always willing and available to explain how AI plays a defining role in the making of our products and services. Feel free to reach out and initiate a conversation.

Tbilisi, Georgia - Identomat, a Georgian AI-based platform for Know-Your-Customer (KYC) and Identity Verification has successfully obtained the opinion of the State's Inspector Service and is now fully compliant with the Georgian Law on Personal Data Protection. Using the latest technologies, Identomat developed an AI-powered tool that onboards customers in a smoother and more streamlined way, without jeopardizing data protection law whilst guaranteeing the security of the collected data.

In an era where data breaches happen almost on a daily basis, organizations that provide financial or identity verification services are under immense pressure from regulators and legislators to focus on KYC and client due diligence. Identomat realizes the responsibility of data and information mining and values its security. Being fully compliant with the law of Georgia on Data Protection, ensures Identomat practices are in line with the business processes and technical safeguards outlined by the legislation. Identomat takes pride in being able to manage the delicate balance between fast, easy, and smooth KYC processes while simultaneously protecting and securing the collected data.

Not only does the aforementioned opinion of the State's Inspector Service of Georgia mean that Identomat complies with the legislation in Georgia, but it also sends an important message as the Company aims to expand internationally. Georgia's Law on Personal Data Protection is regarded as one of the most comprehensive pieces of legislation in setting the standard for the protection of customer data.

Georgian law on Personal Data Protection has been in force since 2012 and the following year the data protection office was founded, later renamed into the State Inspector's Office. The legislation aims to ensure human rights and freedoms are secured in the process of personal data processing. The Law of Georgia on Personal Data Protection states that data could only be processed fairly and lawfully, without degrading the dignity of a data subject.

"We aim to provide clients with great user experience, as well as a quick and super-light onboarding process. Yet, we do not take security lightly. We hold ourselves responsible for our customers' data and are guided by the highest standards in data protection - says Zura Kotaria, CEO of Raizomat, the company behind Identomat. "Obtaining the opinion by the State's Inspector Service is a natural milestone for us, while we are also awaiting for the ISO-27001 certification, and GDPR compliance as we prepare to offer our services to EU-based clients".

About Identomat:
Identomat is a KYC (Know Your Customer) and Identity Verification solution, developed in Tbilisi, Georgia. Relying on its proprietary technology, based on the latest advances in Artificial Intelligence and Machine Learning, Identomat streamlines the onboarding process, providing organisations and businesses with reliable identity verification and fraud prevention solutions. Please visit https://identomat-329a23.ingress-baronn.ewp.live/

What most people know about Georgia is that it has a long and proud history of winemaking. What people don’t know about the country of Georgia is that it sustains a business-friendly environment through flexible, thorough, supportive and far-reaching legislation. 

In 2014, the EU and Georgia signed a Deep and Comprehensive Free Trade Agreement (DCFTA) that guaranteed Georgia to be an inseparable part of the common market of European Union making the country very welcoming towards investors, encouraging foreign investment. Legislation supervising foreign investment has created appealing conditions giving foreign investors the same privileges and rights to locals. 

So, what are the things that you should know about? 

Starting a business in Georgia 

According to the World Bank Ease of Doing Business 2020 Data, Georgia ranks 7th in the list of countries that’s easy to conduct business. It only takes a day or two to register a business and the fair is quite low, ranging from 40-60 USD.

As for the rules concerning reorganizations, more information can be found in The Law of Georgia for Entrepreneurs. 

Taxes 

Tax and customs legislation is merged under a single tax code and is collected and supervised by the Revenue Service of Georgia. So, there is Corporate Profit Tax (15%), Value Added Tax (18%), Personal Income Tax (20%), Import Tax (0-12%), Excise Tax (on selected goods) and Property Tax (stopping at 1%). 

Permits, Certificates, Licenses

To-be-established companies that are going to have an impact on the environment, human life or health, are obliged to prepare an essential check called Environmental Impact Assessment and subsequently, present it to the Ministry of Environment Protection and Agriculture.   

Trade and Customs

Customs procedures in Georgia are pretty transparent and take no longer than 15-20 minutes. Taking into consideration the fact that Georgia has free trade agreement with Ukraine, Turkey, China, including EFTA and CIS countries, on top of the DCFTA with the EU, without imposing customs or import rates, Georgian goods are available to roughly 2.5 billion population markets. 

Data Protection Laws

The Law of Georgia about data protection aims to secure human rights and freedoms, including privacy if the personal data has to be mined. The law applies in these following cases: Automatic data processing, Semi-automatic data processing, Non-automatic data processing inside Georgia. The principles of data processing encompasses rules like data being processed for only the amount of time that is needed to process the data, without damaging subjects’ dignity, collected data, if not necessary or relevant, must be deleted, destroyed or stored in a way that guarantees anonymity of the person.  

In conclusion, Georgia is definitely open to foreigners and is ready to accommodate. Taking into consideration the tireless refinement and updating of the business environment it is definitely on the rise of becoming a reliable investment destination in Eurasia. 

The Sixth Anti-Money Laundering Directive is the EU’s latest iteration of a deliberate attempt to define crime related to terrorism and money laundering in the EU Member States, as well as to determine the liability and penalties of the parties involved in the aforementioned activities.

The 6AMLD came after just 6 months after the adoption of the 5th EU Anti-Money Laundering Directive (5AMLD), highlighting the speed at which things are evolving in the KYC industry. Financial crime coupled with the rise of cybercrime has threatened companies, governments and countries in recent years and these Directives showcase a concentrated effort to combat that. 

What changes does the 6AMLD propose? 

If you had to put a general title on the proposals of the latest Directive, you could safely say that it expands and digs deep into Predicate Offenses. You’re probably in the process of Googling the term ‘predicate offense’ so let us save you the trouble.

In simple words, a predicate offense is a crime that is part of or leads to a larger crime. More often than not, financial crimes consist of chained actions and reactions that eventually culminate in what we know as money laundering. 

What the 6AMLD was put together to do, is reverse engineer money laundering and break down the crime into smaller crimes, identify them, point them out and hold everyone involved in them accountable. The Directive defines and standardizes the following 22 predicate offenses for money laundering in all EU member states:

Impact on FIs: How Should They Prepare?

Even though the changes proposed by the AMLD6 are very particular, the learnings and takeaways for FIs are broad. If there’s anything to learn from the AMLD6 is that it won’t be the last time we will hear from the European Commission. The frequency and intensity of regulation will only escalate and FIs can’t afford to simply react to each and every new piece of regulation.

It is evident that the entire KYC and AML industry is under siege and FIs need to take a holistic approach in their planning if they want to stay afloat. The days of doing the absolute minimum for compliance are long gone, with RegTech taking a prominent role in this equation. 

RegTech should be seen as a revenue generator and key strategic differentiator, establishing compliance as one of the most important departments in the company. FIs should build around Regulatory Technology and aim to create a governance framework that emanates from the top, down. 

Buying the appropriate technology and establishing internal processes are the tools to achieving the goal but the cornerstone of success lays in understanding the importance and gravity of compliance as a function.

Is AI Worth The Hype? 

Yes. If anything, the importance and potential of Artificial Intelligence in the KYC space is underplayed and underrated. The industry has been under immense pressure in the past couple of years with regulations and scandals redefining the means and ways you go about Know Your Customer procedures. 

In the midst of this disarray, AI has emerged as the guiding light, the savior the compliance space was calling for. What does AI mean for compliance, what’s the role of this new3 technology and what problems does it really solve? Let’s investigate. 

Reassignment & collaboration

The idea that Artificial Intelligence will replace humans is ignorant, to say the least. Can AI machines sort through the tons of data better than humans? Yes. Does that mean machines will simply replace the people that have manually performed these tasks up until now? No. It’s important to understand that AI technology is not something you plug in and identity verification problems simply go away. 

AI technology is an ecosystem, it’s a framework built around people, their experience, skills, and ability to make sense of the data analysis and findings. People in the KYC, AML, and identity verification industries would not get replaced, but reassigned. Their roles would simply develop and evolve around the new technology. AI is not something that would take their jobs but a powerful tool that would help them do their job better. 

Identity verification is a problem that tantalizes companies across the globe. It’s a universal problem that has been dealt with in isolation up until now. One of the main ideas proposed by AI technology is the ability to deal with this problem on an international basis. Technological consortia may just be the solution to the problem. A scenario where banks and companies share their data, creating a centralized information center that is way more powerful than what each company could have ever achieved on its own. 

An appropriate term for it could probably be collective intelligence. A collaboration that benefits all partakers without meddling with competition principles or profit generation. 

AI & UX Are Best Friends 

Want some double-barreled words to describe the current KYC and identity verification process? Labor-intensive, time-consuming and error-prone. Unfortunately, all three words perfectly describe the process most financial institutions and companies use to onboard their clients. 

What’s interesting is that we always look at the onboarding process from the business side of the equation. Rarely do we take a step back to evaluate the user experience and how customers feel when they go through the long and arduous KYC process. 

In a world where everything is becoming mobile-first and people are used to interacting with apps, clicks, taps, and touches, the identity verification process for a customer that wants to open an account with an FI is long, manual and arduous. Many companies are subject to worrying drop off rates as users can’t be bothered to go through the entire onboarding process. In the UK, 25% of applications are abandoned due to KYC friction according to a 2017 report from Consult Hyperion. 

This is where AI can work its magic and not only simplify the process but make it modern, fresh and minimal. Manual checks such as photo/ID verification can happen within minutes and people can be onboarded on the system within hours. Running a name through huge databases, PEP lists, and adverse media articles used to be a long and exhausting task for compliance staff but it’s a basic task for AI. The automation of this process significantly minimizes the time people have to wait for being onboarded. 

Better user experience does not only create healthier customer retention numbers for companies but it builds a relationship of trust between user and company. A fast, hassle-free onboarding process leaves a sense of satisfaction and content in the customer. It builds a foundation for a bright future as the first time the customer was asked to interact with the company they walked away with a positive impression. 

Consolidate Data Silos

AI is known for going through humongous numbers of data and information, organize and structure them in a short period of time. Even though that’s impressive, that’s not where it stops. Through Natural Language Processing (NLP), it is possible to not only compile data but make sense of it. 

AI has the ability to comb through data and build risk profiles with just the relevant information about an entity, cutting through the noise and anything irrelevant. Apart from the obvious time-saving implications afforded by AI in this scenario, companies will also end up with more robust risk profiles - faster execution and better results all in one. Analysts will now be presented with an up-to-date, detailed yet relevant distillation of what they need to know about an entity without having to do any manual work. 

Mitigate False Positives 

Monitoring the transactions of a suspicious entity is a tricky affair. Manually following these entities is logistically impossible so FIs resort to a rules-based system where they set certain parameters that the entity needs to operate within. If for example, the system recognizes a transaction that is above the set parameter, it will flag the transaction and alert the FI. 

The problem with this system is that the rules-based approach is too simplistic and does not take into consideration variables that might explain these transactions. Even though a transaction might seemingly fall outside the rules, it usually ends up being not something the FI should be concerned about. These findings are known as false positives.

What was meant to be a solution for KYC monitoring ends up being a problem for FIs. Analysts have to go through an endless list of alerts that hold no value. According to Reuters, 95% of alerts are closed as false positives in the first phase of the review. 

How does AI solve this problem? First and foremost, it moves away from the preset, rules-based system as it’s obviously too rigid and does not match the live, on-going nature of monitoring. An AI algorithm will be able to monitor transactions and determine its risk relevance before flagging it. The fun does not stop there. AI has the ability to learn from patterns, trends and previous matches and build a database where it can draw examples and references more. The more the algorithm is used, the smarter it will get, building its own set of parameters on the go. 

Zura Kotaria, CEO and co-founder of Raizomat, the company behind Identomat, was a guest on a Facebook LIVE by Orient Logic, one of the leading Georgian companies in IT infrastructure and Business solutions. Mr. Kotaria spoke about founding Raizomat and the rising need for remote services, highlighting the fact that number one Georgian insurance company Aldagi has fully digitized its services through Identomat.  The main concern, when it comes to KYC and handling someone else’s personal data is data protection. Mr. Kotaria stated that Identomat guarantees mined data security:

‘As a company, we reached out to the state inspector of data protection and introduced how Identomat processes work. the inspector acknowledged that Identomat is fully compliant with the data protection law of Georgia. Moreover, since we are eyeing international markets, our company fully complies with international laws of data protection as well. ‘

Mr. Kotaria also mentioned branching out overseas, main focus being the United States of America and Europe:

‘The first stage of merging into the international market would be Eastern Europe and the United States where we have a partner organization. Also, Ukraine, where we have presented our project, and Baltic countries, since remote services for the financial sector are very popular there too. ‘

The live session can be watched here (in Georgian)

Contact us to learn more about Identomat and if it fits your business.

If you have been following tech news for the past five years, Artificial Intelligence and advancements in the said field have been the dominant topics. That being said, countries known for their proficiency in tech like the US and China are expected to make headlines. But what about not-so-well-known countries, like Georgia? 

The country of Georgia, has come a long way the past decade with a lot to show in the field of Artificial Intelligence. New labs, hubs, universities even, have been emerging these past 7-8 years in Georgia, especially in the capital, Tbilisi. The pioneer lab, GeoLab introduced and popularized the interest towards AI and continues to work on digital projects to attract more youngsters. 

Apart from educating its citizens, AI has been a thread of connection with the EU, since the European Union switched from a knowledge-based economy, to an AI-based economy. By creating a friendly AI-oriented environment, which is essentially a prerequisite for investments in the field, Georgia showcased readiness to become a reliable partner.

In order to reach international markets, the existing and upcoming businesses in Georgia, have been adapting AI technologies and really making it the basis of their products. Take IDENTOMAT for example – it takes everyday, mundane KYC-related tasks and completes them efficiently. 

As far as the public sector’s involvement, the Georgian government has an issue to address. The issue mainly being the support of the Georgian people in acclimating with AI-powered services. The concern is that not everybody understands or backs AI technology, creating an adjustment period.

Every confrontation is an opportunity for growth, right? AI is still in its infancy and Georgia has a unique opportunity to grow the technology with a clean slate. What will happen remains to be seen but if the current situation is anything to go by, Georgia has the potential of becoming a tech hub, a point of reference for companies interested in AI technology.

This year’s COVID-19 pandemic and subsequent lockdown, seem to have halted the global economy, resulting in dire projections for the year 2020 and beyond. Yet while things look uncertain in many areas, one thing remains true: life does not stop. Routine tasks pile up, bills keep coming, and the dates on the calendar just keep changing. This also means that regular insurance coverage packages expire just like they used to - be it health, life, or car insurance. 

In many countries, the only way to renew an insurance agreement is in-person. In the current environment, breaking quarantine to renew your insurance seems laughable to say the least. Fortunately, there’s Aldagi, Georgia’s leading insurance company.

Just days ago, Shota Chachkhunashvili, Director of Aldagi’s Strategic Development department, announced Aldagi’s full digitalization. This means that Aldagi has become the only fully digital provider of insurance services in the region, relying on the latest technologies of blockchain and Artificial Intelligence. 

From now on, all Aldagi’s processes will occur digitally, protecting the employees and clients both from exposure to the virus, as well as from unnecessary steps. Identomat is proud to be Aldagi’s partner in providing our artificial intelligence-powered solution for Identity Verification. 

As Mr. Chachkhunashvili has explained in his interview to Marketer.ge, one of Georgia’s leading online media, relying on the best and latest of the Artificial Intelligence and blockchain technologies has been a strategic decision. With the growing interest in affordable and accessible insurance products, digitalization had been the obvious next step for the insurance market leader. The pandemic merely accelerated the change. 

From now on, all transactions are verified and recorded via the blockchain (the main benefit of the blockchain technology is that its records cannot be altered thanks to cryptography). Thanks to Artificial Intelligence, which powers the Identomat solution, Aldagi is able to verify customers’ identity, accurately extract data from submitted documents, and process it according to all legal requirements and standards of online security and data protection. All insurance packages can be purchased and finalized online, including submissions of all related materials. When it comes to a car insurance package, for example, a customer can upload all necessary photos of the vehicle online and finalize the agreement. In the past, purchasing a car insurance package would require a company employee to examine the car and document the process, after which the documents were signed. 

“Identomat also provides identification of our clients and insurance subjects remotely, which is very handy in today’s fast-paced world, ” said  Mr. Chachkhunashvili. The key difference between prior service and the Identomat-provided service is that the customer obtains any type of insurance policy (price and insurance subject do not matter) without the need of bilateral signature, but simply through the web-application powered by Identomat - fast, easy and safe. 

Identomat was created by Raizomat, the company behind a number of innovative tech projects.  Raizomat is an expert in machine learning, data mining, robotic process automation. Businesses are increasingly adamant about implementing online KYC/AML compliance services, but it has never been as essential as it is today, when the world is facing the reality of the COVID-19 pandemic. 

At Identomat, we are proud to have contributed and collaborated with the most prominent insurance company in the country of Georgia and look forward to bringing digitalization to the next level in Georgia and beyond. If you are interested in how our technology can fit within your business flow, and help your company grow, contact us today.

A KYC process is not something that’s set in stone. It’s an ever-changing, always-evolving project that will always need fine-tuning and adjustments. Today, we’ll give 5 easy steps you can take in order to improve your KYC process. 

Create Audit Trails

Audit trails are a fairly simple concept but their value to the KYC process is immeasurable. An audit trail documents, records, and chronicles each and every step of the KYC process. From profile creation to monitoring and editing, the audit trail clearly maps the sequence of activities undertaken by the company, emphasizing the principles and values of transparency and clarity. 

Audit trails are not only valuable as a culture builder, but they are a tremendous tool when evaluating the quality of work that’s been done. Internally, it gives management clear insight into the steps undertaken by staff when dealing with an entity but the real merit of the trail comes when external regulators run their checks on the company. The audit trail is the single most important piece of evidence that the KYC policy has been executed according to the policies, guidelines, and requirements of the regulator. 

Failure to adhere to KYC regulation can undo months or even years of hard work for the company. Fines, financial but importantly reputational damage can prove detrimental to the progress of an organization that falls short of the proper KYC procedures. An audit trail is not a suggestion or something that ‘would be nice to have’. It’s a necessity and priority that can prove to be critical for the company’s future. 

Cloud-Based API Technology

The idea here is simple. Monitoring the news, feeding the in-house compliance workflow with industry-leading data and information and getting instant updates about new compliance regulations is a huge undertaking in its self. Instead of using your in-house resources to go hunt for this information, you can simply leverage cloud-based API technology. 

The KYC process instantly becomes faster, streamlined and more accurate, allowing compliance analysts to make informed risk decisions. Their skills can be used in analyzing the information, drawing inferences and conclusions instead of burning out, manually looking for information. 

Tailored Approach 

One of the most important steps in bettering your KYC process is understanding the intricacies of your own vertical, product and geography of conducting business. Even though there are best practices for conducting KYC that apply to every single company, in every single market, if you want to get serious about your KYC process, you need to dig dip into the identity and uniqueness of your industry.

What’s the financial and regulatory environment in the jurisdictions you’re selling? What’s the customer persona? Are you a B2B or a B2C company? Are you dealing with clients that possess a complex layer of ownership structure?

Answering questions in the same vein as the examples given above can essentially shape the way you approach and tackle your KYC process. Even though the end-goal of every KYC process is the same, the means by which you go about achieving that differ greatly when you drill down to details.

Employee Training 

We can’t stress this enough but the compliance industry is one of the rapidly evolving sectors in business. Reaching out to technology solutions in order to catch up is one way to go about it but you must never forget the most important asset your company possesses: people. 

Being a compliance analyst is similar to being a doctor or a software developer in the sense that you never stop learning. A degree and some years of experience mean nothing if you stop evolving and learning the new trends that unfold in your sector. Investing in employee training is investing in your company. 

The benefits are tremendous as not only will employees be upgrading their skill set but they will also feel an increased sense of motivation and value. When your employer allocates the time and resources to train you, you feel important and valuable, renewing your incentive to show up to work and do your best. 

Internal Assessment 

Once in a while, it’s good to take the time for some reflecting, do some cleaning up of our mess and evaluate our own performance. The same logic applies to companies. It’s important to establish a framework of governance and management where departments are assessed on goals, results, and performance. 

Even though this happens for the most part for revenue-generating departments like sales and marketing, this is often not the case with compliance. For the longest time, KYC was seen as something companies had to do rather than want to do. In recent years though, the perception seems to be changing and companies are more educated on the importance of a healthy, high-functioning KYC department. 

Implementing an internal assessment system will only help the department perform better and subsequently push the company to greater heights.

Identomat has been featured by a Georgian TV channel! Formula News ran a feature about our company and product on Saturday, April 11, 2020. The story can be viewed (in Georgian) here. 

For all our non-Georgian speaking readers, we are happy to share the translation of the TV spot, which included the detailed showcase of Identomat’s KYC solution, alongside interviews of our core team members:

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How many of you had to wait in endless queues in the service centre to be identified as a customer? From now on, this can be done from the comfort of your home - using just your ID card and a selfie. 

Identomat is an online registration platform that allows the business sector to check authenticity of documents and liveness of customers. As a result, customers can undergo verification processes via a smartphone or computer, without having to go to the service center.

‘Identomat brings the benefit of simplifying user experience without compromising security, making it easy and fast as well. Identomat provides instruction on each step of the verification process. ‘ - Marika Sherozia, Senior Product Manager.

A new Georgian platform was created a couple of months ago, that complies with international standards and stays relevant to the recommendations of personal data inspectors. 

Identomat’s team principle is that there is no such thing as an unresolved problem. So despite many obstacles, like lack of qualified personnel and legislative system, the platform was created, and is capable of user verification, liveness check as well as determining the authenticity of a document. 

‘Liveness check is crucial, so that someone else would not use your face to authorize an account. There are many methods to do that, but our team and many tests have concluded that contingency is key. Therefore, we decided on a smile, because when one smiles all face muscles work. And it is impossible to fake it. ‘ - Rezo Imnadze, co-founder of Raizomat

Identomat was created by Raizomat, who has implemented many other innovative projects.  Raizomat is an expert in machine learning, data mining, robotic process automation.

‘As a rule of thumb, assessing risk used to take about 40 minutes. With Identomat the time is reduced to seconds. ‘ - Zurab Kotaria, co-founder of Raizomat. 

Businesses are more and more adamant about instilling online KYC/AML compliance services, but it has never been as essential as it is today, when the world is facing the reality of covid-19 pandemic. In crisis and post-crisis times, Raizomat is prepared to help out businesses with the Identomat platform for free. 

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We are excited about our first major media feature, and can’t wait to share with you what’s in store for Indentomat in the coming months! Stay tuned, and follow us on Facebook, Twitter, and LinkedIn, to never miss the news. 

Located at the intersection of Europe and Asia, the country of Georgia is mostly known for its architectural treasures and picturesque landscapes with some of them even featuring on the UNESCO World Heritage list. Things seem to be changing though, as Georgia is making itself known for a lot more than its natural beauty. 

Despite the small scale of the country itself, the location is proving to be pivotal for Georgia's rising: right between Asia and the EU empowers good trade relations with Asian and European countries, following the free trade agreement with the European Union in 2014. 

Technology has been the focal point of NGOs, government and startups for quite some time. The Georgian government has achieved great results in helping businesses set up processes fast and easy, not just for the locals, but especially for foreigners. There are only several procedures to go through and your business could be up and running in no time. The high engagement in this field breeds growing business interests and attracts investments - making Georgia a tech-hub among non-EU countries. 

Besides the birth of dozens of new local tech startups every year, technology has been blooming in Tbilisi for the past 5 years. Emerging Techno Parks, innovative centers, Tech hubs, labs and more, are focused on developing and bettering technological ecosystems in Georgia. 

In recent years, many digital and tech seminars and projects have been held in Tbilisi, gathering not just Georgians, but internationals interested in technology advancements. Special notice is deserved by Tech Park of Tbilisi, that has invited international professionals to share their experience, for example Paolo Italiani, that spoke about innovation, inspiration and visualization. Italiani, who is an industrial designer, has a relevant experience in said field in the US and Italy. Also, Tech Park has hosted Encata, a Belorussian company that specialises in end-to-end product development and software engineering.  Projects and startups have been presented showcasing passion and true commitment to the current and upcoming news in technologies. Presented projects encompassed diverse fields, including medicine, PR, informational technology, entertainment, education, insurance, finances etc. 

Identomat is only one example of the many thriving tech startups in Georgia, bringing the latest technology trends to their clients, both domestically and worldwide. As more and more global businesses and investors turn their sights to Georgia, we’ll be bringing you more insights into the country we are proud to call home.

KYC has been through a lot in the last decade. The rapid development of technology alongside the breakout of financial crime scandals have put the industry through the wringer. Just like pressure turns coal into diamonds, pressure has caused KYC to evolve and progress as an industry.

How was it able to do that? Through the use of Robotic Process Automation (RPA). This new breed technology slowly yet steadily has developed into the ideal dancing partner for KYC. The pairing has proven to be a great fit and it has a very promising future with the potential to finally align business and government objectives.

Are you ready to take a deep dive into this interesting relationship between KYC and RPA? Let’s do it.

Regulation is Tightening The Screws

Before delving into the ins and outs of Robotic Process Automation and what it can do for the KYC industry, it would be interesting to examine the parameters leading to the growing need for RPA help. The Know Your Customer industry is subject to constant scrutiny, revision, and amendments. Governments are tightening the screws on businesses through policies and regulation that’s becoming more and more specific and particular.

The recent Panama and Paradise Papers fiasco was a milestone for the relationship between governments, businesses, and KYC requirements. Both scandals revealed that taking advantage of offshore accounts, nominees, trusts, shell companies, and a variety of other loopholes of the existing system was a way of hiding funds, evade taxes, and launder money.

The need for addressing the issue of the beneficial owner became evident very quickly.

The Final Rule

The Final Rule came into effect on May 11, 2018, and is a new set of rules from FinCEN regarding customer due diligence (CDD) requirements. Under this FinCEN CDD Rule, collecting, maintaining and reporting of beneficial ownership information becomes a requirement for financial institutions and merely an option.

Europe did not stay put and its take on tackling anti-money laundering (AML) and know your customer (KYC) came shortly after.

EU’s 5th AML Directive

On June 19th, 2018, the 5th EU Anti-Money Laundering Directive (AMLD 5) was published in the official journal of the European Union. Amongst many proposed changes to tackle terrorist financing, increased beneficial ownership requirements were one of the main areas of discussion put forward by the Directive.

The industry and geography of businesses were starting to become irrelevant for financial controllers and regulators. It became very apparent that businesses could no longer avoid thorough KYC and AML processes. Huge fines, scrutiny, and bad press snowballed right after the announcement of the new measure and the need for a new approach was vital.

What Does This Mean For Businesses?

Let’s get some perspective on what KYC processes meant in financial terms for companies and what KYC procedures will mean for companies in the near future. According to a Thomson Reuters survey, “Financial institutions with $10 billion or more in revenue have seen their average spend on KYC-related procedures increase to $150 million from $142 million in 2016. The number of deployed employees skyrocketed to an average of 307 KYC compliance professionals in 2017 from 68 in 2016”.

Bear in mind, this was the situation before the measure and policies mentioned above.

The implementation of the aforementioned policy is pushing those numbers through the roof. The policy is not only calling for an increase in the number and depth of data collected by companies but it’s demanding KYC to be conducted on both a retroactive and ongoing basis. According to a Burton-Taylor report, global AML/KYC spending was projected to increase by 17.5% reaching a record of $905 Million In 2019.

Enter Robotic Process Automation (RPA)

1.Customer Information Gathering & Processing

The current framework used by Financial Institutions in gathering information from customers is usually the following: printed papers, PDFs and online forms.

The pain points of this framework are multifold. Updating, organizing and editing these files becomes challenging if you consider the volume of information and clients FIs deal with on a daily basis. This is where RPA can work its magic. It can be used to harness, process, analyze and extract structured and unstructured data.

The point of reference here is not the mere digitization and simplification of the process. Using RPA can actually add an extra layer of value for businesses as it can crawl additional information about the customer from public domain/databases which the client would have otherwise not submitted in the first place.

2. From a budget killer to a budget maker

Customer information is often dispersed across different systems and software. What RPA can easily do is centralize information and give FIs a holistic view of customer data. What that does for the company is two-fold. One a KYC level, the business is now able to create an up-to-date, comprehensive customer profile with a depth of information like never before. From a marketing and sales perspective though, the business acquires a very strong tool to push its products and services. Profiling clients and knowing as much as there is to know about them allows for tailored and personalized campaigns and opens up a very direct communication channel. Even though RPA tools are primarily seen as a way to verify the identity of customers, mitigate customer risk and adhere to KYC regulations, the malleability of their technology allows them to become a source of income for the business.

3. Optimizing human resources

Nobody is claiming that RPA will replace compliance officers. If anything, RPA is the perfect tool to elevate their importance and make them one of the most valuable business units in an FI. Human errors are a calculated risk in any occupation but the repercussions differ from industry to industry. A human error in a KYC environment could prove to be costly for the business but even if it doesn’t, it still requires time and effort to fix it.

Instead of analyzing data, making inferences and drawing conclusions on findings, compliance officers end up correcting manual mistakes or play catch up with the latest regulatory developments. By employing the services of RPA, regulatory changes will automatically be added on the system and distilled to a readable and actionable format. RPA can optimize the use of KYC human resources, making them decision-makers instead of task managers.

Did you know that 40% of customers drop out during the onboarding process? The statistics are staggering, but we would be lying if we say we weren’t expecting it. To put it lightly, identity verification is a hassle for most people — providing ID documents, taking selfies and photos that are often declined. You would hardly call this a fun activity. The lack of clear directions and overall bumpy user experience create a frustrating procedure that almost half the people that go through it, decide to quit.

Could you, as a business, avoid the identity verification step of the onboarding process and immediately see your conversion rates skyrocket? Sure, if you are willing to bet your whole business on it. Identity Verification is an absolute must-have for your business. Besides being a legal requirement in a growing number of industries, it’s a necessity in the era of digital transformation, large-scale data breaches, identity theft, and account takeovers. Businesses need a reliable way to determine if a user is indeed who they claim to be online. The challenge is, how do you provide identity verification in a way that does not make your potential customers leave?

What you should be looking at is not trying to avoid the process, but rather reinvent it in a way that keeps the customer engaged.

How do you make the KYC process interesting enough so that customers don’t drop out?

At Identomat, we believe that it’s possible to turn the KYC process into a truly rewarding experience for the customer. Our flagship product was put together with the mission of enabling businesses to onboard customers faster and easier while maintaining the highest level of security. The secret to success is a minimal intuitive design and frictionless automation that can empower the user to seamlessly go through the process without roadblocks or hiccups.

In saying that, we understand that every business is different and brings its own set of challenges. This is exactly why we offer an end-to-end KYC & Identity Verification solution with enough flexibility to meet your unique business needs.

In the year 2020, where everything moves fast and people’s attention span keeps shrinking with every new app that comes out, having a cumbersome onboarding process can literally break your business. You can’t expect customers to compile documents that require any sort of manual processes. The entire procedure should happen online and this is exactly what Identomat can do: simplify and automate the process.

The latest advances in facial recognition and biometrics are creating ways for online business owners to run identity verification checks quickly and easily. A selfie, a photo of a government-issued ID/Passport/ Driver’s License, and a biometric check could save both the users and the operator numerous steps and time.

The idea that AI is a tech breed for the elite few is a thing of the past. You no longer have to run a Fortune500 company to offer it to your clients. With Identomat, you can easily help companies improve conversion rates, comply with AML and KYC regulations, and better detect fraud while delivering a definitive yes/no decision in seconds using artificial intelligence.

Identomat brings you the benefits of:

• Simplifying the user experience without compromising security
• Eliminating manual identity verification processes
• Accelerating customer onboarding and transactions
• Catching fake IDs and prevent fraud
• Industry-leading data extraction accuracy
• Omnichannel verification

https://youtu.be/jw5ZYSOiXs8

Your customers deserve a better onboarding process. Identomat delivers.

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