Around one billion people worldwide are believed to lack access to an officially recognized identity. The majority of these individuals live in emerging economies. The ability of an individual to establish their identity is critical for active engagement in political, social, and economic life. Without a reliable identification system, an individual may be unable to exercise the full range of human rights guaranteed by international laws and status. Additionally, proper identity verification is critical to the Know Your Customer (KYC) processes required to comply with Anti-Money Laundering and Counter-Terrorism Financing (AML/CFT) regulations. The foundation of the KYC concept is the capacity to gain a better understanding of your consumer. Individuals, other organizations, and youth/adults are examples of customers. KYC enables an organization like Blocks to secure its brand more effectively. On the other side, knowing your customers' birthdays/marriage anniversaries, etc., provides you with a basis for providing individualized service. Thus, enterprises' investment in KYC, from enrollment to the end of the lifecycle, enables them to deliver superior services. KYC is necessary because of the worldwide nature of today's corporate climate and the growing requirement to trace money entering the economy. By tracing the origins of such funds, governments worldwide can seek to prevent various illicit operations and safeguard its institutions. With customer interactions increasingly spanning physical, online, social, and mobile channels, banks urgently require new capabilities that allow seamless, comprehensive, and robust identity identification across time and across all interactions. This is why Unique Identity systems are gaining traction. Historically, identity management systems have centered on the least volatile user data (such as biographic details and PINs). Unique Identity systems are distinct from one another. They employ precise and adaptable capabilities to build a single identity for each individual based on:
• What the client is knowledgeable of (password, PIN, security code)
• What the client possesses (identification card, service card);
• What the client possesses (identification card, service card);
• The location of the client (mobile number, geo-location, IP address, social network site)
Identity Theft: Identity fraud is a critical aspect of KYC. KYC is predicated on the provision of authentic verification of your legal identification.
Terrorist Funding: Following 9/11, the United States government began cracking down on questionable operations in an effort to put an end to terrorist activity on American soil. One approach to do this was to halt financing for terrorist camps. It was discovered that many individuals and organizations were funding these efforts using monies generated in the United States.
Money Laundering: Banks are used to financing other illegal acts, similar to terrorist funding. The list of illegal activities includes drugs trafficking, human trafficking, smuggling, and racketeering.
Financial Crime: Another situation that necessitated KYC verifications was financial fraud. Financial fraud comes in a variety of forms. However, one of the most challenging varieties is when the attacker creates phony accounts using forged or stolen identification.
An organization's Anti-Money Laundering (AML) compliance is determined by its Know Your Business (KYB) verification. Companies must ensure that their interests are protected before entering into a business relationship with another company. Corruption among corporate owners, stockholders, and money launderers must be identified if a company's income is being misappropriated. Knowing if a legal or a shell firm is being dealt with is determined by the Know Your Business concept. KYB verifies the corporate information of potential customers' firms as well as the personal information of the company's top management, which is in charge of the company's operations. In addition to legal issues, businesses are responsible for understanding who the Ultimate Beneficial Ownership (UBO) is of the entities they do business with. So, what exactly is UBO? The legal entity that is the beneficiary of the firm is referred to as the UBO. A company's UBO definition, the company's UBO check, and the company's UBO verification, are all required. Shell businesses are concealing billions of dollars in hidden money from lawful taxes, and these monies end up in the hands of persons who are subject to a high level of federal and state taxes. Doing business with these individuals might have a negative impact on a company's reputation. As a result, KYB should examine the UBOs structure in conjunction with Customer Due Diligence (CDD).
Organizations establish Know Your Business processes to comply with various rules, such as anti-money laundering (AML) legislation and anti-terrorist funding legislation (CFT). KYC/KYB processes are carried out to avoid probable money laundering crimes committed by businesses or dangers of terrorist operations and to ensure compliance with necessary international AML regulations. The firms meet KYB criteria by verifying diverse information and acquiring papers from reputable sources. Included in this set of documents are the company's business registration, the Ultimate Beneficial Ownership (UBO) identities, and the names of the shareholders who own at least 25% of the company's stock. Following the verification of identities, firms continue to watch the operations of the relevant institution to guarantee that their partners' risk profiles are not compromised. Here, the ultimate purpose is to discover and analyze any questionable behavior that may occur. The Know Your Customer (KYC) procedure protects businesses from being unintentionally utilized for money laundering or terrorist operations, as well as from unintentional fraud in their accounts.
Benefits of KYC and KYB
· Effective fraud detection and prevention: Unlike paper-based documents, which can be falsified, stolen, or become obsolete, KYC data sets are essentially immutable and appear to have contributed to the global stability of identity theft trends.
· New customer onboarding processes are simplified: time and administrative expenses are saved by conducting identity verification using fingerprints rather than laborious KYC paperwork requirements.
· Appropriate and verified customer profiles facilitate intermediation for the banked poor, especially for distant, low-income, and high-risk credit seekers.
· Provides a comprehensive picture of an organization's Ultimate Beneficiary Owners (UBO)
· Aids in scanning Politically Exposed Persons (PEP) and Heads of International Organizations (HIO) lists against current customer KYC data
· As the "trust factor" rises, it ensures a positive and seamless consumer experience.
· A systematic approach to establishing safer business relationships with clients
· Assists banks worldwide in maintaining a positive reputation
However, while KYC/KYB was initially developed for use by banks and financial institutions, it is now utilized by a wide range of organizations, including virtual businesses. Institutions often structure their KYC/KYB procedures using one of four approaches:
· Acceptance Policy for Customers
· Customer Identification Procedure
· Transaction Monitoring
· Management of Risks
Organizations like Bizsecure helps users create an immutable digital representation through verifiable credential services for everyday proof. Bizsecure employs a selective disclosure which a cornerstone of Self-Sovereign Identity that enables people to provide just the information necessary for the receiver to understand the data and take appropriate actions. It helps to demonstrate that their data meet particular criteria without disclosing the actual facts. With these services, KYC and KYB becomes simple and efficient, take for instance, with 1Delivery, using these services, we can prove that a user is 21 years old and above, and can be served alcohol. By using selective disclosure, we can show their age, name and picture, while other detail like residential address can be held private. KYC and KYB for business in recent times have been seamless and straightforward by the technological innovation provided by the partnership of Bizsecure and Acuant with BLOCKS providing selective privacy services.
BLOCKS is dedicated to integrating industries and enterprise-grade technology into the blockchain while maintaining an agnostic approach to both sectors and blockchain. The BLOCKS Token is at the heart of the BLOCKS DAO and Builder Program, governing everything from on-chain governance to enterprise transactions between our BLOCKS Builders. The purpose of BLOCKS is to link the globe through decentralization, regardless of industry application; at BLOCKS, decentralization connects everything. With Acuant's omnichannel implementation, AI-powered identity verification, and regulatory compliance (AML/KYC) solutions, businesses will experience unmatched outcomes and operational efficiency.
How does it Work
· A user takes a photo of government issued identification documents like international passport, accompanied by a selfie of the user and the ID.
· An artificial intelligent compares the ID and Selfie photo to ascertain its veracity
· At this point, Acuant will verify the data and the information on the document with the issuing authority by leveraging its intelligent data capture and advanced document authentication technologies
· From this stage, Bizsecure issues a verifiable credential permitting the user to activate a selective privacy that allows for a selective disclosure of the certain information about their identity.
With services from BLOCKS, BizSecure, and Acuant, businesses and individuals can have a seamless and simple KYB and KYC verification process that keeps some information private and others public, all in one place. Thus, people can own and control their own identity management, rather than having it spread out across a lot of different platforms and service providers. If a company wants to know who the Ultimate Beneficiary Owner of a business is and how to properly onboard new clients. Proper KYC and KYB can be done without privacy concerns from the users, and at the same time help businesses to build trust with clients and customers.