CCR2 Looking forwards


The magic number


For the most secure ID checks, is it time to harness the power of three?


John Dobson Chief executive, SmartSearch john.dobson @smartsearch.com


There have been some incredible technological advances in recent years, and this has presented major challenges to those involved in trying to combat fraud and money-laundering in the financial system. Technology has made it very easy for criminals to cover their tracks and to produce forged or falsified ID documents that can escape detection. Thankfully, technology also provides


increasingly sophisticated tools to catch them in the act. This is especially important while the threat from Covid-19 hangs over our heads, as this makes it impractical to conduct face-to-face ID checks. With would-be money-launderers on the


lookout for any sign that the guard has been lowered, businesses need to explore alternatives to avoid being brought down by a sucker punch.


Amply demonstrated It has already been amply demonstrated that electronic verification (EV) provides a much more robust and secure solution for firms to meet KYC and AML obligations. Credit reporting data is tamper-proof and can provide a positive ID match in less than two seconds for 95% of cases. This can be done


entirely remotely, with just a name, address, and ideally date of birth. Because the process is almost wholly automated, compliance teams can focus scarce resources on dealing with the remaining 5% of cases, where the bulk of fraudulent activity is likely to occur. More recent technological advances have


made it possible to build additional layers of security into the process. An identity document such as a passport or driving licence can be verified as authentic and the biometric data it contains can be compared against a so-called ‘selfie liveness video’ (SLV) provided by the individual. Again, this can be carried out regardless of location and is more reliable than simply ‘eyeballing’ customers. The combination of these two methods –


cross-referencing biometric and credit reporting data – is already a very safe and secure way of verifying a customer’s identity. But there are further checks that can be performed. People’s e-mail addresses and mobilephone numbers, even the IP addresses they use – all of these build layer upon layer of additional security, to build up a complete digital ID for any given individual.


With would-be money- launderers on the lookout for any sign that the guard has been lowered, businesses need to explore alternatives to avoid being brought down by a sucker punch


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Full effect The full effect comes not from any one of these checks in isolation. It is by harnessing the ‘power of three’ – performing all these checks together – that the technology achieves its full impact, like the pieces of a jigsaw puzzle fitting together. Each piece you slot in makes the image a little clearer but it is only when all the pieces are in place that you get the full picture. And as with a jigsaw, if one piece does not quite fit, that is usually a sign that something is not right. Regulators are increasingly endorsing the use of digital KYC and AML processes, in


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direct response to the Covid-19 outbreak, but also in recognition of the additional security they bring to the table. In the UK, HM Land Registry has said


that in-person ID checks “do not feel very twenty-first century” – and its endorsement of digital solutions was backed by the Law Society, amongst others. At a global level, the Financial Acton Task Force (FATF) has also urged “the fullest use of responsible digital customer onboarding”.


Conclusion The need to step up the fight against money laundering means we all need to look at how to use technology more effectively. The Covid-19 outbreak has made this all the more urgent and has exposed the shortcomings of older methods. The time is ripe for the ‘power of three’. CCR


July 2020


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