Good data leads to better decisions
To create the best automated compliance processes you need data. It’s impossible to complete KYC, KYB and AML processes without access to accurate and comprehensive data.
Good data helps regulated businesses make better risk-based decisions about who to onboard and who to off-board tout-suite.
It also flags up who might be a higher risk and how to carry out ongoing monitoring activity.
But what checks do regulated firms need to build into their automated compliance processes? And who are the best providers out there?
PassFort has partnerships with many of the world’s leading data providers to give customers coverage and choice over their data sources; the data sources that help them build trusted relationships with new clients, because this is where it starts.
Trust is built online when you know someone is who they say they are or when you can establish that a company is legit. And trust is a two-way deal, the right onboarding process gives new clients confidence that you know what you’re doing too.
Whether it’s data that helps facilitate straight-through processing or data that helps compliance analysts make informed decisions, data you can trust needs to be accessed and integrated into your compliance workflows.
Here we’ve listed out some of the kinds of checks you might want to build into a due diligence process, along with some of the providers you can integrate into a workflow of automated compliance checks via the PassFort API.
ELECTRONIC ID CHECK
Let’s start with the good old electronic identity check. Basically, with this check you are validating a person is who they say they are.
The check will verify an individual's identity, their address, or tax status by trying to match them across various electronic information sources. These sources might include electoral rolls, national identity registers and so on, the purpose is to establish a digital paper trail for the person applying for your product or being risk checked.
Document verification checks confirm whether the documents an individual is using as proof of identity are valid. The types of document can vary, but they would typically include things like a passport, driving license, or national identity card.
ID documents can be uploaded and quality checked to ensure validity. Once they are validated, key information can be checked such as name, age, address etc. They will be matched and checked to see whether they are correct for the individual making an application, and all is as it should be.
These document checks can be automated, of course, and they can take place very quickly, but sometimes it can require the human touch. Compliance analysts might request additional documents or carry out enhanced due diligence because very little beats the human eye when it comes to verifying faces.
As we said, sometimes there is no substitute for the human eye when it comes to checking IDs. But it’s still possible to make it easier for people to do their jobs by automating elements of a manual review process.
For example, ID documents can be loaded into PassFort for manual review, but automatic checks can be run on key details like name, address and date of birth.
PassFort is integrated with IDV for manual reviews.
Before onboarding, firms often want to check potential fraud risks associated with an individual or a company. Fraud checks can be performed by searching an individual's details, such as name, address, date of birth etc. - or a company's details - company name, company number, address and so on – on a fraud database.
In PassFort, this check assesses whether an individual or company has any matches in the Cifas National Fraud Database. This check is performed by sending details to Cifas, who cross-references them in their database. It might flag matches or pass someone with flying colours.
PEPs, SANCTIONS & ADVERSE MEDIA
PEPs stands for Politically Exposed Persons and it refers to someone that has, for example, been elected or appointed by a state or government and is in a position of power and influence. The PEP might come under particular scrutiny in a due diligence process to mitigate risk around bribery and corruption for example.
Equally, a PEP might be someone that’s married to a politician, or the child or a head of state. Identifying someone as a PEP isn’t designed to exclude them from onboarding or getting access to financial products. It is an important factor to be aware of because it changes the risk profile of the individual.
Sanctions are a different kettle of fish. If a person has sanctions imposed against them or they are PEP based in a country with sanctions imposed against it, the flag will enable firms to make an off-boarding decision. It’s hard to think of an instance where the onboarding journey would continue if a sanction flag has been raised.
Adverse media screening gives the opportunity to run searches for adverse media, “bad press” or negative news stories related to a business being onboarded. This feeds into the overall picture of risk created, so decisions can be made about whether to onboard or off-board, and what to do about ongoing risk monitoring.
For individuals, the check is called PEPs and sanctions screening and for companies it’s called sanctions and adverse media screening, but both checks essentially work in the same way. The check is performed by screening via a data provider’s official sanctions lists, adverse media archives and so on, to look for potential flags or matches.
BUSINESS DATA [KYB]
Know Your Business or KYB is when due diligence checks are carried out on a corporate entity, rather than on an individual. KYB checks are designed to help assess a company’s fraud risk.
It’s essential to understand the potential risk a corporate client poses and to try and verify it isn’t, for instance, a shell company being used for money laundering. The KYB checks build a picture of a corporate structure and ultimate beneficial owners (UBOs), so informed, risk-based decisions can then be made about the corporate client.
KYB processes are detailed, involved and often complex. The best KYB processes let compliance professional make the final decisions based on robust and accurate data returned via automated checks.
Automated KYB checks help find details on UBOs, verify company names in official registries, search incorporation dates, etc., and they build a picture of a firm’s legitimacy. The checks can be run across different data sources with information returned to the compliance analyst. This saves time and drives efficiency, but the real magic is in enabling the analyst to make their risk-based decision with confidence that they can trust this corporate client.
In the same way KYB checks are run to establish the legitimacy of a corporate entity, charity checks are run to establish the legitimacy of a charitable organisation.
The automated searches will look for a charity’s country of incorporation and registration number, and the check will be complete when basic information about the charity is identified along with information about at least one trustee.
PassFort charity checks can be carried out with DueDil and the Charity Commission for England and Wales.
We always want more data...
This isn’t an exhaustive list of data providers, nor is it a full list of the KYC, KYB and AML checks you might want to perform as part of your due diligence on individuals or corporate entities. For example, you might want to check work and study visas with providers like vSure. Or, you might want to do a device fraud detection check with TransUnion TruValidate.
The good news is, PassFort can integrate many different types of data providers through one API. And, we can map any kind of compliance workflow.
Every companies' compliance processes are different. One might want to include lots of different checks in a workflow with lots of manual intervention from a compliance team. Another might want to maximise straight-through processing and minimise human intervention. Whatever onboarding path you choose, you are going to need data, and good data leads to better onboarding decisions.
Get in touch
If you’d like to talk about automating your compliance workflows, integrating different data providers, and how to tailor the process to work best for your compliance team - get in touch, we would love to hear from you.
Together we can work out the right automated compliance solution for your business; the right onboarding flow for your customers; and the right amount of human intervention to get the best outcome.
Hope to hear from you soon.