TACKLING KYC AND AML WITH DIGITAL IDENTITY
R&C: How would you characterise the prevalence of money laundering across the globe at present? What kinds of risks and threats does it present?
Gunning: According to Deloitte, financial crime costs an approximated $2.1bn a year globally. Money laundering – which is largely facilitated by fraudulent account openings – soared to record highs in 2020, according to most experts and industry analysts. While we do not track money laundering itself, our internal data showed identity fraud attempts surging by 15 percent during the year – much of it driven by new opportunities arising during the pandemic and subsequent lockdowns. Our proprietary data also found that social engineering surpassed counterfeit documentation as criminals’ preferred form of identity fraud in 2020, which confirms the criticality of holistic data checking as opposed to simple document verifications. As financial crime becomes more sophisticated, comprehensive data verifications with checks across identity, liveliness, documentation, biometric data, device metadata, watchlists, and so on, becomes increasingly crucial to security. Beyond the obvious costs that money laundering imposes on society as a whole, banks face great risk of sanctions and reputational damage by allowing money launderers access to their services. Particularly insidious is the use of money mules, who are legitimate ID holders, who open accounts and then transfer access to money launderers or perform activities on behalf of them. Catching these individuals before they open an account is a challenging but essential task for banks – one that requires unified data in an organisation and collaboration across the industry as a whole.
Apr-Jun 2021 Issue
Fourthline