Image forgery has long been a pressing issue in the realms of digital media, cybersecurity, and even legal proceedings. As technology advances, so do the techniques for creating increasingly convincing forgeries. This raises critical concerns for the integrity of digital information and calls for innovative solutions to detect and prevent fraudulent manipulations.
While Facebook, Microsoft, and many others are banding together to help make machine learning capable of detecting deepfakes in videos, we at Signzy are trying to solve a similar problem, detecting fakes in documents. In the journey of building the global digital trust system, we at Signzy had to solve this major challenge of detecting image manipulations in identity documents.
Fig 1.0 Example of our forgery detection in action
In this blog, I will try to explain our approach in building an innovative image manipulation detection approach using deep learning.
The above images are examples of the advancements in image manipulation techniques. It takes a considerable effort for a human to find out that the image is forged. The features which distinguish real and fake are less, which makes it difficult to detect with human eyes.
Our objective was to build a system which could detect image manipulated documents.
Our first step was to create a dataset of forged documents to test the algorithm. With our expertise and domain knowledge in this field we came up with various scenarios on how an intruder would forge a document. The corresponding data for these scenarios was prepared by photoshop experts.
The forged documents were of mostly two categories.
Copy paste : A region of the image copied from a particular document and pasted into a different document.
Copy move : A region of the image copied from a particular document and pasted into the same document.
Copy paste
This is the type of forgery when a fraudster tries to copy a face from one document into another document. Our goal was to detect these forged regions and to classify the document as fake or real.
The dataset that we created manually using photoshop experts was not enough to train any deep learning solution around it. So we developed image processing algorithms which could generate synthetic forged data. Now all set for the experimentation.
For forged region detection, our approach was to first start off with the state of the object detection methods. We tried with FRCNN to predict the bounding boxes of the forged region along with the class information. FRCNN uses convolution nets to extract feature maps from the input image. These maps are then passed on to a Region Proposal Network which will give proposals for bounding boxes. These proposals are passed on to the ROI pooling layer which converts all the proposals to the same size. Finally, they are passed on to a fully connected layer to predict bounding boxes and classes. This method did not give us better results because the forged regions were of very small size.
Our second approach was to train a patch-based classifier which could classify between real and forged patches. The idea was on the assumption that if the copied image region has a different compression footprint when compared to the region to which its copied to, there would be a strong shift in the way that the pixels are grouped. This method proved to be very efficient.
It almost gave us around 97% accuracy. We did a lot of ablation studies to find the right configurations which I can’t reveal due to IP issues.
Copy Move
This is the type of forgery when a fraudster tries to change any text in an image by copying a similar text from the same image. For example, changing dates. Our goal was to detect these forged regions and to classify the document as fake or real.
There is a lot of literature related to detection of this type of forgery. The popular one is DCT based feature matching. In this method, DCT followed by quantization is performed on a 16×16 patch extracted from the image. The similar operation is performed throughout the entire image and all the matrices are sorted. Then for each row in the matrix the corresponding shift vector is calculated. If two regions are copied the shift vector of those regions would match. A very powerful algorithm that works well in most scenarios. But in our use case, since a document has many regions that have the same DCT values this method couldn’t be applied.
Our method involved two parallel networks. First, an encoder-decoder network predicts pixel-wise forged regions. A second network runs in parallel that finds feature maps which are in correlation with forged region predicted by the first network. Both networks are trained together with a cumulative loss function. I regret as I can’t reveal the full solution due to IP issues.
To summarize this blog, I had explained the two major types of forgeries which can be done in documents. Also, I had tried to explain the approaches we took to solve this challenging problem. Hope you had a nice read.
About Signzy
Signzy is a market-leading platform redefining the speed, accuracy, and experience of how financial institutions are onboarding customers and businesses – using the digital medium. The company’s award-winning no-code GO platform delivers seamless, end-to-end, and multi-channel onboarding journeys while offering customizable workflows. In addition, it gives these players access to an aggregated marketplace of 240+ bespoke APIs that can be easily added to any workflow with simple widgets.
Signzy is enabling ten million+ end customer and business onboarding every month at a success rate of 99% while reducing the speed to market from 6 months to 3-4 weeks. It works with over 240+ FIs globally, including the 4 largest banks in India, a Top 3 acquiring Bank in the US, and has a robust global partnership with Mastercard and Microsoft. The company’s product team is based out of Bengaluru and has a strong presence in Mumbai, New York, and Dubai.
Know Your Business (KYB) process is not so different from the most widely known and standardized Know Your Customer (KYC) process. The difference lies in the purpose and intentionality of the process. The focus is on identifying companies and suppliers in the first case. It changes to consumers or customers in the second one.
KYB (Know Your Business) process shares all the features we have seen in defining KYC processes. The difference lies in the user to identify. In the standard process, potential clients or users are identified to register them in a company. KYB process involves identifying the person responsible or legal representative of a business.
Most B2B (Business-to-Business) companies need to carry out due diligence to identify the businesses they work with. This is to fight money laundering and other tax crimes. It also ensures that they work with organizations with security and guarantees. Even so, in the great majority of occasions, as in the financial sector, it is a mandatory requirement of legal compliance.
For example, companies that offer professional services to other companies must establish KYB. This is to identify the legal representatives of these businesses. It also verifies their connection with the client company.
As with the KYC process, digital solutions in KYB help
– reduce costs
– eliminate bureaucracy
– develop control methods that are safer and more reliable than traditional methods.
KYC To KYB — How One Led To The Other
The US Banking Act of 1970, laid the foundation for the Anti Money laundering (AML) regulations. Customer Due Diligence (CDD) was deemed essential to the financial sector. The term assigned to CDD at the earlier stages was Know Your Customer or KYC.
However, in June 2016, a loophole was found in KYC compliance regulations in the US. These regulations ensured the identity of the customers while assesing the risk factors associated with them. The loophole is that financial institutes weren’t required to identify or verify the stakeholders and beneficiaries of the businesses and entities they are serving. This meant that legitimate firms could unknowingly shelter bad entities or shell companies. These entities could perform illegal and high-value transactions on their behalf. To verify the identity of businesses, the need for KYB was born.
Talking About KYB Terminology
Ultimate Beneficial Owner | UBO
A UBO or Ultimate Beneficial Owner denotes the person or entity that is the ultimate beneficiary of an organization that initiates a transaction. A UBO of a legal entity is a person who possesses:
An interest of at least 25% capital of the business.
At least 25% voting rights at the common meeting of shareholders
A minimum receipt of 25% of said organization’s capital as a beneficiary
Customer Due Diligence | CDD
Customer Due Diligence is a KYC process. It involves conducting background checks on clients. This helps in risk mitigation before further dealings. Business relationship risks may root from many factors in the finance factor. These may have financial crime, creditworthiness and inefficient AML/CFT policies.
Enhanced Due Diligence | EDD
Enhanced Due Diligence is a KYB process having a greater level of scrutiny of potential business partnerships. It also highlights risks that evade Customer Due Diligence.
Simplified Due Diligence | SDD
This is the simplest level of due diligence that can be carried out on a customer. This is appropriate where there is nil to moderate risk of money laundering or terrorist financing. Under such criteria, products and services fall into simplified due diligence criteria. The only requirement is to identify your customer.
AMLD5 Guidelines — Role In KYB Compliance
Recently, two major regulatory global directives were updated. These are the 2nd Payment Services Directive (PSD2) and the Fifth Anti-Money Laundering Directive (AMLD5). The PSD2 requires financial institutions to share data with other institutions. This can be done through the use of APIs (Application Programming Interfaces). On the other hand, AMLD5 compels financial businesses to keep checks on personal information online.
Some key takeaways of AMLD5 –
Obliged entities should assess the information available in KYB records. Then they can proceed with the data process to mitigate any gaps in the Ultimate Beneficial Ownership (UBO) data. There may be gaps or new requirements to obtain information. KYB periodic reviews can be used to obtain or confirm existing beneficial ownership information. This way, the necessary information is available for updating relevant beneficial ownership registers.
The following are the requirements for a robust KYB process:
1. Collect information on the customer, UBOs and intended nature of the business relationship.
2. Gather data on the source of funds and wealth of the customer and UBOs. The reasons for the intended or performed transactions can also be procured.
3. Gain consent of senior management for establishing or continuing the business relationship.
Need For KYB In Businesses
KYB checks are most relevant in the context of AML compliance currently. In India, the major reason for introducing KYB is fraud. Despite advancements in KYC, frauds at the organizational level continue to occur in India. Here are some examples:
Money Laundering Through Shell Companies
A common method of money laundering is through the establishment of fake companies. These are also called shell companies. Most of these appear compliant with the Government of India. However, these companies do not really exist. Shell companies sell no goods or services. They exist only on paper, not in reality.
In a recent crackdown on Chinese companies in India, the Income Tax Department conducted a series of search operations. A scant number of Chinese individuals and their Indian counterparts were found. They were engaged in money laundering and hawala transactions through shell entities. Above 40 bank accounts were created in various dummy entities. These were used in the transactions of over Rs 1,000 crore. With KYB, these shell companies could have been easily investigated and identified faster.
Chit Fund Scams
In India, chit fund scams go back to several decades. In such cases, a registered organization looks authentic. But it mainly just cheats people with lucrative offers. The customers end up providing money. Then the company disappears without a trace.
In Himachal Pradesh, a recent scam was run under the name of Sarv Manglam Cooperative Society Non-Trading Company. This organization was registered in Dharamshala. The members were been accused and arrested for cheating people of Rs 2.75 Cr. With KYB, this could easily have been prevented as the UBO information would have appeared as bogus or fraud.
Bank Loan Frauds
These kinds of fraud involve a bogus organization. It registers as a genuine service company. The objective is to scheme people into providing payments by cash or through fraud accounts. Recently this has become a pain point in multiple states.
The Anti-Bank Fraud Wing of the Central Crime Branch on 6th Feb 2020 arrested six persons. The accused were running a call center in Pazhavanthangal (Chennai). They cheated several persons who sought loans online. In a similar incident this year, 4 fraudsters were arrested in connection to fraud of Rs 2 crore from more than five banks. This was done by pledging forged land documents. With KYB, the business information could have been traced early on.
Challenges associated with manual business verification
Businesses are required to verify customers, corporate clients, and other critical information under the KYB guidelines. Some of the major challenges for this process are are:
Time taking manual onboarding process
Normally, KYB verification for customer onboarding can be a hectic manual process. This is because it requires extensive efforts. In a 2019 Survey Report by Thomson Reuters on AML Insights, 47% of respondents used manual document scanning during client onboarding. This ensured a robust digital identity verification at the expense of laborious effort. The report further states that 4/10 companies employ no digital verification at account opening.
The conventional method leads to a frustrating customer experience. Customers are probable to abandon the account creation process. Moreover, the chances of errors and mistakes when done manually are higher.
High compliance cost
In the Thomson Reuters report, 95 % of respondents reported that data accuracy was very important. 93% cited both well-structured data and company reputation/credibility were also crucial. High costs are required for manually retrieving UBO information. These other factors also drive up the cost for manual KYB verification.
Complex ownership structure
KYC/KYB regulatory directives such as AMLD5 and PSD2 CDD rules make it necessary to verify and identify the business entities. This becomes a mandatory regulatory requirement. Financial institutions rely on gathering business details from clients. This is done with a manual process of filling in forms and verifying the information manually. There exists a high probability of data discrepancies to occur in this process.
Data inconsistencies
Companies can afford manual data retrieval. But the problem of data verification remains. There are multiple sources for collecting companies’ data. Sometimes the information can be defunct or invalid.
Technology To The Rescue — Areas To Address For Automating KYB
With an increase in regulatory requirements, the above points clearly state the need to automate the current process. Here are some solutions that could help businesses:
Automated KYB onboarding
AI-powered verification opens an opportunity to increase the efficiency of the onboarding process. It also reduces the cost and speeds up the process.
The manual method for retrieving UBO information can be achieved in a fashion similar to KYC process. What used to take 24–30 days for manual KYC has been reduced to 2–3 minutes by Signzy’s VideoKYC solution.
Access to authentic business registries
Companies must have access to the properly updated business registries. This is valuable and will make business compliance an easy task. Signzy’s proprietary APIs that can easily retrieve company information. This can be done from reliable sources like from the Registrar Of Companies (ROC) database
API integrated KYB solutions
Advanced API integrated solutions can be designed to aggregate data from various sources. Businesses only need to enter the required details to retrieve data. For ex, business registration number and the jurisdiction code where the business is operating.
Signzy provides a host of microservices involve unique APIs that can extract and verify the UBO data in a matter of hours as opposed to days. Our APIs are also capable of cross referencing data across multiple govt. Databases and sanction lists.
Virtual Identification Using VideoKYC
Businesses are now turning towards automated software. This is due to increasing compliance costs. Software helps conduct checks for everything. This includes from basic forgery attempts to advanced negative checks. The data is cross-referenced against sanction lists across the world.
With Signzy’s VideoKYC, the entire process can be completed in a matter of 2–3 minutes. Our unique video conferencing tool can also allow officials to interact and verify the credibility of the data. This is done while maintaining KYB compliance as well as data accuracy.
Scope Of The KYB Market
The market for KYB includes multiple services. Ex: business verification, beneficial ownership identification, and risk assessment and so on. This market is projected to grow to $11.8 billion by 2022. This projection comes from OWI Labs in their recent report
The total global KYB addressable market, as of 2017, the value of the market is estimated at
$5.6 billion with an annual growth rate estimated at 16 percent, adding up to a market size of $11.8 billion in 2022
KYB in Europe
In Europe, the AMLD5 has already been implemented. It facilitates the businesses to know about the UBOs. This is to enable trust between foundations. It also ensures legality of the entities to comprehend the structure of the business and customers.
Devoid of commitment to KYB and other related AML activities can have extreme consequences. For example, Deutsche Bank was fined $16.6 million last year by Frankfurt prosecutors. This was due to failure to observe suspicious transactions. This came as a direct result from their poor management of their AML processes. Previously, a £163 million fine from the UK’s Financial Conduct Authority. This was again due to effective AML oversight. Criminal activity associated with a business can also harm credibility and reputation. It can also cause other business disruptions.
Therefore, KYB is an essential element of anti-fraud frameworks and requirements. This includes Anti-Money Laundering regulations. An extension of KYC and regular due diligence is having a proper KYB process within your organisation. This protects against potential clients and vendors who intend to commit money laundering activities or other financial crimes. By establishing and understanding risk levels during onboarding, organisations can manage potential vulnerabilities. They can also respond effectively to indications of fraud or crime.
KYB in the US
The Customer Due Diligence (CDD) Final Rule is active from May 2018 in the US. This rule states as:
“Beginning on the Applicability Date, covered financial institutions must identify and verify the identity of the beneficial proprietors of all legal entity customers (other than those that are excluded) at the time of opening a new account (other than exempted accounts)”
The financial institutions constitute banks, dealers and brokers, mutual funds and futures commission merchants. However, different jurisdictions constitute different requirements. For example, the US financial institutes, in addition to the Bank Secrecy Act (BSA), are also liable to OFAC (Office of Foreign Assets Control), FACTA (Foreign Account Tax Compliance Act) and SEC disclosure rules.
KYB In India
The newly developed concept of KYB is still in its infancy and yet to be fully applicable across all business sectors. While the regulatory authorities have to take the developments of KYB under consideration, the need for KYB is clear in certain business sectors, particularly in financial space as listed below:
Banking
With money coming in from all corners of the globe, banks must be able to perform Know Your Business (KYB) checks on a client base that may be moving money all around the world. In addition, a “beneficiary owner”, which is a derivative of KYC, must be a present as a priority before financial transactions take place.
A recent article by Times Of India has brought to light how certain “fake” branches have been operating in major Indian states. These are Tamil Nadu’s Cuddalore district as an SBI branch, as well as a false branch of Karnataka Bank which was discovered in Phephna in Ballia district. The culprits behind the 2nd incident swindled almost Rs. 17 lakh in terms of new accounts and fixed deposits. With such fraudulent methods in full sway, KYB in banking is now necessary more than ever.
Lending
India’s lending market is one of the largest in the world, particularly with the advent of digital platforms. Digital lending to micro, small and medium enterprises (MSME) in India can grow upto 7 lakh crore by 2023, a 15x increase in annual disbursements. This is based on a joint report by Omidyar Network and Boston Consulting Group (BCG).
Assessing the integrity and ability of a borrower can be difficult — despite assets backing the loan, making it rock-solid. Unfortunately, there is no stereotypical “fraudster”. There is no scam artist who can be profiled or categorized. A polished CEO with an impressive background can look the same as every other swindler. Lenders need to be particularly mindful of who the borrower is and this means conducting proper due diligence. KYB in lending can help assess:
The background of the directors and the organization
Past offences/lawsuits/ criminal cases registered
Any other controversial data which may harm future business
SMEs/Merchant Onboarding
KYB (know your business) checks are crucial to help businesses verify customer identification by gathering and verifying important documents. It should be mandatory for most financial companies to conduct KYB on their customers/businesses to protect against money laundering, identity theft and fraud. KYB can be incorporated at the time of onboarding to minimize risks as well as mitigate potential frauds.
A lot of companies adhere the use of time-consuming manual KYB processes due to:
Need for complete checks and collect signatures from multiple directors
The applicant is not always the director
The application can quickly become a complex journey if there is overseas ownership or beneficial ownership
Insurance
India does not have an effective insurance fraud law against insurance frauds. According to an article in Business Today, frauds burnt a Rs 45,000-crore hole in the Indian insurance industry’s pocket in 2019. Most of these are due to bogus or fraud claims passed. In many cases, insurance companies, their intermediaries or those pretending to be either of them may also perpetrate frauds.
As India’s insurance industry continues to grow, fraud management is now a major concern for insurers and business leaders. Fraud risk in the insurance value chain can originate from internal as well as external factors. There is also the risk of employees misusing confidential information. Colluding with fraudsters is on the rise. Insurers must install internal checks and balances to rectify such issues.
KYB can also contribute by providing the list of people who have access to sensitive client information as well as conduct checks against the background and history of the organization as well as the people involved.
Conclusion
The global business markets are growing at a rapid pace. Companies must tighten customer due diligence for clients. The KYB processes and checks defined above can take hours to days without a platform with automation capabilities. However, cutting corners to achieve faster onboarding without proper controls increases the risk. It exposes the business to fraudulent actors and their illicit activities. Therefore while complete automation remains a challenge, care must be taken to improve KYB to match the levels of KYC automation that has already been achieved.
About Signzy
Signzy is a market-leading platform redefining the speed, accuracy, and experience of how financial institutions are onboarding customers and businesses – using the digital medium. The company’s award-winning no-code GO platform delivers seamless, end-to-end, and multi-channel onboarding journeys while offering customizable workflows. In addition, it gives these players access to an aggregated marketplace of 240+ bespoke APIs that can be easily added to any workflow with simple widgets.
Signzy is enabling ten million+ end customer and business onboarding every month at a success rate of 99% while reducing the speed to market from 6 months to 3-4 weeks. It works with over 240+ FIs globally, including the 4 largest banks in India, a Top 3 acquiring Bank in the US, and has a robust global partnership with Mastercard and Microsoft. The company’s product team is based out of Bengaluru and has a strong presence in Mumbai, New York, and Dubai.
In recent times, wallets and UPI have taken over the Indian digital payment ecosystem. Since its introduction in 2016 by the National Payments Corporation of India (NPCI), UPI has changed the payments paradigm.
But even as the reduction of friction in payments is driving the growth of new businesses, it is also orchestrating fraud. And with a likely influx into new-age payments platforms in the aftermath of the coronavirus outbreak, things may only get worse.
KYC is basically the collection and collation of customer data which is the most effective way of fraud mitigation. Newer and faster ways of getting KYC done are being implemented with the advent of AI and ML gradually taking over the legacy systems. So instead of having an agent visit the customer to manually check the details, more efficient ways like;
Aadhaar Offline KYC (Processing KYC without the use of biometrics)
Electronic KYC (Accessible to only customers with Aadhaar number)
Central KYC
Video KYC. This involves capturing all details and identification via a video.
Types Of KYC Related Frauds In India
Fake/Emergency Re-KYC
Usually, a re-KYC is required, to ensure an updated database of the customer in areas where they might have been a change. For instance, address or marital status or in case there was a minor mistake in the data.
This is the most common attempt of KYC fraud in India where the fraudster places a forged phone call pretending to be a bank/company representative. He/she asks you to provide your KYC information on an emergency basis otherwise the account will be “blocked”.
They will collect your information from social networking sites like Facebook, Linkedin, Twitter and so on. Once they have enough information, they will call you to talk to you about an ‘emergency’. Once they are confident that you are sold on the idea, they will ask you about your personal account details citing those ‘emergency’ reasons. Once you provide the details, he/she will further transfer the money from your account to some other account.
Vishing
Vishing (voice phishing) is an attempt where fraudsters try to seek personal information like Paytm Bank PIN, Paytm OTP, Card expiry date, CVV etc. via a phone call. The miscreant acts as an employee from Paytm, the government or a bank. He/she asks you for your KYC details. They will state various reasons like reward points, free cashback, reactivation of account, etc for this. These details are then used for accessing your account without your knowledge.
Smishing
Smishing (SMS phishing) is when a SMS/Email/WhatsApp message is used to lure you for calling back on a fraudulent phone number, visiting fraud websites or downloading malicious content via your phone. Fraudsters will send you SMS/Facebook Requests/WhatsApp messages to inform you that you’ve won some prize money, cashback offer or the like. They’ll ask you to share your Paytm account/Paytm Payments Bank account details. Unaware of what might happen, once you do that, they will initiate fraudulent transactions using your account details.
Identity Theft
Identity Theft occurs when someone uses your KYC information to obtain a Credit Card, Loan and other services in your name. Then those will be used for fraudulent transactions. They try to gain access to your details through any of the measures stated above. They contact you and try to collect KYC details pretending to be a Paytm employee!
Common KYC Frauds In India
According to CNBC, The Government of India has announced many beneficial schemes to help small businesses. Example: interest/EMI waive-off for MSME, microloan for unorganized vendors, a moratorium of EMI for various loans up to 6-months. But in most cases, common people might find it challenging to avail of these schemes. This is due to the amount of paperwork and the general complexities involved in dealing with banks. There is also a possibility of many bogus agents approaching small business owners. They provide fake offers of support in exchange for money. These fraudsters may use fake KYC documents to avail such benefits or could run a racket of fund diversion.
Some examples :
In a May report by Times of India, A 70-year-old retired government employee from Hyderabad lost Rs 4.2 lakh in a KYC (know your customer) fraud case. An unidentified man, posing as a Paytm employee, lured him into completing the fake KYC process and the customer provided all bank account details for fear of account termination.
In a Hindustan Times report, a senior citizen (67) from Borivali, Mumbai was duped by a cyber fraudster of Rs 3.18 lakh. The fraudster posed as an executive from a popular e-wallet service provider and under the pretext of updating his KYC (Know Your Customer) details he ricked him into sharing his bank details, including OTPs (one-time passwords). The accused used these details and fraudulently transferred money to another bank account. The complainant is a retired government employee and lives in a Borivali (West) housing complex, the police said,
In July, as per a report by Hindustan Times, a 38-year-old woman from Kothrud, Pune had been duped of Rs 14.49 lakh in a KYC (know your customer) fraud. According to the police, the complainant owns a business in the city.
The cybercrime wing of Maharashtra Police has received a number of complaints against eSIM swapping scams. In this, people have lost large sums of money in cases reported across the country. A July article by Indian Express mentions how the target user initially receives a call from a person posing as a customer care representative of the service provider, who, under various pretexts, deceives the user into forwarding an email sent to the user’s registered mail address with the service provider. In many cases, the user is contacted under the pretext of updating Know Your Customer (KYC) details.
Earlier this January, reports by Times Of India indicated that frauds through KYC were on the rise in Chandigarh with over 50 complaints in just 15 days. According to the Cyber Crime Investigating Cell, complainants have lost amounts ranging between Rs 10000 to Rs 45000.
In June of this year, a resident of Ballygunge, Kolkata was duped by an unknown fraudster who called the wife of the complainant on the pretext of KYC update. The caller convinced her to click on a link shared with her and enter OTPs multiple times after login. The complainant has lost Rs. 48000 in this process.
The Right Way To KYC For Banks & Financial Institutions
In order to clarify and strengthen KYC in the financial sector, the four minimum elements needed for an effective program are:
However, none of these processes require customer bank account information. The data rests with the organization itself while the customer account is created. Most organizations tend to offer to warn their customer channels on the same.
Video KYC — Fighting Financial Fraud
To prevent fraud and money laundering, the BFSI sector needs to comply with KYC norms. These were introduced by RBI and are based on the Government of India’s (GOI) PMLA Law of 2002. Aadhaar-based KYC verification had simplified the process. It also reduced the time taken by the BFSI sector to on-board customers drastically.
But, things changed with the Supreme Court order dated September 26, 2018, made the use of Aadhaar-based KYC by private players as unconstitutional. To overcome this hurdle, RBI brought Video KYC as an alternate tech-driven mode of KYC in its notification on January 9, 2020. It is based on the Aadhaar and Other Laws (Amendment) Bill, 2019, which was introduced by the government on June 24, 2019.
The process involves
Information about the user is received via API
User can opt for authentication using their smartphone/computer
Document details are captured on live video: screenshots of PAN Card, other identity documents, selfies etc.
Documents are scanned and data is automatically extracted and authenticated.
Facial recognition between the picture on document and person showing it is done
Liveliness and fraud prevention checks are conducted
The whole process is recorded on live video
The outcome of the verification process is assigned
The data retrieved during the procedure is automatically forwarded to the client via API
Conclusion
While most people will tell you that being cautious and aware is the best way to fight fraud, the modern age is no longer just a battle of wits but of technology. If fraudsters can use advanced software and hardware to hoodwink your judgment, it is only fair that technology should come to the rescue. Besides, with novel ideas like Video KYC, ven users with minimum knowledge about frauds and cyber threats can secure their accounts. After all, what might escape the human vision cannot defy computer vision.
About Signzy
Signzy is a market-leading platform redefining the speed, accuracy, and experience of how financial institutions are onboarding customers and businesses – using the digital medium. The company’s award-winning no-code GO platform delivers seamless, end-to-end, and multi-channel onboarding journeys while offering customizable workflows. In addition, it gives these players access to an aggregated marketplace of 240+ bespoke APIs that can be easily added to any workflow with simple widgets.
Signzy is enabling ten million+ end customer and business onboarding every month at a success rate of 99% while reducing the speed to market from 6 months to 3-4 weeks. It works with over 240+ FIs globally, including the 4 largest banks in India, a Top 3 acquiring Bank in the US, and has a robust global partnership with Mastercard and Microsoft. The company’s product team is based out of Bengaluru and has a strong presence in Mumbai, New York, and Dubai.
On September 20th, the International Consortium of Investigative Journalists (ICIJ) released the “FinCEN Files” to the world in collaboration with Buzzfeed News. These were the same reporters who brought us the “Panama Papers” and the “Paradise Papers”. This latest data leak of the FinCEN Files delivered a stunning blow to law enforcement and regulators across the globe. As we have seen from similar past incidents, releasing such highly confidential data into the public domain has serious consequences for the businesses and authorities involved.
2 Important Terms In Connection To Fincen
FinCEN stands for the US Financial Crimes Enforcement Network. It constitutes the people at the US Treasury who counter financial crime. Any concern about transactions made in US dollars is sent to FinCEN, even if they occur outside the US.
Suspicious activity reports (SARs) are the documents where the above-mentioned concerns are recorded. A bank must fill up one of these reports if it has a suspicion against one of its clients. The report is forwarded to the relevant authorities.
The Suspicious Activity Reports (SARs) have established that most banks often moved funds for companies registered in offshore tax havens. Ex: the Cayman Islands and the British Virgin Islands, where the owner information was unavailable.
Banks could have denied proceeding with these transactions. But in most instances, the transactions were carried out and a SAR report was later filed to fulfill their reporting obligations.
The Fincen Files — What Are They
The so-called FinCEN Files constitute 2,657 documents leaked from the Financial Crimes Enforcement Network (FinCEN). The FinCEN files were leaked to Buzzfeed News in 2019 who promptly shared them with the ICIJ. For the last 16 months, 400 journalists across 88 countries have sifted through the leaked records. They conducted a number of their own investigations to verify the data.
The documents contain 2,121 SARs sent to the US authorities. These are regarding transactions that took place between 1999–2017. The leaked SARs allegedly provide “some of the international banking system’s most closely guarded secrets”. They cover 200,000 suspicious transactions Which are at over USD 2 trillion that occurred over two decades.
Key Revelations Of The FinCen Files
HSBC enabled fraudsters to move millions of dollars of stolen money around the world,. This was done even after it learned from US investigators the scheme was a scam.
JP Morgan assisted a fraud company to move more than $1bn through a London account. They did not even know without knowing who owned it. The bank later discovered the company owner to be a mobster on the FBI’s Top 10 Most Wanted list.
Recovered evidence from the files hint that one of Russian President Vladimir Putin’s closest associates used Barclays bank in London to avoid sanctions that were meant to stop him using financial services in the West. Some of the cash was used to buy works of art.
The husband of a woman donated £1.7m to the UK’s governing Conservative Party’s. According to the files, he was secretly funded by a Russian oligarch with close ties to the Russian President.
The UK is called a “higher risk jurisdiction” and compared to Cyprus. This is according to the intelligence division of FinCEN. The number of UK registered companies that appear in the SARs has over 3,000 UK companies. These are named in the FinCEN files — more than any other country.
Chelsea owner Roman Abramovich once held discreet investments in footballers not owned by his club. These investments were made through an offshore company.
The UAEs’ central bank did not respond to warnings against a local firm which was helping Iran evade sanctions.
Deutsche Bank was involved in money laundering for organized crime, terrorists and drug traffickers.
Standard Chartered Bank mobilised funds for Arab Bank for more than a decade. This was even after their clients’ accounts at the Jordanian bank had been funding terrorism.
In North Korea, a host of shell companies were used to mobilise millions of dollars through U.S. banks in New York. The funds were routed through China, Singapore, Cambodia, the U.S. and elsewhere. This is based on the suspicious activity report filed by the Bank of New York Mellon and JP Morgan Chase.
In another instance, JPMorgan Chase, alerted the Treasury Department in January 2015. This was about suspicious financial transactions linked to North Korea. In its report, JPMorgan Chase said that it oversaw $89.2 million in transactions from 2011 to 2013. These transactions benefited 11 companies and individuals with ties to North Korea. The bank said it had previously flagged those companies in its own suspicious activity reports for sending funds to North Korea.
The Indian Involvement
The Indian Express joined 109 media organizations in 88 countries at the International Consortium of Investigative Journalists (ICIJ) as the Indian representative. They coordinated tracking of the Indian entities and the banks mentioned in these SARs filed with FinCEN from 1999 and 2017.
Suspicious bank transactions of Indians are red-flagged by FinCEN. They are suspected for money laundering, terrorism, drug dealing or financial fraud.
The investigation also revealed transactions of a range of individuals and companies. The list includes a jailed art and antique smuggler, a global diamond firm owned by Indian-born citizens named in several offshore leaks, a premier healthcare and hospitality group, a bankrupt steel firm, a luxury car dealer who allegedly duped several high net worth individuals, a multinational Indian conglomerate, a sponsor of the Indian Premier League (IPL) team, an alleged hawala dealer who became the reason for a massive fight within the Enforcement Directorate (ED) and a key financier of an Indian underworld crime boss, among others.
Not The First Incident, But How Is It Different?
There have been a significant number of big leaks in the financial world in recent years:
2017 Paradise Papers — This event marks a bunch of leaked documents from an offshore legal service provider Appleby and corporate services provider Estera. The two were partners in operation together under the Appleby name. This was until Estera became independent in 2016. The documents divulged the offshore financial dealings of politicians, celebrities and business leaders
2016 Panama Papers — The infamous incident marking the leak of documents from the law firm Mossack Fonseca. These documents showed in detail how wealthy people were using offshore tax regimes.
2015 Swiss Leaks — The documents from HSBC’s Swiss private bank were revealed in 2015. They displayed how it was using the country’s banking secrecy laws to help tax evasion.
2014 LuxLeaks contained documents from the accountancy firm PricewaterhouseCoopers. These documents exposed big companies who were using tax deals in Luxembourg. The deals helped to reduce the tax amount they were having to pay
The FinCEN papers are different because they are not just documents exposing a bunch of fake/offshore companies. They are actual reports which come from a number of well-established banks.
These papers bring to light a plethora of potentially suspicious activity involving companies and individuals. The reports also put up questions about why the banks which had noticed this activity did not address their concerns.
Once a bank has delivered a report to the higher authorities, it is very difficult to prosecute it or its executives. This is despite the fact that it carries on helping with the activities and collecting the fees.
FinCEN stated that the leak could
– have repercussions on US national security
– jeopardize investigations
– place the safety of institutions and individuals who file the reports under risk.
Role of Shell Companies In Money Laundering And Fraud Businesses
A shell company is an on-paper business that is established to hold funds and manage another entity’s financial transactions. Shell corporations don’t have any employees. Their shares/stocks aren’t traded on exchanges. Shell companies neither generate any revenue nor provide customers with any products/services. The only normal business practice that shell companies take part in is managing the assets they hold. This usually doesn’t amount to much money.
Tax Evasion: Many times corporations set up shell companies at offshore venues. These locations usually have a very lenient tax rate. These places are known as ‘Tax Havens’. Examples of these places are Panama and Switzerland. These corporations dump their assets in the shell companies. This way, they can escape from paying high taxes on their assets. Foreign companies can create shell company law. This is because some tax havens don’t have to report any tax information. This makes it a cakewalk to defer taxes and hide offshore accounts from other tax havens. Ex: include places such as Switzerland, Hong Kong and Belize which have gained public attention.
Money laundering — The Black & White Game; In India, a lot of shell companies were discovered in 2016 when demonetization happened. This was because they were engaged in making use of black money. Many people and corporations make use of shell companies to store their surplus cash. This is preferable instead of making deposits.
Ponzi Schemes: People or corporations may create shell companies to defraud people. They do so by offering fraudulent schemes and earning money out of it. By making use of these companies, they save themselves. When the fraud is discovered, it is very difficult to find the actual people behind the scheme. The only thing upon which the blame can be put on is the company (which is not of any use).
Masked Vigilantes — Hiding The Identities: Finding the real owner of a shell company can be a problematic task. The owners of these companies successfully hide their identities. They cannot be located as usually the registered office of the company or directors is at a completely different place. In most cases, it does not match the address submitted to the registrar.
Can There Be Any Legal Reasons For Setting Up Shell Companies?
There are some legal reasons for which a shell company can be created. These are as follows:
Hold or store money temporarily. This is mainly when the main company/ owner of the shell company is planning to start a new company.
If a company wants to conceal its business with another company, which has a bad reputation, a shell company can come into play. This can be solely to deal with the other company.
A shell company may be created in order to stage a hostile takeover of another company. This happens when a company buys another company. This is usually done without the approval of the management of the target company.
To protect assets from lawsuits.
In case a company is working in a dangerous country with rampant terrorist activities. The people may formulate shell companies to hide money. This helps avoid being a target of criminals and thieves.
Shell companies are often used to receive access to foreign markets.
Why Shell Companies Prefer Offshore banking
Essentially, an offshore bank is just a bank located outside the account holder’s country of residence. Offshore banking services are typically offered by banks with a presence in a low tax jurisdiction. These banks tend to offer financial and legal advantages over domestic banking arrangements.
There are plenty of legitimate reasons for having an offshore account:
When living or working abroad, holding an international bank account can make it easier to manage finances. Also, offshore accounts are often available in multiple currencies. This can be more convenient for someone making or receiving payments across different countries.
Clients like the ones mentioned above may find it more convenient and more economical to direct all of their business through one bank. This makes sense to centralize this in a jurisdiction that is the most tax-efficient. There are several companies that do this without actually having a physical presence in the country where they are tax domiciled. This is not illegal, but it can be stated as highly unethical.
International banking facilities usually offer more flexibility. This helps those who need immediate access to their money or to international financing. They can do so more cheaply, quickly and easily than would be possible with domestic arrangements.
There are of course demerits here as well.
– Such accounts usually require a minimum balance
– These accounts are not protected in the same way as account balances are protected (up to £85,000 in the UK) via schemes such as the UK’s Financial Services Compensation Scheme.
KYC and AML — Need For A New Approach
KYC (Know Your Customer) and AML (Anti Money Laundering) are very popular terms today. They’re basically catch-all procedures designed to prevent all kinds of horrors in the financial world.
The same processes are used for sanctions.
KYC and AML procedures have modernized over the years as international payment volumes boomed through the ages. After 9/11, the prevention of terrorist financing made these processes more refined.
The newly introduced concept KYB is an additional security layer to the above. It requires each bank to formally identify who their customer is. So if the client is a company, the bank needs to know who each Ultimate Beneficial Owner (UBO) is.
This can be a bit tricky. Criminals often build shell companies in offshore jurisdictions. These are usually owned by companies in another country. These shell companies are handy for hiding who the real owners are.
The bank must then engage in a series of Customer Due Diligence (CDD) — and sometimes Enhanced Due Diligence — checks. The bank must also check that the person isn’t on a sanctions list (e.g. they’re not considered a danger by the USA or EU).
Need For KYB — Good For Business
In recent years, combatting money laundering and terrorist financing has ramped up. There are stricter regulations in place to ensure financial transparency around business ownership.
Over the last few decades, the introduction of new regulatory updates like AMLD5, PSD2 and many more have changed the game. Companies and financial institutions are expected to know who they are doing their business with. This requires the detection of the ownership structure and their business relationships.
Use of offshore tax havens, shell firms, investments in cash-intensive sectors like bullion and real estate, Trusts with no specific purpose, layers of shareholding (for instance, through subsidiaries or intermediaries), are some ways fraud and crime are concealed.
Fraudsters utilize fictitious addresses and fake identities to :
– avoid the deposit of annual financial statements
– conceal their identities and get away in the case of investigations.
UBO — The New Weapon
UBO is an acronym for ‘Ultimate Beneficial Owner’, i.e. the person or entity who is the ultimate beneficiary of the company. The Financial Action Task Force (FATF) is the global money laundering and terrorist financing watchdog.
Their definition of UBO is as follows:
“the natural person(s) who ultimately owns or controls a customer and/or the natural person on whose behalf a transaction is being conducted.”
The FATF focuses on two types of UBO, based on “ultimate ownership” and “ultimate effective control”. The beneficial owner is thus;
– the person you are doing business with, who may be the legal owner of the entity, or
– the person, or group of persons, who own/s or controls that business.
A company may have more than one beneficial owner or group of owners, to conceal the identity of absolute controlling person or interests.
The UBO compliance law applies to;
– Financial transactions, financial institutions (commercial banks, investment banks, insurance companies, brokerages and investment companies), and companies that deal with money (credit unions, money transfer businesses, payment services, online marketplaces, gambling and gaming companies).
– Other companies, like real estate and bullion trading, where transaction above threshold limits, may trigger the requirement of UBO reporting.
– Jurisdictions where regulators have explicit AML/CTF laws, and KYC rules.
Regulated entities are required to retrieve, maintain and disclose such UBO information. Non-compliance can lead to heavy fines and severe reputational damage.
Significance of KYB screening.
KYB screening guarantees fraud prevention and gainful regulatory consistency. It assists organizations with accomplishing believability and generosity in the business network. The better the rating an organization has from the specialists, the more business it draws in.
It helps businesses achieve their share of the worldwide market. Enterprises are developing online connections with others from every corner of the planet. With the limited experience of the prospects, the chances of loss are high due to ambiguity.
This ambiguity leaves a loophole in the B2B relationship. This loophole is then exploited by the criminal entities. It is used to prepare attacks on companies with various types of fraud.
There certainly are a few common scams or fraud which are committed through B2B relations like:
Money laundering.
–black money is channeled through a business with weak security protocols. It is used to launder money and to aid terrorist activities.
Shell businesses fraud.
Fake businesses are set up to wash black money. Black money is incorporated available proceeds and declared as legit revenue. In case a shell company is found by the authorities, the credibility of the businesses conducting business with it is also tarnished.
KYB is significant for global companies to achieve retainable growth in today’s scenario of fraud and increasing regulatory scrutiny.
Conclusion
There are no winners in scandals such as the FinCEN Files — except, perhaps, for the media who can profit from sensationalist headlines. Neither the banks nor the regulators come off well.
This case can, however, be used as a call to arms for positive change. With KYB, bogus corporations and shell companies can be weeded out to prevent further misuse of funds. While SARs are easy to be ignored, mandating KYB as part of the initialization process can easily prevent such fiascos from happening in the future.
About Signzy
Signzy is a market-leading platform redefining the speed, accuracy, and experience of how financial institutions are onboarding customers and businesses – using the digital medium. The company’s award-winning no-code GO platform delivers seamless, end-to-end, and multi-channel onboarding journeys while offering customizable workflows. In addition, it gives these players access to an aggregated marketplace of 240+ bespoke APIs that can be easily added to any workflow with simple widgets.
Signzy is enabling ten million+ end customer and business onboarding every month at a success rate of 99% while reducing the speed to market from 6 months to 3-4 weeks. It works with over 240+ FIs globally, including the 4 largest banks in India, a Top 3 acquiring Bank in the US, and has a robust global partnership with Mastercard and Microsoft. The company’s product team is based out of Bengaluru and has a strong presence in Mumbai, New York, and Dubai.
Artificial Intelligence (AI) has been making waves in various industries, but its power is often concentrated in the hands of big corporations and research institutions. The concept of democratizing AI aims to make these powerful tools available and accessible to a broader audience. One such domain that stands to benefit is face detection technology, which has versatile applications in security, healthcare, retail, and even social interactions.
Since the dawn of A.I, facial recognition systems have been evolving rapidly to exceed our expectations at every turn. In a few years’ time you’ll be able to go through the airport basically just using your face. If you have bags to drop off, you’ll be able to use the self-service system and just have your face captured and matched. You’ll then go to security, the same thing happens just use your biometric. The big tech giants have proved this can be done at massive scale. What the world now needs is higher adoption through democratization of this technology, where even small organizations can use this advanced technology with a plug and play solution.
The answer to this is Deep Auth, Signzy’s inhouse facial recognition system. This allows large scale face authentication in real-time, using your everyday mobile device cameras in the real world.
Democratizing AI : Deep Auth, Facial Recognition System from Signzy
While one to one face match is now very popular (thanks to latest Apple Iphone X), it’s still not easy to authenticate people from larger datasets, that is identifying you from thousands of other images. What is even more challenging is doing this in real-time. And just to add some bit of realism, sending images and videos over mobile internet slows this down even further.
This system can detect and recognise faces at real time in any event, organization, office space without any special device. This makes Deep Auth an ideal candidate to use in real-world scenarios where it might be not possible to deploy large human workforce or spend millions of dollars to monitor people and events. Workplaces, Education Institutes, Bank branches even large residential buildings are all valid areas of use.
Digital journeys can benefit from face based authentication thus eliminating the friction of username, password and adding security of biometrics. There can also be hundreds of other use-cases which hopefully our customers will come up with, and help us improve our tech.
Deep Auth doing door access authorization.
Deep Auth is robust to appearance variations like sporting a beard, or wearing eyeglasses. This is made possible by ensuring that Deep Auth learns the facial features dynamically (Online training) .
Deep Auth working across different timelines
Technology behind Democratizing AI
The technology behind face recognition is powered by a series of Convolution Neural Networks(CNN). Let’s divide the tech into two parts :
Face Detection
Face Recognition
Face Detection:
This part involves a 3 stage cascaded CNN network. This is to ensure the face is robustly detected. In the first stage we propose regions (Objectablility score) and their regression boxes . In the second stage, we take these proposed regression boxes as the input and then re-propose them to reduce the number of false positives. Non-maximal suppression is applied after each stage to further reduce the number of false positives.
3 stage cascaded CNN for face detection.
In the final stage we compute the facial landmarks with 5 point localization for both the eyes, nose and the edges of the mouth. This stage is essential to ensure that the face is aligned before we pass it to the face recognizer. The loss function is an ensemble of the center loss and IoU (Intersection Over Union) loss. We trained the network for 150k iterations on the WIDER Face dataset.
Face Recognition:
The extracted faces are then passed to a siamese network to where we use contrastive loss to converge the network. The siamese network is a 152 layer Resnet where the output is a 512-D vector depicting the encodings of the given face.
Resnet acts as the backbone for the siamese network.
We then use K- Nearest Neighbours(KNN) to classify each encodings to the nearest face encodings that was injected to KNN during the training phase. The 512-D vectorization used here compared to 128-D vectorization used in other face recognition systems helps in distinguishing fine details across each face. This provides high accuracy to the system even with a large number of non-discriminative faces. We are also working on extending the siamese network to extract 1024-D face encondings.
Benchmarks
Deep Auth poses impressive metrics on FDDB database. We use 2 images to train each of 1678 distinct faces and then evaluate the faces with the rest of test images. We then calculate the Precision and recall as 99.5629 and 91.2835 respectively, and with the F1 score of 95.2436.
Deep Auth’s Impressive scores!
We also showcase Deep Auth working in real-time, by face matching faces in a video.
https://youtu.be/mTgBw8lAHF0
Deep Auth in Action!
We tried something a little more cheeky and got our hands on a picture of our twin co-founders posing together, a rare sight indeed! And checked how good the Deep Auth really was. Was it able to distinguish between the identical twins?
And Voila! It worked
Deep Auth is accessed using the REST API interface making it suitable for online training and real-time recognition. Deep Auth is self servicing due to the fact it is robust to ageing and appearance, which makes it an ideal solution to deploy in remote areas.
Conclusion
Democratizing AI in the realm of live face detection offers immense potential to transform various industries. As the technology becomes more accessible, it is crucial to address the ethical implications to ensure its responsible use. By focusing on accessibility and ethics, we can harness the full potential of live face detection to create a more efficient and secure future.
Hopefully this blog was able to explain more about Deep Auth and the technology behind it. Ever since UIDAI made face recognition mandatory for Aadhaar authentication, face recognition will start to prevail every nook and corner of the nation for biometric authentication. Thus democratization of face authentication allows even small companies to access this technology within their organizations. This should hopefully allow more fair play and give everyone a chance to use advanced technology to improve their lives and businesses.
If you want to know more about our video kyc product. Read here
About Signzy
Signzy is a market-leading platform redefining the speed, accuracy, and experience of how financial institutions are onboarding customers and businesses – using the digital medium. The company’s award-winning no-code GO platform delivers seamless, end-to-end, and multi-channel onboarding journeys while offering customizable workflows. In addition, it gives these players access to an aggregated marketplace of 240+ bespoke APIs, easily added to any workflow with simple widgets.
Signzy is enabling ten million+ end customer and business onboarding every month at a success rate of 99% while reducing the speed to market from 6 months to 3-4 weeks. It works with over 240+ FIs globally, including the 4 largest banks in India, a Top 3 acquiring Bank in the US, and has a robust global partnership with Mastercard and Microsoft. The company’s product team is based out of Bengaluru and has a strong presence in Mumbai, New York, and Dubai.
Visit www.signzy.com for more information about us. You can reach out to our team at reachout@signzy.com
Digitization has transformed the way customer onboarding was done. With online video KYC, banks are now able to reduce customer friction and automate the onboarding process. Let’s dive deeper to understand more about video KYC
You may already know, but ‘KYC’ short for ‘Know Your Customer,’ coming from the conventional investment world, with ‘detailed information from investors and banks about risk appetite, investment expertise and financial position for their clients.’ For the case, Banks complete this KYC strategy at the Time of opening of a bank account. The bank additionally must keep on upgrading the KYC of each client with Time. KYC formally came into existence in India in 2002. RBI also directed the banks to be compliant with the KYC Master circular by Dec 2005.
Though digitization started quickly, we had a long way to go.
What is Video-KYC? And Everything You Should Know About It
Traditionally, either consumer, or the bank has to be present physically in front of each other. With the acceptance of digital methods in practice, IPV still alluded the customers. Other digital methods restricted the per annum transaction to a certain extent. Right before the COVID mayhem, RBI formally introduced online video KYC as a valid method of onboarding the customers.
Through a video call, the client can straightforwardly chat with a Financier, give all the personality records to confirm who they are, and finish the account opening steps in many minutes. The Video KYC helps you remotely link customers without the need for a physical “IPV” test. A bank officer reaches individuals through a live video call, and they ought to submit identity confirmation virtually in the Video KYC process.
It is also referred to as Video KYC, Digital KYC, or Visual Customer Identification (V-CIP). The recently allowed video-KYC guarantees to supplant the out-dated KYC framework totally, with clients now not required to follow it up with physical confirmation of documents. When both identity and record is confirmed, the outcomes are sent to the back-office. Along with it, Video KYC lets you open an account immediately or take out a loan too.
Future of Video KYC (and finance)
Components like reliability and versatility of Video KYC arrangements have been most talked about and talked about. Online video KYC can prove to be a hassle-free norm in the future even after the battle of COVID-19 too. KYC Video could be a significant benefit to investors, pre-paid wallet players, insurance firms, private and public banks, financial securities, and non-banking entities.
It is a safe way of achieving a clean consumer base for the banking industry and particularly Fintech companies. KYC is the first step in this process, and we hope that will bring you to us as your Video KYC solution partner and be a significant move towards the customer.
Who is offering Video-KYC?
1. The banks said in their press releases that RBL bank and IDFCFirst bank launched video KYC for the opening of savings bank accounts and that IndusInd bank has enabled KYC for the opening of savings accounts and has tied up BankBazaar for applicants for credit cards.
2. According to Deepak Sharma, the video feature of KYC will have its learning curve, chief digital officer Kotak Mahindra Bank. “This offers the user the ability to receive a restricted KYC account that can be transformed into a full KYC account due to network problems or records.
3. And many many more have started using it by Sep 2020. In fact, vendors are even getting replaced while I am writing this.
How Can Video-based KYC Be Beneficial For India?
Why is V-KYC such a big deal? The brief reply is that it serves as a reliable software for social distancing. The recent outbreak of social distance may have been alarming, and our daily financial activities could have been limited. There’s some good news here, no worries! To eliminate the conventional paper-based KYC approach for identifying the consumer, the Reserve Bank of India (RBI) has taken an essential step towards digitalizing the KYC mechanism for the ecosystem. Many banks and financial agencies have begun introducing guidelines for an effective online video KYC operation. That is how V-KYC can serve as a critical success factor:
a)Comfort: The video KYC method can be done with home comfort. You only need a laptop, smartphone, or tablet that is linked to the Internet.
b)Less Time Consuming: The Time for the document review is less. It can be accessible to complete the procedure, which took weeks sooner in a matter of days.
c)Safer: Video KYC test eliminates the need for customers to visit a branch or exchange paper copies or wait for days to complete the account opening process. That will improve the conditions for social distancing, the way bank accounts are opened in the future, and significantly reduce the boarding cost.
d)Reliability: In a nutshell, it enables fraud prevention and error checks. It also stops malicious behavior from occurring and corruption practices such as money laundering.
e)Cost-Effective: For both parties, KYC costs between Rs.50 and Rs.500 while V-KYC cuts cost significantly, allowing more consumers, no matter where they are, to be on board quicker. Video KYC gives customers a more convenient choice when raising their costs during onboarding.
f)Efficiency: The face to face KYC is unpredictable and lengthy due to which only 3 KYCs can be performed a day, but Video KYC comes up with more flexibility and only requires 2–10 minutes for the entire sessions reducing turn-around time while not being limited geographically.
Details Required in the Online Video KYC Process:
The following steps are required to proceed:
1. Fill up the necessary details on the online form.
2. The customer’s picture should be live and not a photo-of-a- photo. Banks can use facial recognition technology to validate the client with an image of the documents on camera.
3. Provision of bank consent to fetch Aadhaar details and enter the PAN number or conduct an e-PAN verification.
4. Live customer locations need to be geo-tagged to ensure that they are located in India.
5. The session requires both the user and the staff of the regulated entity to be present simultaneously.
Bottom Line
Online video KYC serves as an utmost foolproof innovation to set a social distancing and has a long way to go. Customers can now update or complete their KYC process and continue to use the loan service. Considering the current digital pandemic scenario, this is the only way of life. So what do you think of Video-KYC?
About Signzy
Signzy is a market-leading platform redefining the speed, accuracy, and experience of how financial institutions are onboarding customers and businesses – using the digital medium. The company’s award-winning no-code GO platform delivers seamless, end-to-end, and multi-channel onboarding journeys while offering customizable workflows. In addition, it gives these players access to an aggregated marketplace of 240+ bespoke APIs that can be easily added to any workflow with simple widgets.
Signzy is enabling ten million+ end customer and business onboarding every month at a success rate of 99% while reducing the speed to market from 6 months to 3-4 weeks. It works with over 240+ FIs globally, including the 4 largest banks in India, a Top 3 acquiring Bank in the US, and has a robust global partnership with Mastercard and Microsoft. The company’s product team is based out of Bengaluru and has a strong presence in Mumbai, New York, and Dubai.
We are living in a world packed full of automated solutions to problems. When you want to go shopping, just visit an online marketplace like Amazon or eBay and you’re good to go. You have chosen something that you wish to purchase but you wondered, “how should I pay for this?” Perhaps, with Indian KYC, it might be something more lenient to investing like buying stocks or shares from a company.
Good thing that online payment solutions exist nowadays. This is the most frequently used and reliable means of settling important or urgent payments to various goods and services in the market. However, there is a catch — companies are implementing stringent regulations with regards to the people who purchase their selling point and the authenticity of their identity.
One of the first solutions to this problem is the KYC (short for Know Your Customer) systems in several companies, stores, investment solutions, and more. This system is dedicated to identifying, accounting, and securing the customer’s information, including but not limited to the name of the customer, gender orientation, date of birth, employment, civil status, place of birth, and many more. The KYC system is implemented in several parts of the world, especially to developing and developed countries such as the United States, Canada, United Kingdom, Spain, and selected countries in Asia.
Particularly, India has taken a lot ofcrucialconsiderations in the field of customer and client identification, including their significant efforts in implementing the Indian KYC system nationwide. Because of the reported scams, complaints, and shady transactions and online accounts used in several platforms, they have decided to take the system to the next level. Here, I introduce to you, the Central KYC system in India.
The motivation behind Indian KYC
The main motivation behind the induction of CKYC in India is the non-compliance of the old KYC of banks all over the country. The Reserve Bank of India (RBI) imposed hefty penalties to several banks such as ICICI Bank Limited, Allahabad Bank, Andhra Bank, Indian Overseas Bank, and Bank of Maharashtra ranging from Rs 1 to 58.9 crore (notation for 10 million). In nearly a year, these banks faced what it looks like their worst penalties in the entire course of their operations.
These banks are known for being well-managed in terms of financial and statement compliance to the RBI. Because of these shocking events, the RBI knew that they have to implement a greater, more stringent system to minimize these unforeseen events. They created the Indian KYC or CKYCsystem, which is short for Central Know Your Customer. This new system is first imposed by the directives of the Ministry of Finance who created the Central Registry of Securitization Asset Reconstruction and Security Interest of India (CERSAI), the performing body of the CKYC Records Registry. This registry is dedicated to receiving, storing, securing, and retrieving KYC records digitally for clients. This is the government initiative to centralize the overall KYC processes and records in the country.
CKYC as an all-in-one customer records’ haven
For starters, the Central Know Your Customer (CKYC) system is the Government of India’s main KYC (Know Your Customer) program. The goal of this program is to integrate a system in place that enables investors to complete their KYC only once before engaging with specific financial sector entities. The system’s goal is to reduce the cost of generating and checking KYC documents once the consumer first communicates with a financial institution.
The Central Registry of Securitization Asset Reconstruction and Security Interest, or CERSAI, is created for the sole purpose of securing the stability of the new CKYC system in the country. It is authorized by the Government of India to act as the all-in-one security interest registry with the compliance to the PLMA (Prevention of Money Laundering Act) of 2005. They shall be responsible for the overall security of KYC records in a digital form for clients. The accessibility of their form for complying CKYC requirements will be available via several websites on the Internet such as in portal.amfilindia.com. CKYCR shall serve as a consolidated repository of KYC records of financial sector investors with consistent KYC specifications and the inter-usability of KYC records across the industry.
Knowing the differences between KYC, eKYC, and CKYC
In terms of functionality, KYC, eKYC, and CKYC are just the same. They just differ in their approach and how they implement security and accessibility of KYC records for the clients. Their main differences are as follows.
The Indian KYC system is the typical and commonly-done procedure in the Mutual Fund industry whereby an investor’s identity is checked based on the written information he or she submits in a form of a document, accompanied by an In-Person Verification or IPV procedure. When the authentication is completed, the appropriate investor data must be encoded into the KRA Registration Agency (KRA) program and then finally added to their database.
The Indian KYC is done with the use of the investor’s Aadhaar number. There are two verification options of the investor’s identity upon the succession of the eKYC application. The first method is via an OTP (One-time Password) which has a limitation of Rs 50,000 per annum of mutual funds and automatically mandates it online. The second method is via biometrics which has no investment cap unless the investor violates the Government of India’s PLMA of 2005. When done, the investor’s details are imported into KRA databases.
The CKYC is the Government of India’s program seeking to create an integrated system that enables investors to do their KYC only once. CKYC enforcement will allow an investor to go through the whole process without having to complete several KYC formalities. CKYC is geared towards the encouragement of investors in engaging more in the market.
Each investor shall receive a 14-digit KYC Identification Number upon compliance with the following requirements:
Completed CKYC application form/KRA application form plus supplementary CKYC form
· A self-attested proof of your identity (one of the following: PAN, passport, voter’s ID, driving license, Aadhar card, etc.)
· A self-attested proof of your residence (applicable to your proof of identity as long as it states your address)
· A photograph of yourself
Successful applicants shall receive an SMS message or e-mail, including their KIN. However, if you already have a KIN before, you are already a CKYC compliant and you don’t have to go through the whole process of completing the requirements.
Wrapping up: Indian KYC is a promising initiative
The CKYC is a promising initiative of the Government of India to lessen the hassle of going through every step of securing an investor’s identity. Also, it improves the overall security, stability, accessibility, and processing of applicants and existing investors alike. Additionally, the system has helped reduce and even eliminate the recurring number of penalties in large-scale financial establishments in the country, testifying the significant efforts of financial and customer care of the Government.
About Signzy
Signzy is a market-leading platform redefining the speed, accuracy, and experience of how financial institutions are onboarding customers and businesses – using the digital medium. The company’s award-winning no-code GO platform delivers seamless, end-to-end, and multi-channel onboarding journeys while offering customizable workflows. In addition, it gives these players access to an aggregated marketplace of 240+ bespoke APIs that can be easily added to any workflow with simple widgets.
Signzy is enabling ten million+ end customer and business onboarding every month at a success rate of 99% while reducing the speed to market from 6 months to 3-4 weeks. It works with over 240+ FIs globally, including the 4 largest banks in India, a Top 3 acquiring Bank in the US, and has a robust global partnership with Mastercard and Microsoft. The company’s product team is based out of Bengaluru and has a strong presence in Mumbai, New York, and Dubai.
Signzy won the Best Innovative Fintech Data Solution Provider at the 8th India Digital Award, 2018
Signzy bagged the award for the Best Innovative Fintech Data Solution Provider at the 8IDA — India Digital Award of IAMAI. India Digital Awards, possibly the biggest body of its kind, recognizes companies that use digital medium to achieve focussed, successful, and big business outcomes. We feel so humbled to have received this award for our work for simplifying complex regulatory processes in financial institutions and for enabling them to transition to a fully digital experience. As always, we’ll continue to strive hard to take this faith global and beyond the financial industry. Read here.
Events we attended
12th India Digital Summit 2018: We were at the India Digital Summit — the most prominent digital event in the country. The event brought together business leaders, industry veterans, marketers, and delegates to discuss the upcoming technologies, opportunities and challenges in the Digital Industry. Signzy’s Ankit was a part of the panel on “CyrptoCON: EXPLORING AND BUILDING BLOCKCHAIN SOLUTIONS FOR BANKING” at the the digital superconference. He shared his views on the state of the cryptocurrency industry and topics like Standardized Ledger Technology v/s Distributed Ledgers Technology, Blockchain Applications — Smart Contracts, KYC-Chain, RegTech, and Challenges of adopting blockchain for Banking. He also explained how Signzy automates verification processes using cutting-edge technologies such as AI. (17–18 Jan New Delhi)
Upcoming Events
Fintegrate Zone 2018: We’re attending the Fintegrate Zone, India’s largest FinTech conclave at Mumbai from 27 Feb — 1 March 2018. Signzy’s Ankit will be speaking at 15:00 pm on the opening day (27th February).
If you, too, are attending, do come and see us.
How Cryptocurrency Companies should handle their Due Diligence
From our blog:
An informative article explaining how cryptocurrency exchanges are deploying stronger KYC, user data privacy, and AML policies to address key concerns such as financing illegitimate activities, money laundering, and terrorist financing. Read here.
Industry News: Budget 2018 paves the way for MSME sector to be a catalyst in economic growth
Budget 2018 has made important structural changes about accessing KYC, providing tax benefits and more to strengthen the Medium Enterprises (MSME) sector and help build a more robust economy. Read the full story here.
About Signzy
Signzy is a market-leading platform redefining the speed, accuracy, and experience of how financial institutions are onboarding customers and businesses – using the digital medium. The company’s award-winning no-code GO platform delivers seamless, end-to-end, and multi-channel onboarding journeys while offering customizable workflows. In addition, it gives these players access to an aggregated marketplace of 240+ bespoke APIs that can be easily added to any workflow with simple widgets.
Signzy is enabling ten million+ end customer and business onboarding every month at a success rate of 99% while reducing the speed to market from 6 months to 3-4 weeks. It works with over 240+ FIs globally, including the 4 largest banks in India, a Top 3 acquiring Bank in the US, and has a robust global partnership with Mastercard and Microsoft. The company’s product team is based out of Bengaluru and has a strong presence in Mumbai, New York, and Dubai.
Visit www.signzy.com for more information about us.
You can reach out to our team at reachout@signzy.com.
Data breaches and identity fraud continue to be a primary security concern for banks and fintechs . They have harmful financial ramifications for banks. They can also damage the reputation of institutions around the world. As technology advances so do the fraudsters’ methods of theft and deception. Banks need to provide online identity verification service to their users to fulfill regulatory obligations and manage risk.
First, banks have to ascertain that you are who you claim to be. Second, they have to determine that you aren’t a terrorist or involved in crimes like money laundering.
This first step in the traditional KYC process in banks is manually verifying the identity of a customer. This could prove to be the weakest link in a bank’s KYC process. Why? Because it is the most vulnerable to human error.
Fulfilling compliance obligations like Anti-Money Laundering (AML) checks & Combating the Financing of Terrorism (CFT) is not easy for all the entities. Common hurdles are:
A lack of resources
Negative effect on customer experience
Maintaining strict standards of data security
Online identity verification is a suitable solution for all these problems. It fulfills regulatory requirements and provides a secure and seamless user experience. The method is efficient and can easily practice robust data security.
Transitioning to Online Identity Verification
Total identity fraud losses reached $16.9 billion (USD) in 2019 according to Javelin’s 2020 Identity Fraud Survey. It is an annual comprehensive analysis of identity fraud trends. To prevent the instances of such crimes, financial regulatory authorities are setup. Examples include the Financial Action Task Force (FATF). Also, local regulators have set up KYC and AML compliances that businesses are encouraged to adhere to. These regulations enable businesses to carry out proper due diligence for their customers. This can be easily done by properly analyzing customers’ documents to verify their identity. This also helps reduce the probability of fraud and scam. This KYC procedure was mostly done with in-person verification (IPV) by banks, financial institutions, and government offices. However, this was a time-consuming ordeal. Currently, the process is seamlessly done with the help of AI driven online identity verificationsystems.
Now you can conduct your business via your computer and cell phone. In the meantime, the bank or business representative can authenticate your identity. It can detect stolen personal identifiable information and forged synthetic ID documents. This can be done with technology like image forensics.
Capture, Extract, Verify, Screen, Result
How does it work?
Identity documents are uploaded in real-time. The software detects the document and extracts relevant information from it using AI-based OCR extraction.
The data is then analyzed to detect fraud. Next, the name is screened. This determines if the individual poses higher risk from a Money Laundering or Reputation Risk Perspective.
Once the checks are done, a result is procured within minutes.
Document Verification
Detailed customer attributes can be verified through government issued identity cards and documents. They can be a permutation or combination of the following:
Personal Credentials (Name, Number, Age, Date of Birth, and more)
Nationality & Immigration Status (Residence Country, Place of Birth, Sponsor, Citizenship and more)
Documentation for Demographic Information (Tax Numbers, ID Number, Birth Certificate Number, Domiciles and more)
Employee Data & Employer Registration (Employer ID, Year Of Registration, Permit Type, Invoice Details and more)
The types in which these can be falsified are:
Illegitimate documents: These documents are completely fake. They consist of characteristics like missing holograms or other set standards. These form the essential parts of a legitimate version of that document.
False documents: This document is originally owned by another person. The fraudster tries to utilize it to authenticate himself.
Modified documents: This signifies an ingenious document which has been altered. This is where the fraudsters change the font and writing style to manipulate the system.
The online identity verification software can distinguish between all sorts of duplicate documents. Ex: fake, illegitimate, and counterfeit documents. The digital document verification is about 98.39% accurate. Much more precise than traditional manual document verification. It also saves time and resources, allowing customers to verify themselves in the comfort of their homes and offices within a few seconds.
Databases & negative lists
The next step after document verification is a background check for AML compliance. A name is screened against multiple sources and databases to reveal anything suspicious or risky. The sources can be:
Government Databases
A person is accurately identified by tallying information on their ID and publicly available government databases. A PAN card database is maintained by the central government. Aadhaar data is centrally based, with the central database resting with UIDAI. For entities, databases exist like the Registrar of Companies maintained by the Ministry Of Corporate Affairs. There are databases according to profession for Chartered Accountants, lawyers, government officials etc.
Negative Lists
Negative database APIs are used to see if the name appears on any black lists.
AML/ CFT
As per Reserve Bank of India guidelines, banks are required to ensure that before opening any new accounts, proposed customers do not appear in the United Nations’ List under Security Council Resolutions (1267) and the terrorist lists circulated by RBI. Other lists include Interpol Most Wanted, Central Bureau of Investigation, Lists issued under other Resolutions by the United Nations. The FATF blacklist or OECD blacklist is furnished by the by the FATF of the Organization for Economic Co-operation and Development (OECD) from 2000, and highlights the countries which OECD judges to be non-cooperative in the global initiative against money laundering and terrorist financing, dubbing them as “Non-Cooperative Countries or Territories” (NCCTs).
Sanction lists
Financial sanctions form a crucial aspect of the global fight against financial crime and are harnessed by governments across the globe to restrict or prohibit trade with foreign targets which are involved, or suspected of being involved, in illegal activities. Governments and financial authorities globally maintain a diverse range of targeted sanctions lists. An example of a sanctions list includes the United States’ Specially Designated Nationals and Blocked Persons (SDN) List.
Some other examples include:
UN Security Council Sanctions
The Security Council maintained by the United nations can authorize action to maintain or restore international peace and security under Chapter VII of the United Nations Charter. Sanctions measures, under Article 41, constitute a wide range of enforcement protocols that do not involve the use of armed force. Internationally, these sanctions also constitute AML/CFT regulations.
Her Majesty’s Treasury Sanctions List
The HM Treasury Sanctions List possesses the demographics (and other identifying information) of individuals/entities who are subject to UK regulations. Those sanctions comprise freezing of assets and market access restrictions — these are in tandem with UK AML/CFT policy. They are designed to curb criminal behavior from regimes around the world.
Bureau of Security & Industry
The Bureau of Industry and Security (BIS) is a security agency under the jurisdiction of the United States Department of Commerce. This organization specializes in issues involving national security and high-level technology. The primary objective for the bureau is helping stop the proliferation of weapons of mass destruction, as well as enhancing the growth of US exports.
Interpol Most Wanted List
The International Criminal Police Organization, commonly known as INTERPOL, is an international organization that facilitates worldwide police cooperation and crime control. Headquartered in Lyon, France, it has seven regional bureaus worldwide and a National Central Bureau in all 194 member states, making it the world’s largest police organization.INTERPOL maintains a most wanted database and this can contain millions of records with information on individuals such as names and fingerprints; stolen property such as passports and vehicles; and weapons and threats such as firearms.
Central Bureau Of Investigation
The Central Bureau of Investigation (CBI) is one of the primary investigating agencies of India. The organization falls under the jurisdiction of the Ministry of Personnel, Public Grievances and Pensions. The agency is renowned for investigating several economic offenses, special crimes, charges of corruption and other high-profile cases. Similar to Interpol, the CBI database also contains criminal information pertaining to AML/CFT data.
Signzy adheres to the above mentioned global sanction lists along with hundreds of other databases, making our products and solutions globally compliant.
PEP (politically exposed persons) lists
In financial regulation, a politically exposed person (PEP) denotes an individual who has been entrusted with a distinct public function. A PEP ideally is a higher risk for possible involvement in bribery and corruption by virtue of their position and the influence that they may possess.
Panama Papers
11.5m files from the database of the world’s fourth-biggest offshore law firm, Mossack Fonseca, were leaked in 2016. The International Consortium of Investigative Journalists (ICIJ) revealed with the documents how the rich and famous exploited secretive offshore tax regimes. With AI-based screening profiles from the data can be cleansed, and curated, revealing entities with negative information. A risk profile can then be created from the information.
Why is such a list important?
If a client possesses an offshore company, it’s quite possible that they are doing so to avoid taxes — or, even worse, so they can hide the flow of potentially illegal money. This could result in non-compliance and reputational risk. Financial institutions can decide if they want to accept the customer. If accepted, the client would be placed in the high-risk segment, with advanced due diligence.
Adverse Media & Negative news
This can include going through TBs of data from online sites, printed media sources to expose any negative news on the entity or individual.
Benefits of an Online Identity Verification system
Automated document forensics with accurate results
Real-time analysis with results within seconds
ID verification for one or more types of the connected device (mobile, tablet, kiosk, PC)
Facial recognition to match the photo on the ID with the person presenting the card
Faster enrollment using automatic form fill/pre-fill using ID data
Integration with back-office for audit optimization
AML at Signzy:
WorldWatch Risk Screening APIs: This API covers background checks and risk screening through AML/CFT, Politically Exposed People. It also conducts Negative Media checks for individuals as well as entities globally. This data is refreshed every 24 hours. This is because the search results are the most up-to-date information. The data is available from over 8000+ watch lists and sanctions sources globally. The APIs also include monitoring facilities to receive regular alerts.
About Signzy
Signzy is a market-leading platform redefining the speed, accuracy, and experience of how financial institutions are onboarding customers and businesses – using the digital medium. The company’s award-winning no-code GO platform delivers seamless, end-to-end, and multi-channel onboarding journeys while offering customizable workflows. In addition, it gives these players access to an aggregated marketplace of 240+ bespoke APIs that can be easily added to any workflow with simple widgets.
Signzy is enabling ten million+ end customer and business onboarding every month at a success rate of 99% while reducing the speed to market from 6 months to 3-4 weeks. It works with over 240+ FIs globally, including the 4 largest banks in India, a Top 3 acquiring Bank in the US, and has a robust global partnership with Mastercard and Microsoft. The company’s product team is based out of Bengaluru and has a strong presence in Mumbai, New York, and Dubai.
Months into the pandemic, we have adjusted to social distancing and self-quarantine norms. The past few months were harsh and difficult and we have come a long way but the future still looks murky.
With unemployment rates at a high, people are already under the fear of pay cuts and layoffs. Personal finances have taken a massive toll on people.
While news of increasing recovery rates can be considered as a silver lining, there is no doubt that the economy is struggling to stay afloat.
Market volatility is something that an investor deals with on a regular basis. But, the ongoing situation has made them scratch their heads over the future of investments.
Mutual Funds In Times Of Market Risk — Still ‘Sahi hai’?
Mutual Fund companies have been active with their outreach programs for quite some time now. In 2017, the Association of Mutual Funds in India (AMFI), launched a campaign under the tagline ‘Mutual funds Sahi Hai’ to educate people about mutual funds. This was a part of the investor awareness outreach program. The aim of the campaign launched was to bust myths and encourage investors to opt for mutual funds as their potential investment options.
While the campaign did help gain the trust of people and brought around 50 lakh investors in a single year, Mutual funds are still considered risky and hard to understand by a huge number of people. And uncertain times like this further add to the fuel.
The nationwide imposed lockdown, the uncertain future of an economy already in turmoil, and the volatility of the markets have contributed to growing concerns of investors. Should they invest more, sell-off, or wait till it gets normal?
Market Volatility: A Minor Setback In The Long Term Picture
Reports indicate that Mutual Funds investors must not panic as the ongoing situation will not last forever and things will ease out eventually.
Indian Institute of Technology-Hyderabad did a study on Mutual Funds which said “Nonetheless, there is no need for Mutual Fund investors to panic as long as the net asset value (NAV) of their investment drastically does not die out in this ongoing first quarter of FY 2020–21,”
While the economic slowdown may plant seeds of doubts in investors’ brains, it is important to keep one’s cool and look at the long term prospectives. The markets will eventually start giving better returns.
Reports by Arthikdisha show that the mutual fund industry has proven to be effective in wealth creation. With an average return of 12 to 15 per cent in the past 10 to 15 years, investors can rely on long-term returns.
Experts tell investors to focus more on their financial plans than the changing demographics of the market. This would help them make wiser decisions about their investments.
Wealth Creation In Crucial Times Through Investors’ Glasses
According to AFMI, the contribution of SIP rose to Rs 100,084 crore in the fiscal year 2019–20 as reported by Bloomberg Quint. In a highly unpredictable market, investors look for a safer route for wealth creation. The rupee-cost averaging through a SIP in uncertain markets reaps better long-term benefits. As the purchase is made consistently for a greater period. Thus, on average providing lesser risks and better returns to the investors. Investors aim to diversify and balance the risks and uncertainties of the market. Hybrid funds, STP or Systematic Transfer Plans, Large-cap funds help them do that.
For a long time, completing formalities involved the investors to fill out lengthy forms. The Know Your Customer (KYC) process required investors to visit the bank, produce the necessary documents and wait in queues. While many organizations did try to ease out the process, in-person verification was a must. The onset of the pandemic posed its own set of challenges to both the institutions and the investors.
How Adaptive Have Financial Institutions Become?
The outbreak of the virus continues to trouble citizens across the globe. Many institutions have adopted precautionary norms to function in a safe manner. Many fund houses have allowed employees to work from home in containment areas. Those working in offices are taking mandatory measures. Regular temperature checks of employees and visitors are one such measure. Institutions use infrared thermometers for this. Regular hand washing, availability of sanitizers is a must. These measures ensure responsible communication in times of crisis.
Ensuring An Efficient Digital Experience
In the wake of the crisis and a nationwide imposed lockdown, several mutual fund houses moved the KYC (Know Your Client) procedure online. While some representatives still went to the client’s house to get the in-person verification (IPV) done, others allowed the clients to get the IPV done through a video recording.
However, each fund house may have different procedures making the situation unfavorable and confusing for the people. To standardize the process, the Securities and Exchange Board of India (SEBI) released a clarification on the KYC norms.
The intermediaries carry out the online KYC procedure through their apps. Along with the bank and PAN details, personal details can be recorded. This includes the customer’s photograph, name, address, the mobile number.
Video IPV can be done through the apps while the clients can upload a signed cancelled cheque online.
As far as verifications are concerned email and mobile numbers can be verified by OTP generation. Aadhar and PAN can be verified through UIDAI and income tax department respectively. Digilocker can also be used to verify documents. The investor can then digitally sign the KYC form and submit it.
How Signzy is helping build the future?
Through our tech-enabled solutions, Signzy intends to offer financial institutions futuristic operational assistance. Our Algorithm Risk Intelligence aims to provide a satisfactory background check. Digital real-time KYC, Digital signature for KYC, Biometric signatures, Digital contracts are some of the key features of our products. Through our AI solutions, our system is equipped to meet strict data security requirements to help financial institutions function smoothly.
About Signzy
Signzy is a market-leading platform redefining the speed, accuracy, and experience of how financial institutions are onboarding customers and businesses – using the digital medium. The company’s award-winning no-code GO platform delivers seamless, end-to-end, and multi-channel onboarding journeys while offering customizable workflows. In addition, it gives these players access to an aggregated marketplace of 240+ bespoke APIs that can be easily added to any workflow with simple widgets.
Signzy is enabling ten million+ end customer and business onboarding every month at a success rate of 99% while reducing the speed to market from 6 months to 3-4 weeks. It works with over 240+ FIs globally, including the 4 largest banks in India, a Top 3 acquiring Bank in the US, and has a robust global partnership with Mastercard and Microsoft. The company’s product team is based out of Bengaluru and has a strong presence in Mumbai, New York, and Dubai.
