FinCEN’s latest Financial Trend Analysis of suspicious activity reporting, revealed that approximately 1.6m suspicious activity reports, 42% of all the reports filed over the period, were identity related.

The findings of the analysis point to the importance of effective customer verification and KYC processes, underpinned by the right people and technology. They are relevant across all financial institutions, including private markets firms, particularly considering new requirements to capture beneficial ownership information in US and the growing number of retail investors looking to access the asset class. Both of which will increase the volume of KYC and identity verification processes which must be undertaken.

Our key takeaways

Importance of watertight customer identification processes and a streamlined approach to KYC across financial institutions

“Robust customer identity processes are foundational to the security of the U.S. financial system, and critical to the effectiveness of financial institutions’ programs to combat money laundering and counter the financing of terrorism”, according to Andrea Gacki, FinCEN Director. She also encouraged financial institutions to “work across their internal departments to address these schemes”.

Circumvention of verification, one of the top five identity related schemes identified within analysis (alongside fraud, false records, identity theft and third-party money laundering)

These can be caused by “entities not knowing or understanding acceptable practices and regulatory requirements”. This underlines the need for relevant expertise and robust compliance processes.

The security of KYC data provided by clients is critical

The report found that ‘compromised credentials’, through data breaches compromising personally identifiable information for example, have a ‘disproportionate financial impact’ .

The benefits of a technology-forward approach

FinCEN recognized that “innovations in digital identity can strengthen anti-money laundering and countering the financing of terrorism compliance”.

Tokenising investor identity provides a solution

IDR has been supporting fund managers and investors to meet international KYC standards with a single access token to the private markets since 2015. Investors authenticate once, to the highest international standards, in one platform and then share verified credentials (signed off by our expert team) in a tokenised format with fund managers across their portfolio via our trusted hub. In this way, the use of tokenised investor identity provides a simple yet robust and scalable yet secure solution to meeting growing compliance requirements across an ever-increasing pool of investors whilst also mitigating the risks of identity related financial crime.

Why not join us?

Today more than 40,000 investors across 5,600 funds and 300 fund managers are connected via our trusted hub. Investors benefit from a smooth and efficient private markets KYC experience whilst retaining control of their personal data. Fund managers benefit from access to a pool of pre-approved investors, and peace of mind that all KYC is approved and monitored on an ongoing basis to the highest international standards.

Identity crisis? FinCEN “Identity Project” reveals $212bn of identity related suspicious activity

Our key takeaways

Importance of watertight customer identification processes and a streamlined approach to KYC across financial institutions

Circumvention of verification, one of the top five identity related schemes identified within analysis (alongside fraud, false records, identity theft and third-party money laundering)

The security of KYC data provided by clients is critical

The benefits of a technology-forward approach

Tokenising investor identity provides a solution

Why not join us?

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