Over the last decade, anti-money laundering (AML) and countering terrorism financing (CTF) measures have cost the banking and finance industry at least USD 321 billion annually since the Global Financial Crisis1 .
While larger firms have been able to weather the rising cost of compliance, many smaller banks and financial institutions are unable to become fully compliant with the AML and CTF regulations. Even amongst larger firms, there have been a series of high profile investigations, some of which have resulted in hefty fines for the parties involved. Globally, this poses a challenge as the number of AML and CTF cases continue to rise.
Convoluting the issue is the evolution of the digital world. In particular the boom of cryptocurrencies, which are designed around preserving the anonymity of transacting parties, further add to the regulatory burden faced by financial institutions of all types and sizes. It is not only financial institutions that struggle; regulators themselves are finding it difficult to catch up with the advancement of technology and how these are being used to facilitate illicit activities.
Though cryptocurrency technology is still in its infancy stage, many regulatory bodies have been slow to fully comprehend its potential implications on AML and CTF. As a result, many regulators present a conservative stance against the adoption of such technology.
Since the Global Financial Crisis, both regulators and businesses have stepped up KYC (Know Your Customer) standards. With the rise of ISIS and other faces of terrorism to prominence, relevant bodies are also paying more attention to AML and CTF processes, a large subset of the KYC umbrella. The current KYC process, while sufficient, are grossly inefficient.
There are 3 problems identified with the current processes: E-KYC - Many financial institutions and market participants have been reluctant to move towards E-KYC. Non face-to-face onboarding requires additional due diligence to be conducted on the client as regulators view this as increasing AML and terrorism financing risks. However, the supplementar y procedures to be performed are not standardized and vary across jurisdictions.
Manual - Much of today’s KYC processes are manual. Customers fill up a variety of forms and declarations before being granted access to the services they require. There is a potential loss of revenue from clients who find the KYC process too tedious. Since there are many different personnel and functions involved in the KYC process, manual KYC is often inefficient and error-prone.
Analog - Analog KYC processes are those which are conducted and stored on physical documents. These incur extra costs related to the creation, preser vation and destruction of paper-based records. Analog KYC processes also present compatibility issues as the parent organization seeks to digitalise and move to electronic KYC.
In accordance with international KYC standards prescribed by Financial Action Task Force (FATF), ongoing due diligence is paramount in effective AML, CTF and KYC processes. It ensures that companies are not dealing with customers that have become non-compliant with regulatory standards. Although there is no prescribed frequency for which a company should refresh its customers’ profiles, companies should adopt a risk-based approach with constant vigilance to address terrorism financing and money laundering risks.
The question regarding the reusability of KYC records presents both a challenge and an opportunity for the industry. While it is possible for a customer to be subject to the initial set of KYC checks by a company, it does not fulfill current international standards if such KYC checks are re-used by subsequent companies without re-validating these records. The passage of time may render the previously checked profiles out-of-date, resulting in an increased AML or CTF risk.
In accordance with international KYC standards prescribed by Financial Action Task Force (FATF), ongoing due diligence is paramount in effective AML, CTF and KYC processes. It ensures that companies are not dealing with customers that have become non-compliant with regulatory standards. Although there is no prescribed frequency for which a company should refresh its customers’ profiles, companies should adopt a risk-based approach with constant vigilance to address terrorism financing and money laundering risks.
The question regarding the reusability of KYC records presents both a challenge and an opportunity for the industry. While it is possible for a customer to be subject to the initial set of KYC checks by a company, it does not fulfill current international standards if such KYC checks are re-used by subsequent companies without re-validating these records. The passage of time may render the previously checked profiles out-of-date, resulting in an increased AML or CTF risk.
traceto.io is powered by Cynopsis Solutions Pte Ltd., a RegTech company founded and based in Singapore. We help clients with regulatory requirements including anti-money laundering (AML), counter terrorism financing (CTF) and other KYC related procedures. By addressing these challenges, implementing our framework, and fusing smart contract and artificial intelligence technologies, the traceto.io Network provides the first inclusive “real-world” standard KYC solution for the virtual world.
A userA who is interested to join an Initial Coin Offering (ICO) or ExchangeB is redirected to the traceto.io Decentralised AppC. The user proceeds to upload their documents, which are then encrypted and stored within the application. Consent from the User or Community CourtsD is required to view these documents. This profile is then shared with our KYC providerF and our artificial intelligence algorithmsE . These algorithms are also used for transaction monitoring
traceto.io TOKENHOLDER BENEFITS: 1. Projected high demand, driven by consumption from an increasing number of ICOs and Exchanges, and tighter AML and CTF regulations. 2. Ease of onboarding as various Exchanges and ICOs participate in the T2 network. Cynopsis Solutions has an existing pipeline of 50+ crypto clients.
Initially, traceto.io will focus on addressing AML and CTF problems, the current pain points for many crypto-related businesses. Over time, the scope of the traceto.io Network will evolve to address questions related to Product Suitability and Credit Worthiness.
traceto.io’s mission is to create a virtual KYC platform that will allow the decentralised ecosystem to comply with KYC related regulations. KYC standards in the cryptoworld are still being developed and traceto.io will leverage off its founders’ experience in compliance and regulatory technology to preempt and satisfy upcoming regulations.
traceto.io is a decentralised digital KYC network that gives ownership, control and management of KYC processes back to the community. It intends to provide incentives to users to organize themselves in a symbiotic relationship with each other that guarantees privacy yet complies with regulatory requirements.
traceto.io requires the community to have the right to grant access to a User’s documents to a Requester. For this purpose, the community needs to be able to give access to the vault which belongs to that particular User. If the User is still an active participant in the community, this problem is trivial, since the User may choose to grant access himself. However, situations may arise whereby the absence of the User occurs. An example is regulators requesting the KYC information of suspected terrorists or money launderers.
traceto.io has comes in the form of a digital currency named T2T. The T2T Token will go on sale from 8 Juny, 2018, at a price of 1 T2T equivalent to 0.10 USD. The purchase of token itself can be done with foreign digial currency such as ETH. Do not forget, get also purchase bonuses at certain time period.
traceto.io itself is the result of teamwork established by Chionh Chye Kit and Dias Lonappan, traceto.io strives to provide their best capabilities in this project. In addition, the team also strives to provide the best benefits and services, to anyone interested in joining the project.
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