Welcome to today's chat about making people's life easier and more efficient.
Why easier and why more efficient?
Let's start with the reason why we consider this as a barrier.
To make progress we have to solve problems and in this specific case, the major problem is that KYC and AML regulatory information and verification are held by institutions because they feel is good to hold people's data. 🤯
If we want to create a world where we can be free in any country we will have to remove those barriers.
I will go straight to the point saying that in today's global economy, regulatory compliance is a critical component of doing business. Most companies and financial institutions alike are required to comply with strict regulations that aim to prevent money laundering, terrorist financing, and other illegal activities (no wonder why we are here writing this article. ScanSan is going through the same process).
The two essential regulatory compliance requirements are Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations.
When do users go through the KYC and AML regulatory compliance?
Every time there is a process in place where users have to upload a passport or have to take a video of their face saying a certain sentence, or when they have to answer questions like where do you live or where do you pay tax or where are you from.
Usually is a long and tedious process, but the problem is not that is only long and tedious, the problem is that users have to do it again and again and again every time they want to open an account with any institution in the world. Simply because they have to show they are who they are saying to be!!!!
How does it work?
KYC requires businesses to verify the identity of their customers before providing services. AML regulations require businesses to have processes and tools in place to prevent, detect, and report suspicious activities that could be indicative of money laundering or other illegal activities. Complying with KYC and AML regulations can be challenging for businesses as it involves collecting and verifying a lot of personal information from customers.
The traditional KYC and AML compliance process is time-consuming and involves a lot of paperwork. This process is also prone to errors and can be expensive for businesses. Moreover, KYC and AML regulations vary from country to country, making it challenging for global businesses to comply with all the different regulations.
Let's talk about the Solution
This is where blockchain technology comes in.
Blockchain technology is a distributed ledger that allows for the creation of a tamper-proof, transparent record of transactions. By utilizing blockchain technology, businesses can create a single, immutable record of customer identity information that can be accessed by authorized parties. This eliminates the need for repetitive data collection and provides a secure and transparent record of customer information.
Blockchain technology can also simplify AML compliance. The technology enables businesses to track and trace the movement of funds across multiple parties, creating a transparent audit trail that can be monitored for suspicious activity. Moreover, blockchain technology can enable real-time transaction monitoring and alerting, reducing the time and cost associated with manual AML compliance.
By using blockchain technology, businesses can simplify their KYC and AML compliance processes, saving time and money. The technology can also improve data privacy and protect against identity theft by providing a secure and transparent record of customer information.
The benefits of blockchain-based KYC and AML solutions extend beyond compliance. For instance, blockchain-based solutions can enable more efficient customer onboarding, reducing the time and cost associated with traditional KYC and AML processes. Blockchain-based solutions can also improve the speed and efficiency of cross-border transactions by reducing the need for intermediaries.
Blockchain-based KYC and AML solutions have the potential to transform regulatory compliance worldwide. By simplifying the compliance process and improving data privacy, businesses can focus on providing excellent services to their customers. As the financial industry continues to embrace digital transformation, blockchain-based KYC and AML solutions are likely to become increasingly popular and widespread.
What we have learnt?
Basically, Blockchain technology offers a compelling solution to simplify KYC and AML compliance worldwide. By any means, I'm trying to say that is gonna be easy to build the whole system. What I'm specifically saying is that is gonna be easy for users to use it. It will remove barriers, it will reduce costs and it will be used across the whole world.
By creating a single, immutable record of customer identity information and enabling real-time transaction monitoring, blockchain can streamline compliance and reduce the time and cost associated with traditional processes. Moreover, blockchain-based KYC and AML solutions can provide additional benefits such as improved data privacy, more efficient customer onboarding and avoiding duplications. On top of this, each customer can have their KYC & AML verification badge and they can show this to any company or institution that required this verification to be done.
As we saw the potential of blockchain-based KYC solutions is significant, and it has the potential to affect a large number of people. It is a common issue in the financial industry, particularly for individuals who use multiple financial services providers. The lack of coordination and standardization between institutions can result in redundant and time-consuming KYC processes. This is where blockchain-based KYC solutions can potentially provide significant value by creating a shared, decentralized database of customer information that can be accessed by multiple institutions with the customer's consent, streamlining the KYC process and reducing the need for duplicate verification.
Thanks
Alessio
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