Online Investor Verification - An Utmost Need of the Modern Age
September 29, 2022
investor verification

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As the world’s financial markets boom, the wealth, real estate, and investment sectors are becoming subject to more legal scrutiny. Customer onboarding is a tough task in this era where scams are increasingly growing. For both personal and organizational clients, it is vital to get the right first impression because it sets the standard for the rest of the relationship. Thus, organizations may benefit from a simple and user-friendly onboarding procedure.

On the other hand, criminals are increasingly focusing on the investing industry. Businesses must adhere to regulatory requirements such as Know Your Investor (KYI), and due diligence in order to control the potential risk that could interfere with operations. Investment firms are implementing tech-driven online investor verification solutions in order to avoid regulatory penalties and ensure legal client onboarding.

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Online Investor Verification Service 

KYI is a technique that determines whether investors really are what they say they confess to being. Investment businesses are now required to perform KYI checks, or else face severe penalties. Know your investor regulations have been introduced by regulatory organizations to safeguard customer investments and deter fraud. The investor is authenticated in real-time by the investor authentication service using digital methods.

Why Do Firms Need Online Investor Verification Solution?

People strive to gain as many advantages from the digital environment as they can. They have begun investing in NFTs as well as the cryptocurrency market specifically because of this. On the other side, fraudsters are doing everything in their power to take advantage of these industries for their own selfish ends. According to Statista, the NFT sector has developed into a haven for money launderers. The 3rd and 4th quarters of 2021 saw a loss of over a million dollars at the hands of money launderers. These figures make it very evident how crucial it is for businesses to have online investor verification solutions.

Methods to Validate an Investor

In order to stop any illegal conduct, the company often verifies the investor at the time of enrollment and whenever necessary. Several approaches, including the following, are used to verify the client:

KYI Due Diligence

Digital investor pertains that the investment is authenticated using all available verification techniques. Due diligence is carried out by the know your investor solutions to ensure that the investor as well as other connected networks adhere to anti-money laundering regulations. The steps in the KYI due diligence process include:

  • Associated Shareholders 

The shareholders of investment companies are subject to know your investor service to determine whether they are trustworthy or pose a risk to the business. Through several examinations and analyses, the shareholders are verified.

  • Strategic Corporate Business

The identification of corporate organizations is a critical component of the investor authentication process. KYC on investors aids businesses in determining whether the companies they intend to spend with are reliable or dangerous.

Biometric Verification

The investor is verified using biometric methods like facial recognition, which merely require the client to scan their face. If the system approves, the customer is ready to go; if not, they are rejected permission to make any investments. Undoubtedly a more sophisticated method of identity authentication, biometric screening adds an extra layer of security because fraudsters cannot duplicate an individual’s characteristics.

Age Verification

The age verification procedure is another way to confirm investors. It determines if the investor seems to be of legal age to make investments. The traditional methods of determining the client’s age are currently no longer valid. Nowadays, businesses use automated accredited investor services to confirm the client’s age.

Document Verification

It is crucial for businesses to check the investor’s documents to make sure they have the legal right to participate in the investment strategy. The client is required to submit their official legal documents, such as utility bills, bank receipts and transactions, and other records, in order to complete the document verification process.

Final Thoughts

Nefarious practices are still on the rise despite international legislation and the investment industry’s efforts. The firm’s credibility is damaged by this. The businesses that customers feel most secure investing in are always their first choice. Therefore, it is now necessary for the investment industry and other financial industries to implement reliable Know Your Investor services. By using online investor verification services, the company could avoid penalties and hefty fines in addition to safeguarding itself from fraud. Additionally, in a competitive market, these investor identification services improve user experience and promote a strong corporate identity.

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