How to comply with AML at Boarding

By Maksim RokhlineAML, Identity, ,

With e-wallets (think of PayPal) we, consumers, got the ability to save our payment credentials (think of credit card number, a PAN) and never re-enter them at a check-out page.  At a merchant check-out page we authenticate ourselves with a wallet and let a wallet use our payment credentials to pay for an e-commerce purchase.

Prior to storing our payment credentials a wallet is authenticating (adjudicating) them (a wallet will submit, for instance, a $0 dollar auth transaction to a card issuing bank).  So, – now the info (payment credentials) is adjudicated and stored with a wallet entity.

Think of the same process for AML/KYC.  Instead of a wallet it should be a bank.  I (a consumer or a business) want to make my bank a guardian of my identity.  My bank is collecting my personal and business information and fully adjudicates it.  That is the only application I ever complete.   With my bank – an entity I trust with my money and identity!  All the next 173 application forms for SCF, mortgage, P-card, hotel membership, … – I don’t fill out.  I click on an AML button and my bank authenticates me and approves the request to share my personal/business info with a requestor ( a SCF program manager, a P-card issuer, a hotel, …).

More so, – a requestor of my Identity information should not be bothered with verification, adjudication as part of AML/KYC compliance.  A secure and authorized transmission of my identity information from a Trusted source (my bank) should be sufficient to comply with know your customer, Patriot Act, Bank Act and other AML statues.  A trusted source liable with Identity management and a secure protocol for communicating the request and response of identity information should be an adequate infrastructure for an AML (on boarding!) purpose.

On-boarding purpose!  That is to say that ongoing AML responsibility is still on a ‘requestor’.  Transaction monitoring, SAR reporting, Training, Data retention, assignment of compliance officer, … – all of this is for an original identity requestor to do.  (And probably share some info with an identity manager, – the bank).

On-boarding (AML/KYC) adjudication can be so much cheaper and easier with the set up I am outlining. It can be seamless as well.  Click an AML button!  Done!!!

(Well, – credit risks and fraud risks is still for an identity requestor to assess.  But that is different from compliance risks)

Everyone can benefit here:  (1) a new, profitable and legitimate role for a bank, (2) a much easier and compliant On-boarding process for an AML ‘requestor’ and (3) great customer experience for consumer or business to apply for a service.

There are some sporadic attempts to get this built.  To be successful  – i.e universal and ubiquitous – it should be a true network play.  A network will need to orchestrate the value.  A new AML Visa needs to be created.  And everyone (banks, AML requestors, infrastructure providers, customers, …) has to derive a value out to it.  Otherwise, – it is a waste of time.