CRYPTO
What’s driving IDV in crypto? Delphine Chen, Business Compliance Manager at global cryptocurrency exchange Wirex, and Charles Roberts, who heads up the financial services team for Germany-based identity verification business IDnow, believe harmonised regulation and the use of biometrics are crucial for the future of the crypto industry One of the biggest obstacles to mainstream cryptocurrency adoption is the widespread stigma of illicit activity attached to the crypto industry. In an effort to dismantle the belief that cryptocurrency is largely unregulated and hazardous, the last couple of years have seen crypto firms implementing new identity verification (IDV) services, with enhanced customer due diligence. According to Delphine Chen, business compliance manager at global cryptocurrency exchange Wirex, despite many changes over the past decade, regulatory solutions are lagging behind technological ones. “Regulators are still trying to find their way in terms of how to regulate enough, but not too much”, says Chen. On the other hand, there have been numerous, innovative IDV solutions coming from third-party providers. Crypto platforms have come a long way from asking users to upload a photo or www.fintechf.com
scanned copy of their ID, and manually funds and data. Roberts believes the reviewing their documentation. Machine human element of video authentication learning and artificial intelligence (AI) services is crucial to fraud prevention, technology have been leveraged to because talking with the person allows automate this process. Users are now firms to better assess their credibility. asked to take selfies holding their ID, while the technology scans the document and REGULATORY CHANGES AND AML5 checks its originality, extracts information In 2018, the European Commission using optical character recognition (OCR) published the new Anti-Money Laundering and performs facial recognition faster, and Directive (AML5), which amended and with more precision, than humans can. was built upon AML4. The deadline for German IDV services provider IDnow has EU member states to incorporate AML5 taken it a step further by offering customer provisions into national law was January identity authentication via video calls. 10, 2020. The new Directive extends to Recently, the startup has seen an uptake in virtual currencies and includes updates on requests for its services from crypto firms. know your customer (KYC) procedures. Charles Roberts, who heads up its financial Roberts explains that, from the services team, identifies two dominant beginning of this year, cryptocurrency drivers: fraud prevention and regulation. exchanges and wallet providers need to Fraudsters have been comply with local AML creative in finding new regulations and perform ways to get away with their own due diligence, forgery and identity theft, or KYC, on their customers. putting crypto firms Voluntary AML and under pressure to protect countering the financing the credibility of their of terrorism (CFT) platforms and show has been turned into customers that they care a mandatory regulatory Delphine Chen, Wirex about the security of their measure.
Regulators are trying to find their way in terms of how to regulate enough, and not too much
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