Fourthline report warns of identity verification technologies causing more manual reviews

Banks and fintechs are dedicating between three and five percent of their overall compliance cost to the digital identity verification technologies they use to meet their high compliance requirements, according to newly-released data from Fourthline.

The fraud prevention and compliance provider’s white paper on ‘The Digital KYC Paradox’ indicates that 45 anti-money laundering (AML) penalties were levied around the world in 2020, with a total cost of $2.2 billion.

The paradox referred to is what Fourthline says is a common situation in which financial institutions put technology in place, like selfie biometrics and ID document checks, to perform identity verification, but end up with a greater volume of manual checks creating a back-office burden.

These processes, however, tend to be error-prone and expensive, according to Fourthline. A holistic data approach can enable organizations to automate more approvals, and unlock untapped value for clients.

Fourthline has also reported year-over-year revenue growth of 200 percent in the third quarter of its fiscal 2021.

The company detected 37 percent more financial fraud attempts in from June 2020 to June 2021, with 47 percent of those in Europe involving social engineering or manipulation, according to an announcement.

Fourthline is continuing to collaborate with working groups operated by the French National Police and Europol to help fight financial crime.

AML landscape complexity

Fourthline examined France’s landscape of AML, know your customer (KYC) and other regulations in an article on its website.

The post provides a snapshot of French AML regulations and directives, the country’s primary financial regulators and enforcement bodies.

Partnering with a regtech firm that can offer in-depth knowledge of the European legal landscape can help keep companies on the right side of French regulations, Fourthline advises.

The company noted earlier this year in a post on take-aways from the Money 20/20 Europe conference that while KYC solutions in Europe must by GDPR-compliant regardless of the jurisdiction they are operating in, different rules for data flows can lead to very different challenges in different country markets.

Article Topics

AML  |  automation  |  digital ID  |  digital identity  |  document verification  |  face biometrics  |  Fourthline  |  fraud prevention  |  GDPR  |  identity verification  |  KYC  |  onboarding  |  regulation