Sumsub stats show more biometric ID verification needed as crypto regulations increase
Cryptocurrencies could soon be subject to strict anti-money laundering checks in the European Union, with a provisional agreement between the EU Parliament and Council to impose stricter controls, Bloomberg reports.
The Transfer of Funds Regulation is being extended to crypto, meaning that service providers will be required to adhere to the same regulations as other financial services providers, including Financial Action Task Force (FATF) recommendations 15 and 16. Those articles call for regulation of service providers with AML and “countering the financing of terrorism” (CFT) checks, and the “Travel Rule,” or auditability of who is involved in wire transfers, respectively.
Know-your-customer and compliant identity verification processes will therefore have to be built into the workflows of cryptocurrency service operators in Europe.
The deal largely leaves out private wallets that are not hosted, however, according to CoinDesk.
Sumsub survey shows room for improvement
Meanwhile, Sumsub says that digital identity verification in the crypto industry is fairly prevalent, but not always robust, with over 84 percent of businesses already performing identity verification, and almost 80 percent using automated KYC solutions for AML compliance and fast onboarding.
Selfie biometrics are used by just over 7 out of 10, however, while about two percent of those are yet to adopt liveness detection, according to Sumsub statistics.
The 51-page ‘State of Identity Verification in the Crypto Industry’ report from Sumsub is based on surveys of 200 crypto businesses, data from the company’s own identity verifications records, and surveys of experts.
Of those businesses using manual user verification, over three-quarters plan to adopt automated verification technologies.
The report also reviews challenges and best practices in digital identity verification, and predicts future trends in the field.