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KYC and AML costs add up, compliance with biometrics costs less: Ondato

KYC updates from Sumsub, Airtel, Shufti Pro, AML rule update from EU
KYC and AML costs add up, compliance with biometrics costs less: Ondato

The cost of anti-money-laundering (AML) processes for major European banks averages €14.25 million (US$15.15 million) each year, with each of them spending €17,008 daily just for labor expenses.

The data comes from a marketing report by ID verifier Ondato. Its staff looked at financial companies with €10 billion in assets.

Switzerland-based companies spent an average of €19 million ($20.24 million) on AML compliance yearly, followed by financial firms in the Netherlands; spending €15 million; Germany, where businesses spend €14 million and France, €9 million.

KYC cost large European financial firms an average of €5.7 million ($6.07 million) yearly.

Despite these figures, only 26 percent of banks’ KYC budgets are spent on related software.

The report goes further, suggesting that 40 percent of customers abandon application processes stretching more than 10 minutes. That kind of abandonment cost companies $3.3 trillion in 2019.

In contrast, Ondato’s research says the average cost of KYC and AML compliance is $5.47 million, which, if even remotely accurate would make automated identity verification and authentication attractive.

“Our best advice is to choose a product that encompasses what others lack: a comprehensive AML management solution,” reads the report. “From identity verification and case management to due diligence and continuous monitoring.”

Within these solutions, Ondato says those with effective biometric capabilities should be at the top of the list.

“Ondato delivers 95 percent accuracy for biometric checks. When combined with additional technologies, the whole identity verification procedure reaches 99.8 percent precision,” the firm writes.

For more information about compliance costs, budget allocation and no-compliance penalties, among others, the latest Ondato report is available here.

Sumsub highlights economic benefits of compliance

Another company highlighting the financial benefits of compliance is Sumsub, which published a new study by Forrester Research earlier this week.

In particular, the document highlights the benefits and costs of implementing Sumsub’s all-in-one verification and concludes that firms investing in it can experience a 240 percent return on investment (ROI) with a net present value (NPV) of $3.21 million and payback in roughly six months.

This translates to a $762,000 in value savings from inferior losses due to identity fraud within three years of implementation, according to the report.

“We believe this Forrester TEI (total economic impact) study underscored Sumsub’s commitment to helping businesses fight digital fraud and stay fully compliant with regulations worldwide,” comments Sumsub’s CEO Andrew Sever.

“Trusted by more than 2000 companies, we are happy to move forward with our mission to provide best-in-class verification and compliance services to a growing number of global businesses across the fintech, trading, crypto, gaming industries and beyond.”

Sumsub also discussed regulatory compliance, among other things, in an exclusive interview with Biometric Update.

Airtel now supports KYC-compliant face biometric payments

Returning to the benefits of KYC compliance, Airtel Payments Bank in India has announced it supports face biometrics-powered payments (in addition to the existing Aadhaar-based fingerprint option).

The new feature, initially available to the bank’s Business Correspondents (BCs), can perform facial recognition for KYC and enables individuals to create an account remotely.

“We believe in improving our bouquet of digital services with the newest technology and providing our clients access to better digital banking solutions that are user-friendly,” comments Airtel CEO Anubrata Biswas.

“The UIDAI’s (Unique ID Authority of India’s) efforts have made this safe and secure authentication method feasible, which is a big step forward in the country’s inclusive banking cause.”

Shufti Pro brings compliance to gambling in Puerto Rico

LMG Gaming’s (LMGG’s) ApuestaPR betting platform has selected Shufti Pro to power its KYC and Identity verification (IDV) processes.

The company, which plans to launch its retail Sportsbook platform in 2023, chose Shufti Pro for its reliable compliance and attractive customer experience.

“It was critical for us to select a trusted KYC and IDV provider with proven experience in the gaming industry that would easily integrate within our partner ecosystem,” says Winter Horton, a partner at LMGG.

The integration comes days after Shufti Pro announced compliance with new guidelines within the Single Euro Payments Areas credit transfer scheme.

EU Council agrees on strengthening AML rulebook

Also in Europe, the EU Council agreed last week on a position on an AML regulation and a new directive.

Writing in a blog post, the council said that those two documents, alongside the previously agreed proposal to recast the transfer of funds regulation, will form the new EU AML rulebook.

Commenting on the news, Czechia finance minister, Zbyněk Stanjura, said the new rules would also apply to the crypto sector, demanding all crypto-asset service providers (CASPs) to conduct due diligence on their customers.

“Trying to stay anonymous when buying or selling crypto-assets will become much more difficult,” Stanjura says.

“Hiding behind multiple layers of ownership of companies won’t work anymore. It will even become difficult to launder dirty money via jewelers or goldsmiths.”

The rulebook also introduces additional due diligence measures aimed at crypto-asset service providers for cross-border correspondent relationships.

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