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Introducing the first regulatory compliant, reusable KYC/KYB digital credential solution

cheqd, in collaboration with FinClusive and Verida, is thrilled to announce the launch of a verifiable KYC/KYB solution powered by digital credentials – to modernise client onboarding and monitoring across traditional and decentralised financial services on a global scale.

Summary

cheqd is delighted to announce the launch of an end-to-end solution for reusable and verifiable Know Your Customer (KYC) and Know Your Business (KYB) credentials. This solution streamlines client onboarding and associated compliance, reduces onboarding costs, increases operational efficiency and meets existing and emerging regulatory requirements for both traditional and growing alternative and decentralized financial services.

Building on the achievements of the initial PoC between FinClusive and Verida in 2022, we are excited to join forces as a new partner to provide the infrastructure for credential issuance, verification, suspension and revocation. Together we can scale this combined application and enable financial services of all types to condense client onboarding times, while enabling portability and privacy controls for clients.

Interested organisations from traditional and web3 sectors, please book a call with our joint representative Alex to capitalise on the benefits of reusable KYC/KYB credentials.

Combined, this solution provides a plug-and-play platform for financial services’ KYC/KYB needs while providing reusability, client privacy, portability, and embedded compliance controls. The technology and capabilities provided through this alignment result in the following benefits for organisations that adopt this solution:

  1. Cost Savings: Significantly reduced costs for KYC and KYB verification, by a factor of 10x.
  2. Efficiency: A simplified customer experience, reducing customer drop-off rates and friction during onboarding, and making re-validation and monitoring real time. Simultaneously, for companies, it reduces manual document verifications and time-sinks through instantaneous verification and trusted checks. 
  3. Regulatory Compliance: Full regulatory compliance for customer onboarding and associated KYC/KYB, background due diligence (basic to enhanced and bespoke), with full real-time AML checks, risk scoring and background screenings, and an ongoing monitoring engine in keeping with global best practices and requirements. 
  4. Interoperability: Full compatibility and interoperability with other organisations issuing or accepting digital credentials, with no vendor lock-in–with a growing ecosystem of vendor/partners, our combined platform can enable multiple vendor engagement, and importantly accommodate financial institutions’ individual risk profiles and methodologies.
  5. Enhanced and Embedded Privacy: Improved data sovereignty and privacy for customers, via holding their credentials in a self-custodied wallet and explicitly consenting to when they are shared, with whom, and what data is verified. Digitally verifiable KYC/KYB-backed credentials protect sensitive underlying personal and entity identifying information (PII/EII), as well as sensitive accounts and payments information (e.g. account numbers, wallet addresses, payments flows), that can be attached to these credentials – providing essential proofs while eliminating continual data disclosures in current practice.
  6. Standardisation: Future-proofed technology in line with the upcoming eIDAS 2.0 regulation, and in keeping with ongoing international data standards from the World Wide Web Consortium (W3C), Internet Engineering Task Force (IETF) and International Organization of Standardization (ISO). 

Within Q1 2024, we will be rolling out the first verifiable credentials for KYC and KYB to streamline onboarding for financial services in web2 and also regulated organisations such as Virtual Asset Service Providers (VASPs) within web3.

Solving onboarding challenges, while reducing costs

There are currently significant challenges for companies around customer onboarding and verification where it is too costly in terms of time and money, leading to inefficiencies, to build trust in their customer-base.

This “verifiable” KYC/KYB solution positions itself to solve three major challenges faced by most companies which require identity verification checks in their course of business. 

  1. High costs for KYC/KYB. With digital credentials that can be reused, this solution significantly reduces the costs for onboarding and verifying customers, for industries such as financial services, as well as opening up KYC/KYB into new markets
  2. Challenging and costly compliance requirements. With an instantaneous check feature for AML assurance, risk scoring and other background screenings, compliance requirements can be met more easily than ever before
  3. Time inefficiencies spent on identity assurance. With verifiable data sharing, secured by cryptographic primitives, we can provide a high level of assurance without any manual effort, saving employees and employers time. 

Through addressing each of these problems, we are bringing significant value to the market, with reduced costs and improved efficiency

Amit Sharma, Founder and CEO of FinClusive has commented the following: “The rising cost of inefficient compliance in the client onboarding, KYC/KYB and verification process is both crippling for service providers and detrimental to customers’ experience and privacy. Integrating the cheqd network into the Verida Wallet to allow users to store and share their FinClusive credentials sets an industry benchmark for a regulatory-compliant digital credential application and introduces a more efficient model for the traditional finance sector.”

He continued: “Expanding our partnership with Verida with the support of cheqd is very exciting as we work to build a ‘consortia’ of partners. Together, we intend to securely issue compliance credentials across a decentralized finance network, modernizing the existing process. We are excited to grow these capabilities with partners in expanding a robust, globally transportable KYC/KYB verifiable credential that streamlines essential compliance processes and brings needed privacy controls and efficiencies to client onboarding and engagement in both traditional and decentralized financial services.”

Book a chat with our joint representative Alex now to create a seamless client onboarding and engagement experience while enjoying the pros of reduced cost for your organisation.

A feature-rich solution that meets global standards

As a full end-to-end solution, cheqd integrated with FinClusive and Verida can offer the following capabilities for achieving the first regulatory compliant process for verifiable KYC sharing and reliance:

  1. Identity verification: FinClusive currently supports identity verification coverage in over 170 countries.
  2. Digital credential issuance: Through cheqd’s Credential Service we can issue reusable and verifiable digital credentials based on the results of these identity verification checks – for both individuals and entities (including their beneficial owners and control persons).
  3. Credential storage and backup: Users can securely store their KYC/KYB credential in their Verida Vault, backed up on the decentralized Verida storage network. 
  4. Endpoints for applications and services: Applications and services can request access to this KYC credential, validating users without requiring them to repeat the KYC, creating a seamless user experience, and a value-added identity asset for clients as they engage more services from their providers and work to enable cross-services and open banking opportunities.
  5. Real-time suspension and revocation checks: Using cheqd’s decentralized infrastructure, we provide instantaneous lookups for AML screenings and other background checks.  Combined with automated ongoing client monitoring from FinClusive, credentials can be issued, managed, shared, verified, revoked as necessary in keeping with a client’s status at any given time.  Further, multiple credentials can be issued and monitored in keeping with a client’s risk profile or a service provider’s risk appetite.

All of these capabilities solve pain points for both traditional bank and nonbank financial institutions as well as decentralized and web-native services providers. Moreover, they facilitate a full end-to-end compliance solution while also giving customers “self-sovereign” control of their own KYC/KYB data. Not only does this have benefits in terms of data reusability, costs and data efficiency, as illustrated above, but it also meets existing and upcoming best practices for data protection requirements and eID, including:

  1. GDPR and CCPA: Achieving data minimisation and providing data subjects their rights by default
  2. eIDAS: Meeting emerging European eIDAS 2.0 standards and digital credential requirements for service providers, which will set a global benchmark.

In combination, this solution modernises existing processes for both web2 and web3 regulated industries. Customers no longer need to go through a KYC process multiple times for each service they onboard to, and can be verified near instantaneously, while assuring the requisite privacy protections of their personal and financial information, which traditionally is disclosed by and between verifying institutions. This creates a more efficient market for identity verification and reduces the replication and storage of sensitive personal identification documents, while providing client control of their sensitive data and embedding the necessary protections for financial system integrity.

A first-of-its-kind differentiator for regulated industries

For most regulated industries, such as financial services, companies are obligated to put in place AML and KYC/KYB controls for their customers. However, many service providers are unaware of their obligations to conduct essential KYC/KYB beyond initial onboarding

These extra obligations include ongoing client monitoring, dynamic risk scoring and continuous AML screening checks – required to meet various regulations across jurisdictions. 

These post-onboarding obligations are vital because when sharing KYC data between two organisations, the relying party may also require “real-time” data on the client to satisfy a requisite level of assurance, minimize their counterparty risk, and to meet regulatory requirements.

Our combined solution provides such needed modernization across:

  1. Client onboarding; 
  2. Ongoing monitoring and essential compliance for regulated service providers;
  3. Real-time compliance checks for relying parties.

For client onboarding, our solution automates and fully digitizes the onboarding experience using digital credentials issued upon successful KYC to a users’ wallet (with FinClusive and cheqd facilitating the issuance and Verida providing the wallet and storage capabilities for the user).

For regulated entities and financial services, our solution automates client monitoring for dynamic risk scoring by ‘embedding’ monitoring and screening controls into an easy-to-use dashboard (using FinClusive’s existing compliance suite and tooling).

For relying parties, our solution provides real-time verification of the KYC credential AND a live “double check” of the data, feeding from on-going monitoring of the client data happening in the background (using cheqd’s decentralised and privacy-preserving status list infrastructure, in conjunction with FinClusive’s compliance suite).

This collaboration has allowed us to innovate with real-time monitoring and verification checks in a fully decentralized and privacy preserving format. This is completely new to the market and enables us to provide a fully regulatory compliant solution for customer onboarding and monitoring, while simultaneously being future proofed for the new eIDAS 2.0 regulation for digital credentials. This can revolutionise the existing paradigm for customer data sharing, reducing costs and friction within existing regulated industries and emerging markets where identity verification is currently too costly” says Alex Tweeddale, Product Lead at cheqd.

Using the existing infrastructure with FinClusive, cheqd and Verida, this verifiable KYC/KYB solution can be used across various use cases:

  • Financial Services: Onboarding at any bank or nonbank financial service, lowering costs and friction. Sharing reusable and trusted data between financial services, while meeting counterparty risk and compliance requirements. 
  • Web 3.0: Reusing “Web 2.0” KYC and ongoing monitoring compliance processes to onboard to regulated Virtual Asset Service Providers at low cost and with increased efficiency
  • eCommerce and Online Retailers: Reusing verifiable KYC/KYB to purchase goods online, reducing the risk of fraud and phishing. 
  • Age Restrictions: Reusing verifiable KYC/KYB to access age restricted content, such as alcohol, gambling or gaming – meeting upcoming compliance requirements for vendors.

  • Government Services: Government agencies can use reusable KYC/KYB to streamline processes for citizens accessing various public services, reducing the administrative burden on both the government and citizens.

  • Cross-Border Transactions: Reusable KYC/KYB can be beneficial in cross-border transactions and international business dealings, where having a standardised and recognised identity verification process can facilitate smoother collaborations.
  • Others: Combining KYC/KYB credentials with other credentials (e.g. employment, accomplishments, loyalty, heath) to build higher levels of assurance and digital reputation. 

Schedule a meeting with our joint representative Alex to become a pioneer in your industry by offering a fully decentralised and privacy preserving way to verify reusable KYC/KYB credentials.

A truly global collaboration

We are thrilled to have successfully integrated the cheqd network into the Verida Wallet and work closely with the Finclusive team to provide a seamless user experience to end users to receive, store and share their reusable Finclusive credentials. This successful proof of concept is a showcase of what industry standard best practice looks like for regulatory compliant credential activities, while also demonstrating a more streamlined and efficient model for the traditional finance sector. We are incredibly excited to continue working with FinClusive and cheqd to roll this technology out across the wide range of global use cases.” says Chris Were, CEO at Verida.

Verida, based in Australia, provides a mobile wallet used by a Holder to receive, store and present their VCs. This mobile wallet also provides an embedded crypto wallet combined with the world’s leading decentralized, encrypted private data storage network suitable for storing VC’s. This provides a simple interface for end users to interact with traditional finance products and blockchain digital assets in a regulatory compliant manner.

cheqd, based in the UK, is a purpose-built network for decentralised identity. It maintains an array of packages with varying levels of integration complexity to allow its partners and customers to have a variety of ways of plugging into cheqd’s identity functionality. Via these different packages, customers and partners can issue and verify Verifiable Credentials, create cheqd DIDs, DID-Linked Resources, Status Lists and Schemas with different levels of integration effort and flexibility, enabling frictionless verification, real-time monitoring and decentralisation for resilience, uptime and efficient cross-border lookups.

FinClusive, based in the US,  is a KYC/KYB and full-stack anti-money laundering and financial crimes compliance (AML/FCC) platform with due diligence coverage in over 180 countries–providing automated KYC/KYB, requisite customer due diligence (basic to enhanced) with global coverage, ongoing monitoring and transaction tracking.  The platform automates the verification and/or issuance of digitally verifiable compliance-backed Identity credentials that can be verified centrally through FinClusive or decentrally in collaboration with Verida and cheqd using VCs.

Arrange a conversation with our joint representative Alex to start optimising your business and reduce avoidable KYC/KYC verification cost. Client onboarding and engagement experience matters.

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