Learn more about how Cros fills in the gaps of traditional identity verification processes.
Ever since the introduction of “Know Your Business” (KYB) regulation in the 1998, and especially after the terrorist attack in September 11, banks and other obligated entities have been following in a long, laborious procedure to assess and understand the risks that new and existing business relationships present. However, this regulation came with a lot of drawbacks.
In efforts for combatting terrorism financing and money laundry, this process was designed to empower organizations with more intel on the business they’re about to get into. It should help them to gauge the authenticity of these businesses and reveal the ones concealing the identities of illegitimate actors. Companies need to submit their physical address, registration documents, licensing documentation, and identities of directors and owners.
Collecting, analysing, and managing vast amounts of data are all requirements of the KYB process; which entails manual assessments, significant time and labour costs and increases the potential for costly human error.
How is Cros solving this and ensuring compliance?
Blockchain enjoys two fundamental perks as opposed to the traditional world: enhanced security and immutability. This statement is especially true with Cros’ private, permission-based Distributed Ledger Technology (DLT). Unlike Bitcoin’s public blockchain, the DLT is only accessible to a group of designated parties. The ledger is designed to safely store both transactions and customer information and only allow them to be used for compliance purposes.
Decentralized, transparent, and flexible, DLT enables firms to share their identity verification data in a cost-effective and fully automated manner. This is unlike traditional KYB which leads to duplications and a waste of resources, DLT is engineered to flag duplicative efforts and make way for more transparency and clarity ahead of onboarding clients.
What does this mean for organizations?
With Cros’ identity verification, organizations will save a great deal of time, money and error.
Time – This identity verification process needs to happen only once on the DLT, as opposed to the endless labour of traditional KYB processes. Organizations would complete the full verification process with Cros, and Cros would create a smart contract containing the Proof-of-Validation document and other submitted materials. After granting permission to business partners interacting with the given organization on Cros, the identity verification results would be ready and visible on the blockchain, for existing partners or any partners to come. This will spare all parties on the chain the time spent on due diligence that would traditionally take up to a month.
Money – Additionally, the cost of the identity verification and compliance process could be split proportionally among participating firms, which would effectively reduce the aggregate cost of the process. Ideally, the data collected and any verification forms would be standardized, so that any financial institution in the world could share the same data.
Error – Employees of the traditional world are assigned to carry out the due diligence manually, and mostly using physical paper, making way for a lot of errors that can happen intentionally or by utter innocent chance. Cros’ identity verification and compliance process would clear out any possibility for errors, thanks to the smart contracts that never sleep and never lie - which also ensures that malicious activities can be more easily spotted while monitoring a shared database of transaction history.