Blockchain technology has been around for quite some time now, and it is credited to Satoshi Nakamoto. While blockchain technology has definitely been an innovative creation, not much information is available about the real identity of Nakamoto. In fact, we don't know if Nakamoto is a single person or a group of people.
As of now, the type of databases that dominate the market
KYC and AML Efforts: How Can Blockchain Technology be Supportive?
It is of the utmost importance that you be aware that both KYC and AML can be integrated with blockchain technology. As of now, entities providing financial and professional services are required to follow a lengthy number of time-consuming tasks to when taking on a new client. With the help of blockchain technology, though, it is possible that AML and KYC expenses can be greatly reduced; this reduction in expenses is primarily attributed to the cross-institution client verification capability that comes along with blockchain technology. Also, this form of technology is well known for being extremely effective in monitoring, as well as analyzing, various points of data that are mandatory for AML and KYC checks.
It is also thanks to blockchain technology that verification of a client may only have to take place one time. How is this possible? Because the verification result can then be "cryptographically stored in a blockchain." This helps banks and other entities providing administrative services be able to access the final results of the verification processes, meaning they would be able to steer clear of the multistep processes that go along with AML and KYC checks.
Even more advantageous is that with appropriate permissions, client information would be accessible to a variety of organizations thanks to the features that come along with a distributed database. And this database would be considered as the single source of truth.
Another notable aspect of blockchain technology is that once information and data
A New Technology That Is Holds a lot of Promise as Well as Challenges
Even though blockchain is a new form of technology, it has nonetheless already shown a lot of promise. Still yet, because it is new, it has brought along with it several challenges for those who wish to adopt it, especially those who are using it to guard sensitive and legal data. This technology has strong advocates, many of whom can help with the challenges that blockchain presents. Some of the most common challenges that accompany blockchain technology adoption include:
With blockchain technology, anyone with the correct permission to access the data will be able to do so. This means that many organizations' KYC documentation and digital identities will be viewable by other entities with whom relationships have already been suspended.
Standardization among banks that are in the same jurisdiction is often viewed as very feasible. When these banks, however, are under different jurisdictions, this presents issues with KYC procedures. Blockchain technology only further aggravates these issues.
Just because a client has been verified does not mean that this client will always perform reputable actions. Take for example a client who has already been verified but then goes on to complete some type of fraudulent transaction. Because of instances like this, it is pertinent that someone is in charge of reviewing clients and keeping the distributed database updated accordingly. Unfortunately, though, as of now, it is not clear who should be responsible for updating client information, nor is it determined how often the
Blockchain technology takes place using network nodes. Collaboration among each node allows for mutually beneficial solutions to be created, especially in regard to KYC and AML risks.
KYC and AML are going to be increasingly impacted by Blockchain as the technology is more heavily integrated into compliance. Companies will need more tech skilled workers to fulfill compliance. ICS can help you there. We have expert recruiters who know the ins and outs of the compliance industry and can help you find the right talent for your specific company. Contact us today!