Are Compliance Costs Currently Highway Robbery?
The majority of businesses that operate within government regulations understand the need for compliance. But very commonly we see that the authenticity of these checks require due diligence in selecting a provider. With this comes a very heavy price and one that can impact whether new companies or startups pass/fail. To make this less bearable, strict fines are being issued for any business or entity that violates the rules of the law that have been established. Government issued fines are steadily increasing over a decade long span and the need for Know-Your-Customer (KYC)/Anti-Money-Laundering (AML) assurance is following the same path.
“Technology is having a major impact on compliance. On the one hand, the anticipated benefits of new technology are driving an increase in the compliance function’s involvement in considering solutions, with 41% expecting to spend more time assessing fintech and regtech solutions over the next 12 months…” — Thomson Reuters
The stronghold that KYC providers currently have on the industry deems to be an unfair practice; That can simply become a habit of the past with new solutions that are emerging!
Almost A Million Dollars to be Compliant!
Recently while attending a business conference in Seattle, I was able to have an interesting conversation with an entrepreneur from Europe. He explained that he was going to need KYC and AML verification within the next two months. The issue that he was facing as a business owner was the substantial costs in these compliance checks for him to operate legally. This individual works in retail of precious metals, gold in particular, and operates out of a small country near Switzerland.
I found it very noteworthy to learn from him that his current KYC/AML provider will be charging $25 USD per person that needs to be vetted. For privacy reasons, I rather keep the gentlemen anonymous, however he informed me that he will be needing up to 25,000 checks to be completed; that results in over a half a million-dollar fee just for compliance!
As we continued to speak and learn more about one another’s businesses, I had introduced him to new network partners of Bridge; a cutting-edge KYC/AML verification service new to the 2019 compliance market. The gentlemen became intrigued to find out more information about our particular services. Ultimately, he had accepted that he will be paying excessive fees for compliance; something that was unsettling for me to hear. After contacting several providers in the last six months and receiving staggering price assessments, his general consensus was simply that there was no other solution available.
Compliance costs are ever-increasing globally. According to a recent Thomson Retuters survey, some major financial institutions spend up to $500 million annually on KYC and customer due diligence. Even more astonishing 10% of the worlds’s top financial institutions spend at least $100million annually on compliance!
Don’t Get Caught Up!
I’ve probably mentioned it 50 times by now but I’ll say the word again — compliance, compliance, compliance! It’s an expensive requirement for any business owner to maintain and even more expensive when in violation. Within a 10 year analysis, Fenergo published some remarkable data in relation to these global fines. Since 2008, the global financial crisis, over $27 billion in fines have been issued globally amongst financial institutions alone. AML fines within the United States have reached a staggering $7.3 billion.
Continuous measures of compliance are increasing globally and we are witnessing the push for regulatory technology (regtech) implementation. Through recent years there have been an abundance of data breaches in some of the largest companies known to us for daily activities. The issue of non-compliance is becoming more prevalent through the data surveys conducted by various sources. It is quite clear that the recent GDPR requirements are significantly stronger than ever before, and for good reason.
At the time that 3 billion user accounts had been breached at Yahoo in 2013–2014, it represented the largest data breach in history. Not only was the scope significant, the company didn’t disclose the breadth of the breach within 72 hours like the GDPR requires; in fact, it took them until October 2017 to fully acknowledge the extent of multiple breaches that occurred in 2013–2014. With revenue in excess of $4 billion for 2012, Yahoo would have faced millions of dollars in fines if GDPR would have been in place — $80 million but potentially as much as $160 million depending on the variable factors of GDPR including the culpability of the company and how cooperative they were.” — Forbes
Cutting corners by operating in non-compliance is not a beneficial alternative opposed to using an expensive verification partner. Technology innovation can, and will, change the price gouging that has controlled the industry for the past decade.
Breathe…Don’t Cut Your Revenue for Compliance!
Bridge Protocols latest network partner offers the highest level of fidelity in digital authentication. The technology features real-time identity verification which proposes a forefront KYC/AML service for businesses of all varieties. Whether the verification needs to support a federal or state entity, this verifier can adequately perform it.
Businesses big or small, our team will be able to determine what your needs are and only that. Consulting your team, while delivering a price that brings a reduction of 50% or greater in KYC/AML compared to the market-leaders current pricing; saving you time, stress and money!
This newly emerged verification partner has the capability of video and image analysis using assisted artificial intelligence for real time facial recognition, ethnicity, age, gender assumption and native language detection. The system will also be able to identify geographic location with built in IP address tracing through permission-ed browsers. Using the software we have created for these checks allows support beyond basic due diligence for KYC and AML services. Not only will the search criteria be checked as a premium, they will yield faster response times as the system grows.
As I was explaining this new solution to the gentlemen, he insisted that we trade business cards. The substantial savings that he would endure by using this new service had him explaining to me his potential of increased revenue. He’ll be able to achieve progress at a faster rate if Bridge’s partners were his new provider. The thought of adding an estimated quarter million dollars to his budget sent the man into an optimistic business future. He had explained to me that he would have the flexibility to hire additional employees and increase his marketing budget immediately; this all dramatically changing his company timelines. This is only one example of a real solution achieved by real technology. The services offered by Bridge Protocol’s verification partner will be industry disrupting in 2019 as we are beginning to onboard companies as pilot testers now!