iGaming Regulations and KYC

Latin America is quickly becoming a fast-growing market for iGaming operators. According to reports, over 70% of iGaming operators plan to expand to Latin American and Central American markets in the next couple of years.

The iGaming market in Latin America is highly diverse and entertaining and it has been growing in recent years. One of the biggest factors behind this is the growing availability and affordability of high-speed internet smartphones. Another driving force is the increasing love for online gaming in Central and South America.

As Latin America represents a complicated map of jurisdictions with 34 countries and union territories, regulation has been a problem. But recently, there has been a positive shift in the regulatory space as well.

To help out both the iGaming operators and the players, we’ve created this guide for iGaming regulations and KYC in Latin America.

iGaming Regulations in Argentina

In Argentina, the gambling regulation is controlled by the country’s 23 independent provinces and the autonomous city of Buenos Aires. Several provinces in Argentina and Buenos Aires have legalized online gambling.

The authority that acts as a watchdog for AML regulations is the Congreso de la Nacion Argentina. It keeps an eye out for all the operators to see which ones aren’t following the regulations.

The regulatory landscape and the licensing regulation vary from province to province. All the operators have to screen players to prevent money laundering and make sure that gaming transactions go through state-owned banks.

iGaming Regulations in Brazil

With a population of over 200 million and a huge fan following for all things sports, Brazil has a quickly growing gambling market. Unfortunately, there’s no regulatory framework right now. Without a regulatory framework, it will be next to impossible for the iGaming industry to thrive.

Brazil has a history of high taxes, and if sports betting is subject to similarly high rates of taxation, it could discourage the investment in the market.

iGaming Regulations in Chile

The future of regulated iGaming in Chile is currently unclear as it attempts to both regulate and prohibit offshore online gambling companies. There’s a land-based gaming industry that’s riddled with lawsuits because of grey market operators. 

If there ends up being a regulatory framework in Chile, the platform will be directly under Superintendencia de Casinos de Juego (SCJ) and operators will have to maintain strict security standards. 

iGaming Regulations in Colombia

Colombia was the first Latin American country to regulate online gambling. All types of iGaming are allowed and regulated in Colombia, including, casinos, bingo, poker, and sports betting. 

Colombia’s national regulator, Coljuegos has built a strong regulatory framework that ensures operators follow all the rules. Coljuegos also allows operators to apply for licenses and submit reports digitally, making the entire process fairly seamless. 

This entire framework has led to reliable data and regular reports on the performance of the industry. 

iGaming Regulations in Mexico

Mexico is one of the most popular markets for iGaming operators. 95% of the online casino operators are looking to expand to Mexico in the span of the next 5 years.

Mexico has a population of over 120 million and a mobile penetration rate of about 60%. This makes Mexico one of the largest iGaming markets in Latin America.

All the land-based casinos in Mexico are completely regulated. However, the online gaming market is in the grey area of regulations. Online casinos and sports betting operators don’t require digital licenses. They operate in partnership with a land-based license-holder casino.

iGaming KYC Compliance in Latin America

The requirement for financial transfers and the risk of fraud is always a factor of concern for the iGaming industry. To successfully manage fraud, the iGaming industry needs to have proper regulations.

Local compliance is continuously acting as a key barrier in Latin American markets. Businesses are also aware that they are likely to incur additional scrutiny in Latin American markets.

Newly regulated markets attract both wanted and unwanted attention. As iGaming markets open up, it’s more than likely that national regulators will implement strict rules on KYC and ID verification.

iGaming operators will need to adapt to these regulations and implement sophisticated measures to ensure compliance and build customer trust.


What is KYC?

Know your customer (KYC) is a requirement for regulated industries. In KYC, businesses have to verify the identity of customers before onboarding them. Businesses must carry out continuous monitoring to ensure customers are legit and they don’t pose a threat to the business.

What KYC checks are available in Latin America?

KYC checks include data, documents, biometrics, and PEPs sanctions list checks. Each business uses a different method of verification. Some businesses combine verification methods to enhance due diligence.


DAC7 Compliance

The COVID-19 pandemic boosted the digital commerce space like never before. The gig economy also saw a boost as companies all over the world looked towards remote workers. The gig economy has always been outside the traditional norms of business. Allowing delivery drivers, vacation property owners, and similar businesses to avoid paying taxes on these transactions. 

Due to this, the IRS made new rules for gig economy tax evaders. IRS has made it compulsory to provide reports of income generated from on-demand services and goods and digital platforms. 

The EU has also had the same legislation in the works for a long time. If you’re a digital platform owner in the EU or if you have sellers on your platform from the EU, you should be aware of the DAC7 directive. 

Let’s dive a bit deeper into DAC7 and what it means for EU businesses.

What is DAC7?

In March 2021, the European Council released the DAC7 directive. DAC7 aims to extend the scope of existing tax transparency laws for digital platforms. The directive requires platform owners to collect and report personal and business information on income realized by sellers using their platforms for commercial services.

The goal of the directive is to ensure that all taxes (income tax & value-added tax) are reported and assessed. The gig economy and sharing economy have been evading tax. DAC went into effect on January 1, 2023. It applies to everything from ride-sharing, food delivery apps, online jobs, and other digital marketplaces. 

Even businesses in traditional industries may come under the scope of DAC7. That is, if they connect third-party sellers and users through their website for commercial activities. 

Payment processing platforms such as PayPal, Venmo, and Stripe that allow users to only advertise goods or services and platforms that redirect or transfer users to another platform don’t have to comply with DAC7.

Businesses that Have to Comply with DAC7

DAC7 applies to digital platform operations incorporated or managed in the EU. It also applies to tax residents in the EU who engage in commercial activities that don’t fall under general tax rules. 

Digital platform owners/operators located outside the EU who host sellers who are EU residents or facilitate the rental of property in the EU have to comply with DAC7 as well. 

Here’s a complete list of those who have to comply with DAC7:

Business TypesExamples
Sales of GoodsSecond-hand items
Real estate
Rental of Immovable PropertyCo-working spaces
Parking spaces
Vacation homes
Delivery or Performance of Personal ServicePaid live streaming
Food delivery services
Rental or Any Mode of TransportScooters

Whose Information Has to Be Reported?

Under the DAC7 directive, any platform that hosts EU resident sellers who conduct business on the platform has to report the seller’s information. Businesses must also report information about non-EU residents who rent immovable property.

On the other hand, government and publicly traded entities are exempt from complying with DAC7. Casual sellers that have less than 30 sales whose amount equates to less than 2,000 euros. Smaller hotel chains and tour operators that have conducted less than 2,000 transactions in a reporting period are also exempt.

What Information Has to be Reported?

If you’re a digital platform operator, you’re obligated to start identifying and collecting specific information from sellers on your platform as of January 1, 2023:

  • Seller’s identity – full name/legal name, primary address, DOB
  • EU member state of residence
  • Financial account information
  • Tax identification number
  • VAT/Business registration number (for entities)
  • Consideration is paid or credited per quarter, along with any fees, commissions, or taxes withheld by the reporting platform operator.

If you’re operating a platform that deals with immovable rental property, you’re required to report additional information, including:

  • Address and land registration number of each property listing.
  • Total number of days a property was rented.
  • The total amount paid in the reporting period.
  • Any fees, commissions, or taxes withheld or charged by the platform in the reporting period.

You, as a business, have to inform the seller in advance that their information will be collected and reported. If the seller doesn’t share their data, you, as a business, are obligated to send 2 reminders. If the seller fails to provide the data for 60 days, the business has to remove the seller from the platform and close the account.

How to Comply With DAC7 Reporting Obligations?

Businesses can comply with DAC7 reporting obligations by submitting all their EU seller information in one member state. If you’re a registered business in the EU, you’ll have to submit your information in the state in which you’re registered. 

As a business, you have to submit your reportable information no later than January 31 of the year following the calendar year in which you identify a reportable seller. The final deadline for the reporting period is January 31, 2024. 

Once the information is submitted, the member states’ tax authorities will distribute the information among themselves. EU member states are required to exchange information within 2 months of reporting. 

You can submit the information yourself or find a service provider to do that for you.

How to Prepare Your Business for DAC7?

If you’re a business operating in the EU, there are some steps you need to take to prepare your business for DAC7. It’s all about how you collect data and how you report the entire process. Here are some initial questions to answer as reporting requirement dates come closer:

  • Does your business already collect all the data you need from the sellers for reporting? If not, what should you do to collect data? Process and systems-wise, to collect the data?
  • Do you need to make any changes to the terms and conditions or posted consent policies to facilitate data collection from sellers?
  • Which steps do you need to take to keep the collected data safe from hackers and data breaches?
  • Which systems and processes do you need to upgrade or implement to validate the seller’s information before reporting?
  • Is your business subject to other regulations or laws that require you to collect similar information and have similar reporting requirements?

How DIRO Can Help

DIRO document verification can help businesses comply with the EU’s DAC7 directive.

Our online document verification solution can help you verify businesses and onboard them quickly. You can collect and verify a business’s bank account information, address, incorporation documents, and other valuable data.

DIRO verifies documents directly from the issuing source, eliminating the use of fake and stolen documents.


Top 5 Compliance Trends to Watch in 2023

In past years, the rising pressure for financial crime professionals, whether they work in AML, fraud prevention, or cybersecurity. It is getting harder and harder to keep up with growing compliances.

For businesses looking to safeguard themselves from fraud, keeping up with compliance trends is crucial. Here are the top compliance trends to watch out for in 2023.

Growing Compliance Trends in 2023

1. Financial Crime Extending to Other Industries

Financial services is the most highly regulated industry, especially in the areas of crimes like money laundering, bribery and tax evasion, and other types of crimes.

Regulatory bodies all across the world are making new controls to make it harder for criminals to conduct crimes. This has pushed criminals to use other industries to conduct money laundering crimes.

Some other industries include:

  • Real estate
  • Luxury goods
  • Sports
  • Precious metals
  • Gems and Jewelry
  • Casinos gambling, and others

With growing awareness of financial crimes, regulators are mandating KYC and AML regulations across all high-risk industries.

The U.S., EU, UAE, and India are leading the industry in this space. Fincrime risk assessments for a variety of potential crimes, such as fraud, money laundering, corruption, and others.

2. SWIFT Migration to ISO20022 Will Drive Enhanced Screening

SWIFT’s migration to ISO20022 payment standard for cross-border payments and reporting has been in operation since March 2023.8.16.

With this sudden change, the new payment messages will have richer and more structured data than current MT formats.

Most FIs are currently facing issues with payment screening match accuracy, resulting in a deluge of false alerts while carrying a risk of missing true alerts.

As SWIFT shifts to new standards, FIs will have to enhance their screening process and matching rules by adopting targeted screening of cross-border payments.

3. Instant Payments Require Monitoring

Instant payments have become the norm in several companies. Beneficiary accounts are being credited within a few seconds, so it increases the risk of fraud.

IMPS in India, Faster Payments in UK, and Osko in Australia are the best examples of Instant payments.

EU laid out the foundation in 2017 for instant Euro payments within EU countries. The speed of payments is a crucial factor that is loved by fraudsters. This forces FIs to implement real-time screening and fraud detection systems.

The financial industry is looking to shift money laundering checks to monitoring to create reports for law enforcement to a real-time mode to identify payments that seem suspicious. 

FIs need to strike a balance between fraud prevention and customer experience. Achieving the highest level of accuracy and reducing fraud levels has to be the priority of financial institutions.

4. Adoption of Data & AI Solutions for Compliance

A lot of financial institutions struggle with fraud prevention relying on legacy solutions. Manual processes and fragmented data don’t paint the complete picture and are inaccurate in preventing fraud.

Crimes are getting more complex, higher volume and velocity of payments and growing regulatory obligations make it challenging to prevent crimes.

Regulators advice financial institutions to use advanced technologies which has led to a rapid growth of RagTech solutions. The number of FIs that have implemented new technologies is still small but they have shown promising results.

In coming years, the implementation of data-driven AI solutions will keep on rising, such as:

  • Biometric-based smart identification, verification, and authentication.
  • Natural language processing (NLP)-powered contextual screening and adverse media checks.
  • Network graphs for criminal linkage and corporate structure/beneficial ownership.
  • Machine learning for detection of fraud, money laundering, bribery & corruption, human trafficking, environmental crimes, and others.

5. Focus on Crypto Crime Prevention

Another compliance trend that’s on the rise is crypto crime prevention. This year’s crypto market was plagued by multiple storms and endless regulatory framework developments.

The crypto industry is still recovering from the impact of serious crimes that took place in 2022.

While the overall transactional value of crypto is much smaller compared to fiat currency, the rising adoption of crypto paired with an increasing rate of crime has begun to scare regulators.

During 2022, FATF also expanded the Travel Rule recommendation to include VASP reporting requirements. 

The EU also approved the MiCA Regulation in 2022 to protect businesses against crypto-based money laundering and other crimes.


What is Regulatory Compliance?

Regulatory compliance by its definition is an organization’s compliance with local and global rules and regulations. If an organization fails to comply with regulations, it can face legal troubles and huge fines. 

Some of the biggest examples of compliance laws and regulations include:

  • Payment Card Industry Data Security Standard (PCI DSS)
  • Health Insurance Portability and Accountability Act (HIPAA)
  • Federal Information Security Management Act (FISMA)
  • Sarbanes-Oxley Act (SOX)
  • EU’s General Data Protection Regulation (GDPR)
  • California Consumer Privacy Act (CCPA)

Based on the nature of the business, every organization has to follow different rules and regulations.

Importance of Regulatory Compliance

Within the last 2 decades, regulations have become more elaborate and complicated. Almost every industry has some set of rules and regulations that businesses have to follow.

These growing regulations have led to the birth of new positions, such as:

  • Creation of corporate regulation
  • Chief and regulatory compliance officer
  • Compliance manager

The primary objective of these positions is to ensure businesses comply with all evolving regulations.

Regulatory compliance processes and strategies help organizations achieve their business goals while preventing the risk of fraud. Companies that are transparent about their compliance process tend to build more trust in the industry. 

Some of the compliance rules are specifically designed to ensure customer data protection. Poor protection of customer data can impact an organization negatively. With more and more data breaches happening every day, businesses across industries need to comply with regulatory compliance. 

Data privacy-specific regulatory compliance such as GDPR and CCPA have become more common. Proper handling of consumer data has become a huge concern across the globe and businesses are under higher scrutiny.

Challenges with Regulatory Compliance

Companies that don’t follow regulatory compliance practices are held liable legally and financially. Moreover, they have to participate in remediation programs that include on-site compliance, audit, and compliance inspections. 

Non-compliance with regulations can lead to reputational damages as well. Complying with regulations can be expensive as businesses have to spend capital to comply with laws and regulations. 

Businesses have to appease stakeholders by showing profit, this is why a lot of organizations skip out on complying with regulations. 

There can be a lot of challenges surrounding regulations, especially in highly regulated industries such as finance, and healthcare. 

Common challenges that come along with maintaining regulatory compliance include:

  • Figuring out how new regulations will influence the direction of business and existing business models.
  • Incorporating and developing a compliance culture and promoting the culture throughout the organization.
  • Deciding on and hiring compliance roles and accountability and functions required by legal, compliance, and audit departments.
  • Foreshadowing compliance trends and integrating regulatory processes to increase efficiency.

Constantly evolving consumer technologies also make it complicated for companies to comply with regulations.

The inclusion of the internet, websites, and apps in businesses creates multiple endpoints that businesses have to keep in mind. For digitized companies to remain compliant, they have to stay on top of required updates and patch weak points in the existing software.

Compliance Regulation Across Industries

Every industry has some regulations, but some industries are far more regulations than others. The financial industry, for example, is constantly under scrutiny and has several mandates designed to protect the public and investors from nefarious business practices. 

Healthcare companies are also subject to strict rules and regulations as they handle a lot of sensitive and personal patient data. Hospitals and other healthcare providers have to show regulatory agencies that they’re complying with patient privacy rules. 

HIPAA is the regulation that the healthcare industry has to follow. The regulatory compliance outlines all the data privacy and security mandates designed to secure patients’ medical information. 

In addition to healthcare providers, cloud service providers (CSPs) and other vendors of healthcare organizations also have to comply with HIPAA privacy laws. 

Each country also has its set of regulations. SOX, for example, is a U.S. legislation, but similar regulations include Germany’s Deutscher Corporate Governance Kodex (DCGK). Australia also has a similar regulation that includes Corporate Law Economic Reform Program Act 2004 (CLERP 9).

Multinational organizations have to be wary of the regulatory compliance rules of the country they operate in. For example, GDPR doesn’t just apply to companies and citizens living in the EU, but also to companies and users whose data is stored in the EU.

GDPR expanded on the initial rules of consumers by including a transparency mandate that includes businesses informing customers on how their data is used. 

Companies that comply with GDPR compliance rules are required to notify all affected parties and supervising authorities about a data breach within 72 hours. 

When it comes to CCPA, California residents are provided the right to which kind of data is being collected about them. Consumers also have the right to refuse the sale of their data.

How Companies Ensure Regulatory Compliance?

Each company has different regulations to follow. Regulatory compliance requires businesses to analyze their unique requirements and mandates specific to the industry. 

Here are some steps businesses can take to achieve regulatory compliance:

  • Identify applicable regulations: Businesses need to figure out which laws and compliance regulations apply to a company’s industry and operations.
  • Determine requirements: Identify requirements in each regulation that are relevant to your business. Come up with plans to implement these regulations.
  • Document the compliance process: Businesses should specify the compliance process with specific instructions for each individual.

Monitor changes and apply when needed: Compliance requirements are applied regularly, and businesses should monitor changes to determine if they are relevant to the company.


Compliance vs Risk Management Process – Everything You Need To Know About it

According to surveys, 60% of top-level executives in the financial industry consider compliance and risk management as the two most complicated categories. Some surveys have showcased that a huge number of banks globally don’t have ideal techniques in place to maintain compliance.

There are tons of misconceptions about compliance and risk management. While both of them help businesses protect their legal structure and physical assets from fraud, both of them are unique. Most people end up interchanging the terms with each other. For businesses operating in the financial industry, the need to understand the difference between the two is crucial.

Without having an idea what compliance and risk management have to offer, it’s practically impossible to stay secure.

Business leaders can come up with strategies that take advantage of all the tools at hand. The end goal should be to comply with all laws and manage risk as much as possible.

What is Compliance?

Compliance is the process of following a set of standards, regulations, and legal guidelines. Compliance management is the process of making sure the entire organization is doing activities that help them conform to the rules. Managing compliance in businesses involves two important steps:

  • Regulatory compliance: These are the steps and changes made by an organization to comply with the set of rules, guidelines, and laws set by an external authority.
  • Corporate Compliance: These are the actions and security practices an organization implements to ensure compliance with the organization’s internal rules.

For an organization to operate smoothly, they need to comply with both regulatory and corporate guidelines. Maintaining regulatory compliance can protect businesses from external threats, and prevent fines, legal actions, and even shutdowns in some instances.

What is Risk Management?

Risk management is something an organization has to do on its own. It’s the process of analyzing, assessing, identifying, and then managing potential threats that can hurt an organization’s reputation and financial health.

These risks come from various sources, including legal liabilities, data-related issues, financial uncertainty, poor KYC and customer onboarding processes, poor vendor onboarding processes, etc.

Risk management involves building and implementing plans that can increase awareness of these threats and teach how to avoid them. 

Risk management allows businesses to predict future threats and prepare for them.

Difference Between Compliance and Risk Management

Compliance and risk management are closely intertwined. Compliance in association with industry regulations makes sure that businesses stay protected from emerging threats. Risk management, on the other hand, helps businesses prevent risks that can arise from non-compliance. Let’s break down the differences between both them:

  1. Prescribed vs Predicted

Compliance is a set of rules and regulations that are set forth by regulatory bodies (governments, industry leaders, etc). Risk management is mainly internal. Organizations have to predict for themselves the risks that can arise in the future. Based on these assessments, businesses have to come up with solutions that help manage these risks.

  1. Tactical Approach vs Strategic Approach

Not complying with industry standards and rules can lead to huge fines, penalties, and reputational damage. Businesses spend hundreds of hours worth of manpower to take a “check-box” approach to make sure the organization is complying with the rules.

Compared to that, risk management is all about building strategies as it requires carrying out decisions that minimize risks.

  1. Preventing Risks vs Creating Value

Businesses need to take a far-sighted approach to risk management. Without preparing for the future, businesses are not usually able to generate value propositions for themselves.

The compliance process ends when an organization is sure that a particular rule is followed. Out of the two, compliance is easier. But, it gets a bad reputation in the industry as it requires time, effort, and resources from employees. Instead, employees could be spending their time on other projects.

A good risk management program is a never-ending process. It requires constant changes, amendments, and thought. Risk management requires changes to strategies all the time so the organization can stay compliant with external rules. Constantly staying up to date with compliance leads to generating a great brand reputation in the market.

Can Compliance Happen Without Risk Management?

Your organization can’t have risk management without compliance. Not being able to or not wanting to comply with rules leads to fines, exposure to threats, and reputational damages. So, make sure to include the compliance process in your business.

The average non-compliance cost for a business is $9.4 million. A  good risk management plan will be able to allocate resources and time to ensure an organization is up to date with all the latest compliance laws.

Organizations can prevent hefty fines, losses due to theft, and reputational damages by simply investing in a risk management process.


Importance of Compliance Management

No business can survive without a list of rules and regulations. To maintain this compliance, businesses have to follow the rules and regulations that are related to their industry. Businesses consider “maintaining compliance” a challenge as the rules are always changing. If you fail to stay up to date on these compliance rules, it can damage your company’s reputation.

What is Compliance Management?

Compliance management is the process of monitoring and assessing an organization’s internal systems to make sure that they comply with industry regulations.

Maintaining compliance isn’t just the role of top management, it comes down to everyone within the organization. The knowledge and understanding should correlate with the organization’s goals. All employees should be aware of how they can follow compliance standards. This helps in smooth working operations.

Importance of Compliance Management

As technology is becoming a major part of all sectors of our lives, legal regulations are becoming fiercer. Compliance management is crucial for every business as non-compliance can lead to legal and financial penalties, data theft, and damage to a business’s reputation.

Compliance management software or verification software can help financial institutions to keep up with compliance requirements.

Here are all the reasons why businesses need to comply with industry rules and regulations:

  1. Avoid Violations

Noncompliance with industry rules and regulations can hurt your business’s financial health. According to a recent study, it came to light that businesses without a compliance management system were imposed fines 2.71 times more than organizations with a system in place. 

These fines amounted to $14.83 million annually. The same report also stated that the annual cost for compliance management is $5.47 million. Businesses operating in financial industries especially need to comply with industry standards and regulations.

  1. Helps in Evaluate Security Risks

Complying with rules and regulations allows businesses to evaluate and manage security risks. Not just written guidelines and documents, but organizations need proper systems that can help to maintain compliance.

Risk assessments help in evaluating the level of risk an organization is facing at any given time. It also helps in uncovering potential risks. In addition to continuous monitoring, compliance management tools like KYC verification software can help you fix vulnerable parts of the operations.

  1. Protect Against Data Breaches

In case you fail to follow compliance requirements, it can lead to data breaches, and legal penalties, and it can hurt your business’s reputation. Every year, the number of data breaches is increasing, leading to the loss of millions of dollars worth of data. That’s not all. These data breaches ultimately increase the number of ID theft cases, leading to a whole new domino chain of fraud.

Challenges of Compliance Management

The reason why businesses shy away from compliance management is the challenges they face. Complying with laws and maintaining them throughout the organization is a major task. 

  1. Regular Changes in Laws

Regulatory bodies often keep changing the rules and regulations based on current fraud trends. As new cyber threats move quickly across industries, regulatory bodies have to make immediate changes to rules to help organizations protect customers.

  1. Large Enterprises with A Lot of Employees

Managing and maintaining compliance is most challenging for larger enterprises. With a large workforce, it can be tough to make sure everyone is following the compliance initiatives. This leads to complex organization systems and can increase the risk of data breaches. 

  1. Scattered Working Environments

As organizations now have both on-site and remote workforces, it becomes even more challenging to get an accurate view of compliance status. As a result, it has been challenging for most organizations to manage and monitor for risks and weak points.

Compliance Management Best Practices

Compliance management is a major process that requires a multi-faceted approach. You need to build a system that allows you to monitor all environments at the same time. Here are some best practices that you can follow for compliance management.

  1. Conduct Policy Audits

If your organization’s policy was written years ago, then most likely it needs to be added. Go through your organization’s compliance management policy, and take note of all the things that look dated. An audit will reveal gaps and weak points in your policy. Try to fix all the issues and you’ll be able to come up with a newer and stricter compliance management policy.

  1. Train Your Staff

Your staff needs to have a complete understanding of how they can maintain compliance throughout the organization. If your staff are your weakest link, then just making policies won’t solve anything. 

Training helps reinforce policies and procedures and helps you handle employee questions and concerns. You should also schedule training sessions throughout the year to make sure all the employees are up to date on compliance standards. 

  1. Continuous Monitoring and Due Diligence are the Keys

Data security and privacy legislation are some industry standards that want organizations to manage their cybersecurity standings. While privacy and security are two completely different things, they do go hand-in-hand.

The new privacy laws require businesses to consider “privacy by design” or “security by design,” and the use of continuous monitoring solutions. Businesses need to note that they should perform due diligence on third-party vendors. They can do this by using vendor bank account verification solutions.


7 Reasons to Switch to Compliance Apps instead of Cross-Border Manuals

Compliance is a word that’s thrown around leisurely in the financial services industry. Banks, financial institutions, FinTechs, and other businesses operating in the financial industry need to comply with KYC and AML regulations. For years, businesses have been relying on country manuals or handbooks that are jurisdiction-specific. These guidelines contain all rules and guidelines for businesses and financial services businesses. 

Handbooks are essential for legal and compliance teams, but you can also be a compliant business activity of wealth as asset managers, HR, Marketing, and even IT teams.

What Are Compliance Apps?

Compliance apps are tools for financial institutions that need to comply with KYC or AML regulations. AML and KYC directives keep changing frequently, so it’s hard for most financial institutions to keep up with them. They allow for faster compliance and decision-making and efficient knowledge sharing between internal parties, businesses, and other departments throughout the organization. 

Here’s why you should use compliance apps. 7 Advantages of Compliance Apps

1. Clear Guidance on Compliance

Compliance apps provide users with simple answers to confusing questions related to business activities abroad. The answers are visually pleasing and straightforward and provide answers for endless business scenarios. Compared to hand-held cross-country manuals and static text, compliance apps provide information in a much more consumer-friendly method. Compliance apps provide clear guidance on the information you require, which requires compliance time. 

2. Flexible & Scalable Coverage

Compliance apps can support the growing needs of businesses. With compliance apps, businesses can choose a variety of business scenarios and new countries and add as many users as needed to access the app. Compliance apps compared to country manuals can provide scalable information. Country KYC and AML compliance manuals can’t grow according to businesses. 

3. Immediate Answers Regarding Regulations

Compliance apps offer a user-friendly comparison between different cross-border scenarios on a single screen. It’s easy to find out answers to complex situations, which isn’t possible with country compliance manuals, and exploring cross-border situations often takes days. 

4. Compare Cross-Border Compliance Factors in Real-Time

Compliance apps users can compare compliance rules and regulations all over the globe in real-time without having to do tons of research. Easily find out where the circumstance best fits products and services. Cross-border country manuals can’t support exploring the comparison of scenarios.

5. Up-to-date Knowledge

By using compliance apps, banks and financial institutions can reduce the risk of missing out on important updates, and they’re automatically applied to the knowledge consumed by users on the app. If you compare this advantage of compliance apps with country compliance manuals, then these manuals need to be updated and distributed manually whenever any update comes in KYC and AML directives.

6. Facilitate Knowledge Sharing Internally

Compliance apps provide users with an increased chance of knowledge sharing among business teams with just a couple of clicks. Communicating with teams and sharing even the smallest of information becomes easy and quick. This can’t be done with country KYC and AML compliance manuals.

7. Answers Offered on Instrumental Level

Compliance apps offer business activities not for just one country, most of them provide insights on a product level, adding context and providing highly tailored guidance that all businesses and teams can benefit from. There is a certain level of complexity that country compliance manuals can simplify.

Conclusion: Advantages of Compliance Apps

Banks and financial institutions that don’t focus on compliance as much as they should tend to get fined. By using tools like compliance apps and online KYC verification software, banks and financial services businesses can improve their overall compliance process.


Building a Successful Digital Compliance Program

One of the biggest parts of completing digital transformation is by modernizing the compliance procedure. The digital compliance process should be in response to regulations set in place to prevent fraud, money laundering, terrorist financing, and so on. The customer Identification Program or more commonly known as KYC (Know Your Customer) is a major part of the compliance process.

It is common knowledge that traditional methods of complying with these regulations can be time-consuming, expensive for the institutions, and result in poor customer experience. A complicated and inefficient CIP(Customer Identification Process) leads to an increased rate of customer drop-off and application abandonment during onboarding. Customer trends are changing and with the rise of technology, customers demand fast, efficient, and secure onboarding processes. Every 10 seconds added to the application process is directly responsible for a 5% increased customer drop-off rate. Building digital compliance services can help your businesses in various ways.

That’s where the technological solutions come in. The right solutions like instant document verification technologies can help banks and other institutions streamline the process. It can also increase customer experience while making sure all guidelines are followed. To make the best out of these technologies, banks should follow best practices for digital compliance.

Strategy for Building an Efficient Digital Compliance Program

1. Build Separate Online and In-Branch Experiences

As banks focus on their digital banking compliance, they should also focus on re-defining the in-branch experiences. Customer preferences and customer expectations change based on the channel they are operating on and customers that operate online desire faster services in comparison to traditional banking. 

During a manual account opening process, banks hand out printed documents about the customer application, these disclosures are used in a PDF format by banks. When it comes to online account opening, a new tab opens for downloading the PDF disclosure of the application. This takes away the focus from the application page. Instead of doing this, banks should focus on building solutions that don’t take away customer focus from what they’re trying to achieve. 

While opening the account in the branch, the bank requires physical customer ID & address documents for verification. In a digital environment, most customers see this step as a barrier. Most customers abandon the application process instead of putting in the effort to submit digital documents. Now that the Federal Financial Institutions Examination Council (FFIEC) and other entities have allowed non-document verification, banks should look past documents. However, not using online documents for verifying customer ID can lead to an increased rate of fraud. This is a conundrum banks have to deal with. 

With third-party solutions like DIRO online document verification API, banks can build trust between customers that their personal information is safe. Also, instant document verification reduces the time significantly which in turn leads to a better customer experience. Technologies help in improving the process of digital risk and compliance.

2. Utilize Multiple Data Sources for Identification

To verify customer identity, which meets up compliance requirements, banks should look to leverage multiple data sources across the online account opening process. Usually, when applying for a new account, a user might be asked to provide information like name, date of birth, social security number, address, phone number, and email address. Banks need to utilize digital compliance services that use multiple data sources to cross-reference information.

Importantly, this automatic data comparison has to be behind the scenes without interrupting or slowing the customer user experience. DIRO verifies documents and cross-references customer data from thousands of sources.

3. Use Real-Time Data for Effective Risk Management 

Online banking is what the customers demand at this time. As banks roll out online account opening capabilities, they have to anticipate potential risks in the customer application approval process. Banks have to accurately assess risk to approve or deny applicants. 

To be able to do that, banks have to come across a range of data, including transactional data, social media, and more. This process can be automatic and occur in real-time, which helps both banks and customers. Customers love a fast and efficient process with as few barriers as possible and banks benefit from highly accurate and fast KYC compliance that reduces the possibility of fraud. Real-time data processing, reporting, and monitoring can improve risk management capabilities. Using real-time data for effective risk management is one of the best practice for digital compliance.

4. Encourage Greater Transparency with Digital Record Management

While digital channels may present compliance challenges. An online account opening allows record-keeping as opposed to an in-person account opening. For example, DIRO provides 100% proof of trust for verified customer documents and then places the documents on the blockchain. Documents that are placed on the blockchain are immutable and easy to maintain. Record management is invaluable for compliance purposes, as banks can provide auditors with highly detailed data.

Making Compliance Easier with Automation

Regardless of the numerous advantages of digital banking, financial institutions sometimes hesitate to develop digital channels just because there’s a lot of uncertainty around compliance. By combining the right kind of technology with a compliance strategy, banks can successfully build digital compliance that keeps up with CIP and other regulations.