Living in a digital landscape means facing an ecosystem full of threats, so there is a high chance of risk associated with the investors chosen by the companies. However, it is crucial to protect financial transactions conducted through digital means.
According to the analysis, after the outbreak of the pandemic, a loss of 990 million US dollars was reported from the victims of investment scams. It was recorded as a ten-time increased loss compared to the previous loss in 60 years in the United States. Therefore, the security of businesses from illegal entities becomes a priority.
A Brief Overview of Know Your Investor
KYI stands for Know Your Investor. The term refers to the method of validating the entity that is interested in investing in the company therefore before starting work, it is essential to ensure that the associating investor is not involved in any money laundering or terrorist funding act previously. The KYI process is similar to KYB and KYC but holds an additional step in which companies create a separate risk profile for the investor, which is entirely dedicated to it.
The significant advantage of creating a distinct profile is that it traces the source of its financing, along with ensuring the entity is legal. It also establishes a profile providing details on whether the investor is capable of working or not. It will assist companies in upcoming complications and ensure security regarding threats
Discover the Significance of Investor Verification Service
The investor verification service aims to assist companies with the following benefits:
- Ensure Financial Security.
- Reduce fraud and criminal activities.
- Prevent illegal money dealings and proceedings.
- Effective risk profiling.
- Maintain brand image.
- Provides satisfactory user experience.
4 Primary Steps of Know Your Investor Solution
Know Your Investor solution is required in today’s world, where everything evolves around technology. To Verify investors, there are 4 primary steps to be carried:
- The investors collaborating with the business are required to submit the business documents, including government-issued ID cards.
- The provided documents are verified.
- Screening tests of investors are being conducted against monitoring lists.
- Lastly, the verification result is stored in the consumer support office.
What is Investor Accreditation Verification?
Investor accreditation verification is a process of validating a business entity dealing with the securities of the companies to ensure that the securities are registered with the regulatory bodies and do not involve any illegal operations.
Investor Onboarding Measures
Verify Investor Background is a primary factor in the investor onboarding process. Here is a list of investor onboarding check processes to ensure the credibility of the business:
- Collecting data from the investor.
- Examine the data gathered.
- Listing risk scores
- Creating a draft report on the analysis
- Take the decision on whether to onboard the investor or not.
These onboarding measures assist a business in making wise decisions regarding the collaboration of investors while reducing risk threats.
Know Your Investor is the utmost process to protect business growth. The process involves the verification, identification, and monetization of the investors aiming to work with the organizations. The KYI assists industries, including real estate, fintech, health care, insurance, banking, etc. The KYI solutions reduce risk factors and improve business credibility, which ultimately enhances the businesses.
Faqs related to Investor Verification Solution
- What is the full form of KYI?
KYI stands for Know Your Investor.
- When did a business require an Investor verification solution?
Organizations require investor verification to ensure that the entity investing in the business is not associated with any risk factor.
- What is the difference between investor verification and business verification?
Business verification refers to the method of substantiating business identity, while in investor verification, a specific entity is analyzed to verify investor background checks to safeguard company financing.
- Is KYI compliance necessary for Customer due diligence(CDD)?
Yes, CDD compliance is the primary requirement in the Know Your Investor solution.
- How is KYI differ from KYC and KYB?
KYB and KYC ensure the legitimacy of the entity a business is working with, while KYI involves an additional step of creating a separate risk profile of the individual investing in the business.
- What are the main regulatory requirements to Verify Potential Investors?
The major regulatory requirements are:
- Financial Action Task Force(FATF)
- US legislated Federal Advisor Act
- UK Financial Conduct Authority(FCA)