Last Updated on April 18, 2024 by Ali Hamza
In the digital era, the investment industry is experiencing challenges in the investor onboarding process. Securing the investment procedure is crucial for organizations to attract investors across the globe. Usually, the first interaction between the investor and the company is the investor onboarding procedure. If the investor verification services are weak and have loopholes in the security protocols, it sends a negative message to the new investors because they feel nervous about investing. Cybercriminals can take over the system through sophisticated hacking techniques and sabotage the integrity of the system. Applying the investor verification services is a powerful approach that also ensures compliance with KYC/AML regulations.
Table of Contents
What is Accredited Investor Verification?
In the financial sector, small enterprises and startups must authenticate the identities of any investor that they want to onboard, specifically to safeguard the corporate investments. Execution of KYC checks, to check financial exchange records, monitor market trends, and origin of funds of investors to discourage fraudsters.
Investor verification services guarantee all stakeholders that they have relevant experience and security for sustainable business development.
The financial institutions, venture capitalists, and investment industries have privileges and special rights due to their high net value, and shares in securities. They have such amenities but organizations must perform investor verification services before forming business partnerships. The aforementioned characteristics only exempt them from fees and certain restrictions.
Investor Verification Services: Working Mechanism Behind the Investor Verification
Execution of investor verification software can vary in different jurisdictions. However, the general outlook of the process is as follows.
- The system guides the investor to display a government-issued ID card in front of the webcam for an in-depth investor verification
- The latest OCR technology captures data from the documents and securely stores them in the organization’s database
- The investor verification services cross-check the data against thousands of watchlists to catch any highly risky entities and discourage their fraud attempt
- Completion of the investor verification procedure generates final verification results for the genuine investors
Investor Verification Services: Listing the Acceptable Records for the Authentication
Some records that are acceptable during the investor onboarding process, for the requirements of investor verification services, are listed below. Templates of the following documents can change depending upon the country and national language but the integration of artificial intelligence and machine learning technologies enables the software to process a massive inflow of data without lowering the quality of verification results.
- Records from all the stakeholders
- Relevant data showing an association
- Proof of address (POA)
- IDV documents
- Evidence of a complete investor onboarding process
Investor Verification Services: Who Can Benefit from KYI Services
People who are suitable for the KYI services are below.
- All shareholders of the relevant institutions
- Private Equity Firms (PEFs)
- Top management members of the organization
- Users having a high net worth
Investor Verification Services: Looking into the Quality of Service (QoS)
Implementation of investor verification services requires a lot of research for reliable, results. The investor verification process must be foolproof, dependable, and confidential. These kinds of features are important to safeguard sensitive data that hackers want for exploitation. They can do both financial and reputational damage to the entities.
Criminals always want to exploit the security protocols to get their hands on legal funds and legalize their black money. For example, hackers use chargeback fraud to hide the source of illicit money, by flowing it through multiple organizational structures.
Investor Verification Services: The Contribution of Securities Exchange Commission (SEC)
There are several objectives behind SEC Acts but two main purposes are below. Investors must be mindful of them before making any important investment decisions. Reducing terrorism, identity theft, and money laundering cases can be achieved through such approaches. The following standards must be followed so that no entity violates the rights of any other investor before or after the investor verification services.
- Every investor must go through the registration process with the relevant organization and submit financial data for authentication
- As per the SEC requirements, the information must be original to guarantee secure financial exchanges
Concluding Remarks
The investment industry must make a significant effort to make incoming investors feel safe about investing in the company. The danger of bad actors and cyberheists will always be there but it can be easily tackled by implementing an investor verification solution. The company must upgrade the security system at regular intervals to close any loopholes in the security measures and adhere to global regulatory requirements. In the end, it makes sure that investors have a positive experience with the investment industry.
The latest investor verification services are a progressive approach for the investment sector that becomes more powerful, due to the integration of artificial intelligence and machine learning algorithms, to generate quality results.
