According to estimates by the Financial Action Task Force on Money Laundering, money laundering could be worth anywhere between $590 billion and $1.5 trillion worldwide and is considered a major threat to global economic stability. In the UK, the problem is thought to be worth as much as 2% of GDP.
Money laundering is the process of obscuring the source of illegally obtained funds through a succession of transfers, typically originating from drugs, prostitution, people trafficking, arms dealing, black market goods and corruption. It has prompted a series of European and UK legislation ensuring financial service providers take proper measures to validate the identity of their customers and investigate any unusual account transactions.
Experian has introduced an online scoring-based consumer identification system that enables FSPs in realtime to authenticate the identity of the consumer prior to opening a bank account or selling a product. E-identity is already in use in the retail credit sector where it achieves a higher than 90% success rate in identifying fraudsters.
The service removes the need for current manual paper based methods of identification such as presenting passports, driving licences or utility bills, which can be fraudulently altered and are not reliable proof of true identity.
E-identity confirms not only that a person exists but also that the consumer is who they claim to be and provides a rapid authentication solution for remote channels - such as the Internet or phone - enabling financial service providers to conduct their online business with greater confidence.
The system references extensive public and proprietary data sources to 'score' the authenticity of the consumer and meets new money laundering guidelines requiring financial institutions to adopt a ‘risk based approach’ to customer identification, dependent on the level of money laundering risk within both the product and channel of introduction.
It also ensures that the vast majority of consumers will be rapidly approved for financial service products because they can be easily recognised through their genuine financial history. This allows an organisation’s underwriting resources to be targeted on suspect cases such as individuals who possess a very limited financial history for their age or profile and who cannot be confidently identified through public records.