The investment scams have been increasing and taking every state and region under them. For the latest update, Australia, a highly developed and mixed economy country, has fallen victim to the most significant investment scams. The reported number of losses includes $30 million AUD.
The major loss created a sense of concern among the business community to take appropriate measures to prevent such crimes before the business industry faces massive destruction.
What Does Know Your Investor Mean?
The Know Your Investor refers to the process of validating the investor’s identity with the assistance of software designed to collect, analyse and manage the details of the investing entity. The KYI method works by creating a separate profile that is solely dedicated to the entity, which helps in identifying the risk associated with the investors and ensuring strict compliance with the Financial Action Task Force(FATF) and other regulatory bodies.
It holds immense significance in the finance sector. KYI is responsible for dealing with risk profiling and complicated ownership structures. It helps companies make wise decisions and evolve the ecosystem.
Proficiency of Know Your Investor Services
Listed below are the proficient investor verification services:
- Offers legitimate onboarding of investors.
- Documents verification is executed within seconds.
- Money Laundering Reporting Officers (MLROs) are appointed for accurate investor verification.
- KYI provides strong risk prevention.
- Adhering to all legal authority rules and regulations.
- Successful approach in mitigating fraudulent activities.
- the KYI process can be tagged as a reliable verification, identification and monetization method.
A Quick 4-Step Approach of Investor Verification Solution
To ensure qualified investor verification, the company should observe the following steps:
- Investors register their information, including all official documents i.e., government-issued ID cards, passports, driving licenses, etc.
- The dedicated Money Laundering Reporting Officers(MLRO) validate the registered documents.
- A screening test is conducted to detect possible risk factors.
- Decision-making regarding the investor is developed, and the results are stored in the client’s back office.
Types of Investors KYI Verifies
There are multiple categories of investors playing a vital role in the business industry while handling the matter of companies. Therefore, verification of all investing entities is crucial and should be conducted properly. Furthermore, is a list of investing bodies KYI verifies.
- Accredited Investors
Accredited investors are legal entities who are permitted to trade securities that are not registered with financial authorities. They are eligible for trading access by fulfilling any of the requirements. i.e., Income, assets, professional experience or governance status. Accredited investors are qualified for investing in complicated securities.
- Sophisticated Investors
The term refers to the entity that alone or with its representative has enough knowledge and exposure to financing and business dealings that the investors have the ability to evaluate the risk score and standard of the proposed investment. They are also termed as the highest net-worth investors who are eligible for various gains and opportunities.
- UBOs or Business Shareholders
UBO refers to the ultimate beneficial owners who hold a share of 25% in the company and own the right to vote. They are not the direct owners of the enterprises but hold a position on whose behalf the transaction is carried out. They are also termed as the shareholders of the companies and are involved in all financial-related matters. Due to the involvement of money dealing, it is essential to verify the company’s UBOs.
- Company Directors
A company director is an ordinary entity who is appointed to manage the company’s business and concerns. Every firm contains at least one director to look after the business affairs. They are accountable for managing day-to-day activities regarding financing and other organizational matters. However, before transferring all the responsibility and credentials of the company it is significant to ensure that the directors are not part of any illegal operation previously.
Summing Up
The investor validation solution has made the process of identifying the qualified investigation verification easy with the benefit of verify investor background and investor onboarding. The validation of ownership structures, ID documents, bank statements, sources of funds, and registration of shareholders creates credibility among the businesses.
Know Your Investor Process serves investment firms, banks, crowdsourcing platforms and crypto markets on a large scale based on their need for security. The expert MLRO and reliable onboarding with real-time verification are all a business asks for.
