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A Basic Guide to Know Your Investor | 2022


The wealth, property, and investment sector is coming under increased regulatory scrutiny as global financial markets surge. One of the most important stages in the client journey is customer onboarding. This is the first contact point between customers and investing service providers. The first impression sets the tone for the rest of the relationship that is why it’s crucial for both individual and institutional clients. Thus, a smooth and user-friendly onboarding process can be beneficial for organizations.

Criminals, on the other side, are increasingly targeting the investment sector. To control the possible risk that could disrupt operations, businesses must comply with regulatory obligations such as Know Your Investor (KYI), Anti-Money Laundering (AML), and due diligence. To avoid regulatory fines and assure legitimate client onboarding, investment companies are turning towards developing tech-powered identity verification services.

Know Your Investor Service – What it Entails?

KYI is a process of verifying investors whether they are those who they claim to be. Conducting KYI checks have been made mandatory for the investment firms otherwise they have to pay hefty fines. KYI laws have been introduced by the regulatory bodies to protect the investments of clients and keep fraudsters at bay. The investor verification service uses digital means to authenticate the investor in real-time. 

Know Your Investor Solution – Why Do Companies Need it?

People want to get benefitted from the digital world as much as they can. For this very reason, they have started investing their money in NFTs and the crypto industry. Fraudsters on the other hand are leaving no stone unturned to exploit these sectors for fulfilling their malicious intents. As per Statista, the NFT market has become a breeding ground for money launderers. More than a million dollars were lost at the hands of money launderers in the third and fourth quarters of 2021. These statistics clearly depict how important it is for companies to deploy online investor verification services. 

Different Methods to Verify Investor

The investor is usually verified by the company at the time of onboarding and at any time when required to prevent any fraudulent activity. The verification of the client is done by various methods which are as under:

KYI Due Diligence

The investor verification online ensures the authentication of the investor through all means of verifying methods. KYI due diligence is performed so that the investor and other linked networks fulfill the anti-money laundering measures as evident from Shufti Pro news. The procedure of KYI due diligence involves:

  • Associated Shareholders 

The KYI verification is carried out on the investment firms’ shareholders to check whether they are legitimate or a threat to the company. The shareholders are authenticated through different evaluations and assessments. 

  • Strategic Corporate Business

One of the crucial steps of the investor verification solution is the authentication of corporate businesses. It helps companies understand that the firms it is planning to invest in are genuine or a threat.

Biometric Verification

The investor is authenticated through biometric screening such as facial recognition in which the client is only required to scan their face and if approved by the system is ready to proceed otherwise declined to carry out any investments. Biometric screening is no doubt a more advanced form of identity verification and provides an additional layer of security as fraudsters can not mimic the traits of an individual. 

Age Verification

Another method to verify investors is the age verification process. It checks whether the investor is of the legitimate age to carry out investments. Conventional ways to check the age of the client have become obsolete now. Companies now verify the age of the client through robust automated identity verification solutions. 

Document Verification

It is really important for companies to verify the documents of the investor to ensure that they are legally authorized for the investment process. In the document verification, the client is asked to provide their legal documents which include bank slips and statements, utility bills, and other legal documents. 

Final Thoughts

Despite the global regulations and efforts made by the investment sector, fraudulent activities are still rising. This puts a dent in the company’s credibility. Customers always choose those companies to invest in where they feel safe. Thus, it’s the time for investment and other financial sectors to deploy robust know your investor solutions. For instance, many firms have started accepting investments like Shufti Pro funding, recently done by UPdata partners. Having an investor verification service would not only protect the firm from fraudsters but also prevent them from paying penalties and heavy fines. Moreover, these investor authentication services provide a greater user experience and build a positive brand image in the competitive world. 


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