Deloitte Develops Blockchain-powered Platform for KYC Checks

The Luxembourg branch of global accounting giant Deloitte has developed KYCstart (pronounced 'kickstart'), a new way to perform customer on-boarding using Blockchain Blockchain Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned.) In this sense, blockchain is immune to the manipulation of data making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tamper with. The Evolution of BlockchainBlockchain was originally invented by an individual or group of people under the name of Satoshi Nakamoto in 2008. The purpose of blockchain was originally to serve as the public transaction ledger of Bitcoin, the world’s first cryptocurrency.In particular, bundles of transaction data, called “blocks”, are added to the ledger in a chronological fashion, forming a “chain.” These blocks include things like date, time, dollar amount, and (in some cases) the public addresses of the sender and the receiver.The computers responsible for upholding a blockchain network are called “nodes.” These nodes carry out the duties necessary to confirm the transactions and add them to the ledger. In exchange for their work, the nodes receive rewards in the form of crypto tokens.By storing data via a peer-to-peer network (P2P), blockchain controls for a wide range of risks that are traditionally inherent with data being held centrally.Of note, P2P blockchain networks lack centralized points of vulnerability. Consequently, hackers cannot exploit these networks via normalized means nor does the network possess a central failure point.In order to hack or alter a blockchain’s ledger, more than half of the nodes must be compromised. Looking ahead, blockchain technology is an area of extensive research across multiple industries, including financial services and payments, among others. Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned.) In this sense, blockchain is immune to the manipulation of data making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tamper with. The Evolution of BlockchainBlockchain was originally invented by an individual or group of people under the name of Satoshi Nakamoto in 2008. The purpose of blockchain was originally to serve as the public transaction ledger of Bitcoin, the world’s first cryptocurrency.In particular, bundles of transaction data, called “blocks”, are added to the ledger in a chronological fashion, forming a “chain.” These blocks include things like date, time, dollar amount, and (in some cases) the public addresses of the sender and the receiver.The computers responsible for upholding a blockchain network are called “nodes.” These nodes carry out the duties necessary to confirm the transactions and add them to the ledger. In exchange for their work, the nodes receive rewards in the form of crypto tokens.By storing data via a peer-to-peer network (P2P), blockchain controls for a wide range of risks that are traditionally inherent with data being held centrally.Of note, P2P blockchain networks lack centralized points of vulnerability. Consequently, hackers cannot exploit these networks via normalized means nor does the network possess a central failure point.In order to hack or alter a blockchain’s ledger, more than half of the nodes must be compromised. Looking ahead, blockchain technology is an area of extensive research across multiple industries, including financial services and payments, among others. Read this Term technology. It introduces digital identities with the objective of onboarding customers just once to be used across several different platforms and organizations.

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The developers explain that in this model, KYC Added-Value Services Providers are regulated entities that are authorized to perform Know Your Customer (KYC) Know Your Customer (KYC) Know Your Customer (KYC) is the process via which the broker is verifying the true identity of its clients in order to comply with multiple regulations. KYC is used to assess the suitability of customers when it comes to anti-money laundering regulations, any type of financial fraud and determining whether they are potentially risky for the brokerage.In particular, KYC guidelines in financial services mandate that individuals make a cohesive effort to verify the identity, suitability, and risks involved with maintaining a business relationship. KYC processes are also utilized by companies for the purpose of ensuring their proposed customers, agents, consultants, or distributors are anti-bribery compliant. In an age of identity theft and myriad hacking, KYC has become a major emphasis by regulators.As such, banks, insurers, export creditors and other financial institutions are increasingly demanding that customers provide detailed due diligence information. These regulations had initially been imposed only on the financial institutions, having now extended to the non-financial industry, fintech, virtual assets dealers, and many non-profit organizations.Regulators Taking No Chances with Identities Regulated brokers in the retail industry are very stringent when applying appropriate KYC verifications after financial watchdogs worldwide have become stricter in monitoring their compliance with the procedure in recent years. Not only brokers use KYC, the procedure is also widely used by banks, and any financial companies that provide insurance or credit and require appropriate due diligence. Most major jurisdictions in the financial space mandate KYC requirements as well as all regulated brokers.The vast majority of these countries have adopted KYC standards as mandatory only during the past two decades. This has helped curb illicit behavior and has become a fixture of the industry. Know Your Customer (KYC) is the process via which the broker is verifying the true identity of its clients in order to comply with multiple regulations. KYC is used to assess the suitability of customers when it comes to anti-money laundering regulations, any type of financial fraud and determining whether they are potentially risky for the brokerage.In particular, KYC guidelines in financial services mandate that individuals make a cohesive effort to verify the identity, suitability, and risks involved with maintaining a business relationship. KYC processes are also utilized by companies for the purpose of ensuring their proposed customers, agents, consultants, or distributors are anti-bribery compliant. In an age of identity theft and myriad hacking, KYC has become a major emphasis by regulators.As such, banks, insurers, export creditors and other financial institutions are increasingly demanding that customers provide detailed due diligence information. These regulations had initially been imposed only on the financial institutions, having now extended to the non-financial industry, fintech, virtual assets dealers, and many non-profit organizations.Regulators Taking No Chances with Identities Regulated brokers in the retail industry are very stringent when applying appropriate KYC verifications after financial watchdogs worldwide have become stricter in monitoring their compliance with the procedure in recent years. Not only brokers use KYC, the procedure is also widely used by banks, and any financial companies that provide insurance or credit and require appropriate due diligence. Most major jurisdictions in the financial space mandate KYC requirements as well as all regulated brokers.The vast majority of these countries have adopted KYC standards as mandatory only during the past two decades. This has helped curb illicit behavior and has become a fixture of the industry. Read this Term) procedures for users who want start relationships with various businesses such as banks, insurance companies, funds, asset servicers, and more. Customers directly control to whom they share their personal information and documents, keeping track of these authorizations using smart contracts.

Thibault Chollet, Blockchain Leader at Deloitte Luxembourg, explains: “With this proof of concept and related ecosystem, we demonstrate the benefits of using Blockchain and smart contract to considerably reduce the costs of one of the most important burden of our institutional clients: KYC and customer on-boarding."

“Providers can now rely on specialized entities to delegate and mutualize the KYC and AML/CTF procedures, reducing the cost of both onboarding and ongoing monitoring,” continues Maxime Heckel, Director at Deloitte Luxembourg specializing in KYC services.

He adds that Deloitte will start providing 'KYC as-a-Service' to financial institutions as of mid-2017. KYCstart will be one of the proposed counterparty on-boarding channels for the service.