Sydney firms Kyckr and Identitii.com back blockchain to fight terror finance

Rage Review : Two small companies in Sydney, Kyckr and Identitii.com, are considering blockchain technology to help banks fight international money laundering crimes and terrorist financial attacks. Kyckr has a unique method to verify the physical identity information of global banks in real time. Regulators will fine companies that do not comply with KYC regulations and anti-money laundering laws; Identitii.com has blockchain-based token tracking technology that can verify the information of both parties in payment transactions in real time, making the banking system safer and having a global impact.

Translation: Nicole

Two small Sydney-based companies are advancing blockchain strategies to help banks combat international money laundering and terrorist financing.

The two companies, one of which is currently pursuing an initial public offering (IPO), have unique ways to verify the physical identities of global banking correspondents in real time.

IPO candidate company Kyckr provides users with real-time access to information on 153 registered companies around the world.

This information can be used by banks to fulfil their obligations under Know Your Customer (KYC) rules, which force them to obtain the identity of each customer.

Kyckr CEO David Cassidy said he believes his company is the only one of many KYC tool providers in the world that wants to build a blockchain network with the goal of creating a corporate identity that can be accessed in real time.

The Bank for International Settlements (BIS), which uses blockchain technology to distribute data based on a unique identifier for each transaction, was left blank in a recent report on money laundering and combating terrorist financing.

In the final report of the BIS (Bank for International Settlements) committee on payments and market infrastructures, there was a withdrawal from correspondent banks due to rising costs and uncertainty for remote customers, and the purpose of conducting legitimate audits was to meet regulatory compliance.

Huge fines

Withdrawals from correspondent banking services come with hefty fines, which regulators impose on banks that fail to comply with KYC regulations.

In the past four years, the following institutions have been fined for non-compliance with AML and KYC regulations: HSBC $1.9 billion, JPMorgan Chase $1.7 billion, Standard Chartered $340 million, Clearstream $152 million, Barclays $72 million, Standard Bank £7 million, EFG Private Bank £4.2 million, Bank of India Hong Kong $1 million and MoneyGram $459,000.

The BIS committee found that there is no uniform standardization of the type and format of information across different KYC tools, and that there is no requirement for a unique Legal Entity Identifier (LEI) code for Universal Access, nor is there currently an appropriate facility in place.

Cassidy, who is on tour this week trying to raise $6 million in funding, has a company operating in 80 regulators around the world, all with the goal of giving banks instant access to consumer information.

David Cassidy

“KYC tool vendors such as Clarient, kyc.com and SWIFT mentioned in the BIS report say they can provide a real-time view of consumer information, but in reality they cannot,” Cassidy said. “They can only provide a real-time view of consumer information from the information they store. The problem is that this information is not real-time from compliant sources that have the rapid global dissemination speed required to meet regulatory requirements and meet bank customer KYC obligations.”

Requires step change

Cassidy, who has worked for Associated Press Holdings for many years, said he was not surprised that the BIS omitted any reference to blockchain.

“It doesn’t surprise me that blockchain isn’t cited,” he said. “The regulatory world is catching up to the technology world, and it really takes a step change for regulation to catch up to technology.” “I think blockchain standards will exceed the standards in the BIS report — blockchain will become part of everyday business.”

A second Sydney company working to help banks meet their KYC obligations is Identitii.com.

The company has blockchain-based token tracking technology that can verify the information of both parties in payment transactions in real time.

The internet startup is poised to have a global impact as the services it offers (also mentioned in the BIS report) can make the banking system safer.

Ben Buckingham, vice president of strategy and operations at Identiti.com, said his company's product addresses the information-sharing issues recommended by BIS.

The BIS report said one of the barriers to information sharing is national data privacy laws that vary between countries.

Identitii.com tokens can be used to carry the LEI, in line with BIS recommendations that LEIs be used to carry payment information between banks.

Buckingham said the Identitii token could serve as a new messaging system for payments.