At the heart of financial transformations, CDI has emerged as an essential tool for banks to authenticate corporate entities efficiently and securely.
According to Encompass, CDI functions by capturing a corporate customer’s unique attributes and data electronically in real-time, establishing a robust digital identity for authentication purposes. This includes gathering specific attributes directly from the customer and supplementing them with information from third-party data sources, such as official records and commercial data providers.
By verifying the customer’s identity, incorporating the corporate structure, and identifying the corporation’s beneficial owners as mandated by jurisdictional regulations, CDI allows for seamless access to services without the need for repetitive documentation.
One of the primary applications of CDI lies in addressing stringent regulatory compliance requirements across jurisdictions. By standardising CDIs to include necessary regulatory attributes, banks not only enhance customer due diligence but also ensure transparent operations and support accurate financial reporting. This transparency is crucial for identifying malicious actors and preventing financial crimes, thereby safeguarding the financial system and upholding regulatory obligations.
CDI’s portable and singular digital identity is beneficial both within the bank and across various industry segments, serving multiple business purposes. This approach reduces customer service friction and facilitates the introduction of new banking services while ensuring adherence to regulatory compliance obligations.
While meeting regulatory compliance is paramount, CDI offers several additional benefits. For instance, it enables banks to manage access to sensitive data through technologically integrated systems that comply with privacy regulations. CDI provides granular, role-based access control, centrally managed across multiple internal systems. Furthermore, it ensures the integrity and authenticity of transactions through applications that utilise multi-factor authentication and public key infrastructure.
Additionally, CDI’s standardized attributes allow for secure, seamless interactions within complex ecosystems, supporting KYC onboarding and due diligence processes.
International standards like the Global Legal Entity Identifier (LEI) system provide unique identifiers for legal entities, simplifying ownership tracking across jurisdictions. Standards facilitate the implementation of KYC processes by ensuring reliable verification of beneficial owners’ identities, thereby promoting transparency and preventing illicit activities.
Automation of beneficial ownership identification processes through standards not only streamlines these processes but also integrates with technologies for real-time updates, enhancing security and ensuring data consistency.
Identifying a Ultimate Beneficial Owner (UBO) requires detailed information, including ownership and tax identity details, and decision-making authority. A CDI stores these attributes, enabling precise UBO identification across multiple bank business lines, thereby driving efficiency in the KYC onboarding process and ensuring compliance with global regulatory requirements such as GDPR, KYC, and AML.
By establishing robust CDI standards, banks can streamline the beneficial ownership identification process, reduce manual interventions, and improve the accuracy and reliability of ownership data, thus safeguarding the financial system against illicit activities.
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