Needed: A better KYC process
Shyft Network, the blockchain KYC AML network, has signed up with their first group of trust anchors. The trust anchors will work with the private testnet, with Shyft releasing their public testnet later in 2018.
‘Know Your Customer’ (KYC) and ‘Anti-Money Laundering’ (AML) processes are due for major improvements and have bedeviled cryptocurrency for years. In 2017, companies with more than US $10 billion revenue spent US $150 million on KYC compliance on average, and to little purpose. AML controls haven’t stopped fund transfers to terrorists, cartels, or sanctioned states, as Shyft Network shows in this report.
The KYC process takes time because each organization must separately collect KYC data from their consumers. As cross-border transactions become increasingly common, organizations need to trust KYC data originated in another country, which is easier said than done. KYC regulations and what constitutes meaningful KYC verification varies by country making interoperability is lacking.
The other major challenge is that companies collecting KYC data store a large amount of sensitive information about their consumers. This makes them easy targets for hackers who are increasing their targeted attacks on these centralized data repositories. Hackers made off with nearly 2 billion consumer records in the first half of 2017, alone.
Shyft Network is trying to solve both these issues with their blockchain KYC / AML network by decentralizing KYC. In their network, organizations holding KYC data verify consumers, while other organizations use that as proof. Their blockchain KYC / AML network reduce the KYC compliance effort and cost while eliminating the data breach threat. They plan to achieve this by leveraging KYC compliance effort already expended without storing consumer data centrally.
Advantages of Shyft’s blockchain KYC AML solution
Shyft Network uses trust anchors, which are crucial to the success of the network. They are organizations that have already spent significant effort and collected massive KYC data at a high cost. They also have complete custody of their consumers’ identity data, which they must protect from hackers.
Trust anchors utilize their existing KYC data and record the KYC status of consumers on the Shyft blockchain using their digital signature. They won’t record their consumers’ sensitive identity information on the blockchain, because that would make that information public. Rather, they will record a transaction on the blockchain that they have verified the KYC of the consumer.
This transaction is now tamper-proof due to the immutability that blockchain promises. Any other organization requiring KYC proof of this consumer can get it from the Shyft blockchain, hence they save valuable effort. The trust anchor now no longer needs to retain the sensitive identity information of consumers, and can destroy it.
Shyft Network has signed up EnStream, BDO, Paysafe, and Aion as their first group of trust anchors. They have also partnered with Polymath, a blockchain platform for security token creation. Headquartered in St. Micheal, Barbados, the company has 1 billion data points across industries in their private testnet. The operation documentation including sign-up, attestation, and the workflow is also ready for the trust anchors to use the private testnet. Shyft foresees that their network will help a range of industries such as financial services and supply chain, besides governments and NGOs. Their services are much needed.