Risk and reward

In an increasing unpredictable compliance environment, Trulioo is giving companies confidence and control of their IDV. It’s creating new business opportunities in an uncertain world, says Hal Lonas

Whether you’re a financial institution, big corporate or SME, staying on the right side of compliance when it comes to screening new and existing clients and suppliers is becoming increasingly hazardous, especially if you operate in multiple jurisdictions.

It’s not helped that since the sanctions curtain came down on Russia, governments opposed to its invasion of Ukraine have been moving the regulatory pieces at different speeds across the geopolitical board. What looks like a legitimate business relationship one minute could prove a toxic mistake the next.

At last count (May), there were, for instance, 148 Russian-linked entities and 1,255 individuals whom the UK government alone had made subject of asset freezes. That included manufacturing companies, research institutes, banks and insurers, among others.

Breaching financial sanctions in relation to any one of those carries a maximum prison sentence of seven years or a fine (or both) – not to mention the reputational damage of being publicly excoriated for indirectly supporting ‘Putin’s war’. With the economic thumbscrews being applied to major international companies and smaller entities alike, banks could perhaps be forgiven for taking a low/no-risk approach to onboarding SMEs, especially as they have historically been more expensive to service, anyway.

Hal Lonas, chief technology officer for global identity verification (IDV) platform Trulioo says that needn’t be the case if they let a third-party specialist pipe in the technology that ensures real-time and comprehensive know your customer and know your business verification – in its case, drawing from both structured and unstructured data way beyond the reach of most internal compliance teams.

Trulioo’s data comes from 450-plus data sources in around 195 countries, and, thanks to the company’s recent acquisition of HelloFlow, it can now be offered to customers with a no-code tool so they can bespoke how that information is used in-house, further reducing the cost of customer acquisition.

HelloFlow’s no-code, drag-and-drop solution for customer onboarding, will dovetail with Trulioo’s existing proprietary tools – GlobalGateway, eIDV, KYB and DocV – to assist in both individual and business ID verification to provide a single, holistic IDV platform aimed at saving financial institutions time, money and, potentially, penalties. So, far from retreating from sections of the business community that might have been seen as too difficult to serve because of KYB limitations, the technology can unlock opportunities, says Lonas.

“More and more, the smallest company looks the same as the biggest company; you need to know where they’re doing business, the problems that they’re solving,” he says.

If financial institutions can overcome the onboarding hurdle, then digital enablement will drive the conversion of that business to them.

“A lot of financial institutions looked at SMEs before and said ‘do I want to do business with a smaller company? Is it worth the investment to get them on board?’,” says Lonas.

“Now, with that particular friction point going away, they can look at SMEs as the new greenspace opportunity. With onboarding costs lower, they can afford to really serve SMEs with a much wider range of solutions.”

A tricky balance:

If they can reduce the cost of compliance, banks might look more favourably on SMEs

Risk&reward

The Russia-Ukraine conflict has added to the pressure that Trulioo had already seen building on banks following revelations contained in the Panama Papers and, later, the Pandora Papers, which exposed the criminal and tax-evading practices of some of the world’s richest, most famous and powerful individuals.

Originally released in 2021, further investigation of the Pandora Papers by the International Consortium of Investigative Journalists, recently revealed that eight executives at five of Russia’s biggest financial institutions – Sberbank, Alfa Bank, VTB, Gazprombank and VEB – had already taken advantage of the opaque nature of the offshore financial system to store their wealth.

“Many businesses underestimate the task of ensuring that those they are onboarding aren’t fraudsters, money launderers,

No place to hide:

The technology is closing in on beneficial owners

terrorist financiers – or, now, linked to Russia,” observes Lonas. “They think they can do it themselves, then find out it’s much more sophisticated than they thought, in large part due to the shifting nature of the regulations.

“Even if they understand it this year, next year it’s a whole new game, as it’s a very rapidly evolving space. With the political landscape these days, and the additional scrutiny on who you’re doing business with, there’s just that much more.

“The identity and verification (ID&V) problem gets exponentially more difficult, the broader the geographic area a firm wants to do business in. If they’re confined to one region or country, it’s bad enough. But as soon as they tackle two, three countries, or several regions, it becomes much more complicated because regulations and sources of information change, country-by-country.

“They have to become expert at pulling this information from these different jurisdictions. And, given the current scrutiny around who the ultimate beneficial owners of businesses are, they must also combine knowing whether a business is legitimate with identifying the people behind it, whether they are legitimate operators and where they are located.”

Outlining how HelloFlow can help in this scenario, Lonas says: “Previously, we brought powerful intelligence to our customers, but had to leave them to piece components together and build specific workflows and actions around them. HelloFlow allows us to build very simple to very complex workflows, to automate those checks on businesses and individuals.

“We’ve given some early demos because, as an agile development shop, we want to get feedback from customers and prospects so that, by the time of the writing new code. That’s pretty revolutionary,” says Lonas.

The strong pre-release interest that Trulioo has seen in the product would indicate that companies are both increasingly aware of how worldwide developments will impact ID&V, and of the need to ensure that, by outsourcing the data piece, compliance doesn’t distract them from delivering new products and services for customers.

“We’ve discovered there are a tonne of use cases, even among the biggest customers for tweaking and fine-tuning their onboarding steps,” says Lonas.

“Customers are interested in an automated workflow for things like A/B testing to refine their solutions in terms of forms, order of events, etc. Instead of having to assign a whole development team to take four months to develop that, it might take them an afternoon to get it live.

“It’s a question of companies asking ‘where do we want to spend our time as a business?’. When businesses look at how competitive the environment is, do they want to spend developer time and resources to get to market with a product in a couple of months because they’re building something compliance-related? Or would they rather get there sooner by outsourcing it? I think the decision is pretty clear.”

A lot of financial institutions looked at SMEs before and said ‘do I want to do business with a smaller company? Is it worth the investment to get them onboard?‘ Now, they can look on SMEs as the new greenspace opportunity

general release, we’ll know we’ve built the right thing and that customers will love it.”

The new workflow tool will let companies build bespoke solutions with very little or no code, via a drag-and-drop interface that allows them to choose from data sources using specific criteria.

“Once they’ve discovered the individuals behind a business, they can also then conduct an identity verification – again, simply by dragging and dropping that component – and then overlay the whole thing with their risk tolerance, setting up flags or parameters to alert them in certain situations. It will also enable clients to flow that data into other tasks they want to complete downstream, like linking into a CRM system, but without

For Trulioo, too, the added heft of HelloFlow could be a game-changer.

“We’ve been very mature in the identity verification (IDV) market for several years now,” says Lonas. “Our GlobalGateway KYB product is in very high demand and improving by leaps and bounds. [But] HelloFlow brings higher-level orchestration to the platform for the first time.”

And it comes at just the right moment as regulators react to recent events. However, as Lonas points out, the rules will never be static; the quest for control and visibility never complete.

“Banks either have to deal with all this themselves or find trusted partners like us to work with,” says Lonas. “It’s a case of building that bridge to the future.”