Many people may be unfamiliar with the term KYC; there is little reason for those outside of the regulatory or financial industries, or those not involved with investment or specific technologies (such as ICOs), to be aware of it; nevertheless, most people will, at some point in their lives, be put through the process. Around 70% of the adults in the world have a bank account, and that percentage is thankfully increasing as new technologies and developments promote financial inclusion and independence. When opening a bank account, a customer has to provide information, which the banks or building societies etc. will use to verify their identity and their eligibility to open an account; this is KYC.
By carrying out these checks to comply with KYC regulations when onboarding new customers, companies, and the people using their services, can be reasonably sure that the people they are dealing with are genuine and not criminals. It allows the financial infrastructure that we have in place to operate in relative safety. Of course, no method of conducting KYC will be perfect, but the measures in place ensure that a lot of criminal activity, which would otherwise have a huge impact on the financial services, is stymied.
Unfortunately, the process of complying with KYC regulations is often inefficient in both the amount of time it takes, its cost, and its repetitiveness.
Documents have to be handed over to financial institutions and then need to be given to third parties for checks and approval. These checks have to be carried out each time a person wants to use a new financial institution’s services (banks, exchanges, etc). Whilst this wasn’t overly onerous for the average person looking to open a new bank account, when ICOs began to become popular, the need for KYC in the crypto space became widespread, and investors were stuck having to fill out the same forms and wait up to days or even weeks for their KYC checks to be completed. Not only this, but the cost of conducting so many KYC checks were costly for companies that outsourced it, and legally dangerous for those that did it in-house. It is not just in the crypto and blockchain ecosystem that these checks are problematic; anyone looking to invest or transfer money in a variety of ways or companies suffers the inconvenience.
For the companies and businesses involved, KYC regulations bring another problem - the danger of cybercrime. As financial institutions are required to store user data, they become a tempting honeypot of personal information for hackers to crack into, which will not only cost them financially as they receive fines and other consequences for losing customer data, but will also hurt their reputation and likely cause them to lose business.
Blockpass was designed and developed to solve these problems. By acting as a shared KYC compliance platform between all partners - an easy and efficient on-boarding portal - the Blockpass KYC Connect solution removes the need for multiple KYC checks to take place, reducing it to a single KYC compliance check. Once a person has their Blockpass identity, they have instant one-click access to any merchant in the Blockpass ecosystem. There are already a number of merchants using Blockpass, including Ethfinex, GlenBit and Tokenomica, and as the number of merchants increases, the time and effort saved for the user increases proportionally. Similarly, as more and more users begin to create their Blockpass identities, merchants in the Blockpass ecosystem gain access to increasing numbers of pre-verified users, ready to be instantly on-boarded, with the cost of verification potentially dropping beyond even the price Blockpass charges currently - which is itself cheaper than traditional alternatives.
It is the future goal of Blockpass to develop methods of carrying out KYC which will enable total user privacy whilst also complying with KYC regulations. Work being carried out in conjunction with the Blockpass Identity Lab at Edinburgh Napier University is spearheading the charge to develop privacy-centric technology. When these methods are fully realised, it will allow users to verify their identity without revealing any personal information, removing the need for companies to store sensitive information and simultaneously reducing their risk and removing the honeypot target that is so tempting to hackers. As companies are being increasingly fined over data breaches or leaks, this represents an incredible step forward in safety and security.