In today’s fast-paced world, investor verification services are critical in authenticating their reliability. Financial institutions regularly implement preventative measures to protect transactional records. A report states that in 2022, the US institutions reported a monetary loss of $990 million through investment scams. The investors are regularly involved in money laundering and terrorism financing fraud. To overcome the impact of investor fraud in financial markets, institutions need to implement protective measures, such as know-your-investor. 

What is Know Your Investor (KYI)?

Know Your Investor is the process of authenticating the identities of investors before onboarding them. Every business relies on investments from an entity to expand its business operations. Firms must ensure that they investigate and verify the investors before acquiring their services to determine whether the investor is genuine or a scammer. Investor verification services are part of the customer’s due diligence process. It ensures that the investor doesn’t have a risky profile and contains the required market knowledge to mitigate the risks of financial fraud. Know your investor service incorporates artificial intelligence and machine learning solutions to overcome penalties and ensure a streamlined customer onboarding experience.

Why KYI Is Compulsory For Businesses?

KYI solutions are crucial for businesses as they provide a detailed understanding of financial history and related risks associated with the investors, protecting businesses from investing in unauthorized decisions. 

• Improve Relationship Building 

Know Your Investor solutions allow businesses to make efficient and authorized connections with investment bodies. By getting a complete picture of investor’s preferences and financial backgrounds, companies can improve the trust between their operations and investors.   

• Regulatory Compliance 

Investor verification services ensure complete compliance with KYC and AML regulations because they undertake the verification process that obeys these laws. This provides businesses with an auditable way to validate investor’s identities while following the required rule which protects them from the threat of financial losses and legal penalties.   

• Risk Assessment

KYI services provide businesses with the service of identifying and mitigating threats related to investor’s identities. It provides a detailed assessment of investor’s financial histories and informs businesses about the risks associated with the investment entities. Businesses can double-check their investment decisions before committing to a certain body to prevent financial risks.

AI-Powered KYI Solutions

The KYI services incorporate artificial intelligence algorithms which are capable of identifying the investor’s background in terms of international watch lists by processing a particular code to authenticate their identity. The AI model examines this transactional information of the investment entity and saves the results in the company’s database to verify their authenticity. These services enhance the KYI system by providing monetary equilibrium while reducing the threats of risky investments. 

Steps of KYI Verification

• Collection of Personal Data

In the first step, the investor provides personal information including their name, email address, SSNs, and passport details. 

• Identity Verification

The investors are asked about their past investment experience, academic records, and total assets. It helps businesses validate their identity.

• Evidence Provision    

The investor must provide proof of their financial standing and asset details to ensure their authenticity.   

Functionalities of KYI

• Accumulation of Data

The KYI solution collects information from various sources to verify investor’s identities. These sources include their fiscal deals, social media, risk profiles, and financial relations, which provide a comprehensive profile of the investors. 

• Risk Profiling

Using the AI algorithms, KYI services provide a detailed overview of the investor’s risk profiles. It highlights the activities that the investor was involved in the past. By understanding the investor’s risk profiles, businesses can modify their strategies and hire a more authentic investor if risks are observed.

• Investor’s Performance Analysis

KYI services analyze the investor’s real-time performance, enhancing the business’s ability to assess the investor’s investment portfolios and providing more authenticity to the business’s investment decisions. 

• Detailed Analytical Report

Know Your Investor Solutions provides a detailed analytical report of each investor individually. It shows all the details of investor’s financial activities, enabling businesses to make streamlined investment decisions while protecting themselves from money laundering and identity theft risks.

Advantages Of Using KYI Solutions

• Streamlined Decision-Making Process

By using KYI solutions, businesses get detailed information about investors’ activities, allowing them to make strategic decisions. They can get a better understanding of which investors to hire for their business based on their industry-specific knowledge. 

• Mitigate Illegal Transactions

The most prominent feature of using KYI services is the prevention of illegal transactions. It protects the companies from illicit monetary transactions and money laundering. These services assist businesses in using advanced security protocols to fight fraudulent transactions.  

Final Thoughts

Incorporating know-your-investor service in financial institutions enhances the decision-making process. It ensures protection from illegal transactions and investment fraud. These services improve the relationship building of businesses with their investors, which ensures secure transactions and investments. KYI uses AI algorithms that provide detailed information on investors,  improving business operations.