Digital Age User Identification: European and Swiss Regulatory Perspective

Transcript

full all right thank you so much so we have Julie on stage now that's going to be talking to us about uh digital the digital age of age of user identification uh thank you for joining us I think this stage is yours thank you let's go around and close can you hear me well about this hot topic of user verification with all this Hassan Basel riding around travel Rule and like European Union verification I have one question to you before I start how many of you are obliged to verify users actually by law with regulation one two three four four okay and how many of

you will need also to verify counterparties of your users later as a part of travel rule oh yeah there are also participants that's good happy to tell you about how it works currently how it will work later on and how technology can help you to collect necessary data how to analyze it properly and how still to build the frictionless verification flows for your users let's start um do you already know how big is verification market last year it was um calculated as around 10 billion and it's forecasted to grow even further twice um

by the 2027. what does it mean for us I don't think that these numbers are actually relevant for our understanding how is it good for all business or bad but it means that Regulators are really really interested to see who is going to be verified how and what this data will be standing for if we speak about users verifications in crypto what do we have these days we have standard qhc we have this video identification and electronic kyc which is also popular in some jurisdictions I would say that this user identification overview is the basis where you start on boarding the customer and when you need to get their Finance

so with standard qhc I will show you later table how it works globally in European union and I will highlight how in Switzerland it looks like because Switzerland still stays a bit neutral to any type of hustle verification in Switzerland and their compliance part is extremely clear and I would say that personally as a provider for qhc I think that's Swiss regulator is our favorite one because we always know what shall we do our clients always know what they should do and the feedback is also very very transparent speak about electronic verification this is part that is going to be implemented in many countries soon like in Baltic

states in northern Europe they already have the spank IDs and it's even quicker to be verified they have sometimes even more trust instead of like verifying themselves in multiple exchanges and multiple wallets they still have their Bank IDs they click it couple of clicks showing the face and everyone is verified currently European compliance requirements looks like this so each and every country has some of their specifics like in Switzerland we need this emergency codes in any documents but also the problem with Switzerland regulation for instance if your clients are out of Switzerland they still need the somerset code but not every single document has the

semorset code and again how we can keep these customers and worded how what shall we do in that case luckily we have Mica that will be soon implemented in all the European Union and and this will be the harmonization approach that will help you to get one license and without her the passporting get their operation activities legalized in all countries you are operating in Europe we also have currently European anti-money laundering Authority that is controlling our activities and swiss technologically neutral approach where you are I guess get licenses by the way how many of you

are regulated by Swiss Authority let's have a look what we have this year after all these turbine times uh horrible news about FTX and some other how to say players in the market users do not feel safe say to not trust exchanges and this is one of the problem in crypto so if I put my money if I put my Assets in your platform how can I be sure that my money are not like used somehow by the company and with this kind of information and the background and users still somehow doubt that all crypto companies on

blockchain companies trustworthy luckily we have this regulation that helps us to build the trust between our users and the platform so right now they are implementing a couple of other requirements like travel rule this one is also a Hot Topic right now because this regulation will be implemented step by step in different countries in some of them like Switzerland it's already active which is good but there is a sunrise effect if I'm a Swiss crypto company but I would like to my users would like to transact with clients from for instance Taiwan then they don't have travel rules yet it

will be implemented soon or in UK which is will be implemented in September so how we can confirm that their identities verify that this is the same beneficiary and this is the question where I will cover in the next slides so right now I'm showing you who needs to comply with travel rule I hope you can find yourself there because actually all this travel rule all say that okay crypto is now legal it's not the asset that is like shady or someone don't know where it comes from and where it's go it's regulated as any bank account so it's obviously like getting driver's license so you now can drive actively whenever you want regarding this travel rule solution and

identifications of the user as a part of travel rule I'm showing you now the scheme what's happening between the exchanges so despite the fact that not each to the product force you to start verifying clients and trying to call the protocol to ensure that the clients have already identity the [Music] here is that the depending on the volumes of transaction you should do it like as a must or you can skip it by now if ATF travel rules says that it could be the transactions below 1 000 Euro you

can skip them and do not verify the customers but m Mica which is European regulation they say no you should spend a threshold and verify all of them you don't need passports you don't need IDs for the documents and their counterparties you need this imma screening and watch list chat to ensure that this is trustworthy user at the same time each exercise it looks a bit complicated but in practice it's very very easy approach because when the customer starts initiating the transaction the protocol already has a callback is this user already existing on the platform is this user verify and based on the

ongoing monitoring is this users not under sanctions or like criminal that's what we need and here is the map how the travel rule penetrates the market so sooner or later almost every country will be at the part of this requirement so when you need to find the travel rule solution or when you need to find an onboarding solution what's your shooting first um I would say it's always about global coverage even if you're planning to be regulated only in Switzerland if you don't need this passport thing and getting licenses everywhere you still need to think about potential Global

users who may come to the platform who may want to participate in European Financial market and in that case Global coverage and the ability to verify customers uh different ways including like nfcs including um IDs which are electronic ones but very very important another topic that is important to bear in mind when you speak about users identification this time is IML compliance because it's all about sanctions these days and the sanctions updated when I try to count the number of sanctions in both during last year it's the maximum number during the last

year there's sanctions are getting enforce more and more often and final part that is also interesting to discuss is this flexible integration because as I've mentioned the travel rule protocol will be imposed within the whole Europe and by like 2025 also Amic will harmonize all the requirements but still the protocols are different and even if you plan to have it inside your company even if you don't need a provider for this you still need to think that maybe one day it's easier to connect to the protocol to several protocols to harmonize all your pre-screening like um iPhone or phone email verification and then this full

kyc and transaction monitoring in one place what's next I believe that enhance Corporation among all European member states will be in place definitely we still have challenged that there is no Universal approach in terms of users identification about identification even this vsps and we will rely on adapting this protocols step by step I personally believe that regulatory requirements 45 will also take place so right now as I was showing a couple of slides before uh many companies still do not need to comply with uh verification requirements but

um now it seems that scripture is moving closer and closer to traditional Finance so one day we still film ourselves as a banking Market at the end and if you want to prepare to this It's always important to bear in mind that you may need a qacml policies and the relevant training for the employees regarding how to detect their illegal activities which kind of users you need to verify because it always can be risk-based approach combinated approach and you can build like based on the workflow Builders some logic how you are interacting with the customers and of course proper record keeping because what I noticed also with Regulators some

of them has this effect that they're looking at your past activities and even if the regulations is coming into the force like next year they can have a look at your activities this year and it's always a question about record keeping and Reporting in short that's what I wanted to raise the question to you if you have anything in mind you would like to discuss or to share your thoughts about the topic please don't hesitate to raise your hand I would love to hear your opinion or answer your questions thank you so much [Applause] wonderful we do have time for one last question if anyone does have one for Julia here today going once going

twice all right well Julia thank you so much thank you so much [Applause]