Investor Verification Service – A Need of the Digital World

In today’s technologically advanced world, criminals are embracing sophisticated means to achieve their nefarious goals. They make use of financial firms and digital enterprises to get access to accounts, take advantage of free services, and transform their unlawful earnings into white money. Knowing who to interact with in the financial as well as non-financial industries is critical before developing relationships with corporate and individual investors. Because there is a possibility of criminal activity, it is critical to do KYI (Know Your Investor) procedures to verify investors through their personal details, sources of money, and business profiles. 

Investment fraud has become the most common scam around the globe, despite stringent laws and regulatory restrictions. This form of fraud is expected to expand by 50% every year. Due to the rise in investment scams, it’s becoming a hot topic of discussion, as both organizations and individuals need to be aware of the dangers. Investors, on the other hand, are rushing to online platforms and spending on digital schemes. Thus, an investor verification service has become a need of the hour to tackle such heinous crimes.

Types of Investors

Accredited Investor

As per the SEC, an investor may make investments without having a license or authorization from the SEC. Crowdfunding, private placements, hedge funds, and equity are all available to authorized investors, but not to non-accredited investors. Thus, such investors appeal to most businesses because they may assist them in investing in unregistered schemes. To put it another way, accredited investors’ primary goal is to help businesses finance their operations by spending money on securities. However, by avoiding the SEC’s business registration criteria, one can potentially make a great profit and save a lot of money on filing fees. Cointree is a secure online platform for buy bitcoin and storing cryptocurrency.

Qualified Investor

A qualified investor’s success is reliant on the location in which they work and the current state of the investment agreements. To be clear, such an investor is a legal person that is permitted to engage in private securities, capital funds, placements, and hedge funds via confined offers. Qualified investors include investment businesses, financial organizations, credit card companies, and a variety of other legal entities.

Sophisticated investors

Sophisticated investors are yet another kind of high-net-worth individual who is thought to have vast experience and business skills, making them qualified for specific changes and benefits. However, this terminology can also refer to an investor with a specific level of knowledge and market power. Several legal definitions govern whether an entity is classified as authorized or sophisticated. These numerous jurisdictions, on the other hand, are wise. This kind of investor is entitled to take advantage of possibilities that are not available to ordinary investors, like pre-IPO securities, due to their large net cash and outstanding source of income. Furthermore, sophisticated investors are not obligated to liquefy the assets and are at risk of substantial financial loss.

Investment Fraud Cases

It is evident from Shufti Pro news that investment fraud is getting more common as the industry grows at a rapid rate. Scams like this occur when criminals use trickery to persuade legitimate investors to buy assets based on false information. Furthermore, legitimate businesses deceive customers about their audits, high earnings, and a variety of other false claims to acquire investment. Penetrators also create shell firms and provide bogus investment programs to attract investors.

• One Coin Fraud: This fraud is carried out through a pyramid approach, as the founder sold the coin to companies involved in multi-level marketing tactics, who then duped victims into buying it.
• Boiler Room Scam: The FCA considers this scheme to be the second-largest criminal case. Cold calls were conducted to target the victims, who then were persuaded to invest in enticing shares in a Madeira-based company.

All the aforementioned frauds can be tackled by deploying advanced investor authentication systems. Many companies just started to accept international investments like Shufti Pro funding, recently done by the Updata partners. 

Know Your Investor Solution – How it Works?

The know your investor service is an excellent choice for financial and investment enterprises that are trying to meet regulatory requirements and safeguard their businesses. The  AI-powered investor verification service can reliably validate the genuine identities of investors with great accuracy and that too in no time.

The online investor verification process includes the following steps:

• The investor submits their identification as well as company documentation.
• The documents of investors are verified by expert MLROs.
• Investors are screened against global watchlists via an anti-money laundering system.
• Results that have been confirmed by the investor verification solution are saved in the back office.

Final Thoughts

Despite many global regulations and the investing industry’s efforts,  criminal activities continue to rise on a routine basis. By evaluating their market presence, financial institutions and other investment enterprises can ensure whether their investors are genuine, qualified, trustworthy, and risk-free. Companies can onboard legal organizations, safeguard their operations, and effectively curtail money laundering activities by integrating the investor verification service into the existing identity verification system.