How Gemini Balances User Privacy With AML/KYC Compliance

Privacy is a chief concern among internet users, with 75% of Americans concerned about their privacy online and 70% believing their data is less secure now than it was five years ago. In addition to being less confident that their data is safe from fraudsters, individuals also have declining faith in companies’ ability to keep their data safe, with 79% concerned about how companies themselves are using their data.

This need for online privacy, as well-founded as it may be, often runs up against organizations’ need to gather personal data for anti-money laundering (AML) and know your customer (KYC) purposes. Many companies are attempting to strike a balance between these competing demands with new encryption technologies like secure multiparty computation, homomorphic encryption or other systems that limit the amount of data available at any given time or allow AML and KYC staff to examine it without decryption.

The June “AML/KYC Tracker®” explores the latest in AML and KYC developments, including consumers’ evolving demands regarding online privacy, the harmful data breaches that drive this fear and how companies can silo data access to maintain compliance while protecting users’ privacy.

Developments Around The AML And KYC Space

Data privacy concerns are so significant that customers are even altering their day-to-day online activities, even at the cost of convenience. A recent poll found that online shoppers often forgo using their own accounts to make purchases and instead check out as guests for fear of companies leveraging their data for untoward purposes. Forty percent expressed concern about what happens to their data during and after the shopping experience, and 28% said they would like their data back from brands that have already harvested it.

The record numbers of employees working from home have also dramatically affected the AML and KYC compliance paradigm, with many organizations reporting increased difficulty keeping up with these requirements. Seventy-nine percent of United Kingdom banks said in a recent survey that working from home reduced the effectiveness of their compliance teams, and 49% struggled to manage multiple compliance systems. Pandemic-related fraud methods — such as schemes promising vaccines or assistance checks — have also presented new challenges for firms, with 50% of banks citing issues with such scams.

Failure to comply with AML and KYC regulations can result in harsh penalties from government agencies, even across borders. Swiss private banking entity Julius Baer Group recently agreed to pay the United States Department of Justice $80 million to resolve money laundering charges related to the FIFA soccer corruption case that began in 2015. The bank was accused of laundering $36 million in bribes between 2013 and 2015, with sports marketing companies paying FIFA officials for soccer match broadcasting rights.

For more on these stories and other AML and KYC headlines, download this month’s Tracker.

Gemini On Balancing AML And KYC Compliance With Customers’ Privacy Needs

Cryptocurrencies are often popular due to their anonymous nature, but the exchanges usually require some of their users’ personal data to ensure they maintain AML and KYC compliance. Balancing these competing objectives can be extremely difficult, especially when transacting across borders. In this month’s Feature Story, PYMNTS spoke with Elena Hughes, chief compliance officer at cryptocurrency exchange Gemini, about why exchanges need to be judicious about which data they collect to ensure user privacy while keeping abreast of AML and KYC regulations.

Deep Dive: How Companies Can Address Customers’ Privacy Concerns Without Compromising Compliance

Compliance with AML and KYC regulations is critical for banks and businesses, but customers are often hesitant to surrender the necessary data for these initiatives due to privacy concerns.  These fears are understandable considering the history of massive data breaches, but companies are working to deploy privacy-enhancing technologies that can limit their worries and improve access to data. This month’s Deep Dive explores how secure multiparty computation and homomorphic encryption can ease customers’ minds about data privacy while still allowing firms and financial institutions to access the information they need for AML and KYC checks.

About The Tracker

The “AML/KYC Tracker®,” a PYMNTS and Trulioo collaboration, provides an in-depth examination of current efforts to stop money laundering, fight fraud and improve customer identity authentication in the financial services space.