LeapRate's Daily Forex Industry Newsletter
Join now to receive first access to our EXCLUSIVE reports and updates.
Screenshot of a breaking news alert e-mail from Q2 2017
Shyft, a company redefining the KYC/AML infrastructure for the global economy, has just published its whitepaper outlining the blockchain framework for the standardization of regulatory, compliance and due diligence mandates for Know Your Customer (KYC) and Anti-Money Laundering (AML).
According to surveys from Thomson Reuters’ KYC business unit, firms with greater than $10 billion USD in revenue spent an average of $150 million on KYC compliance in 2017, up from $142 million the previous year. The number of compliance professionals increased 3.5 times during the same timeframe. However, despite these significantly increased resources poured into KYC/AML, anti-money laundering controls have failed to detect terrorists, cartels and sanctioned states. CNN reports that over 2 billion consumer records were lost or stolen in the first half of 2017 alone, up 164 percent from the previous 6 months and that these targeted hacks are expected to continue. EU’s law enforcement agency Europol recently attributed the ineffectiveness of AML regulations to “national solutions being used to tackle an international problem.”
Shyft Chairman and Special Advisor to the OECD Joseph Weinberg said:
What we’re trying to achieve at Shyft is very ambitious. The current processes used by financial institutions to handle regulatory compliance are broken and highly ineffective in preventing money laundering. Shyft is challenging the way the world looks at identity in order to make compliance more effective and efficient, and most importantly, unlock untapped capital and opportunities.
A Disruptive Infrastructure For Security
The Shyft Network will build a new framework to tackle identity, leveraging proven attestation processes. The framework offers greater format standardization and reduces execution time and costs, and provides unparalleled consumer data protection. This framework will support a breakthrough ecosystem that will operate on the concept of Creditability, a comprehensive insight into individual reputation, without disclosing and exposing individual identity.
As part of this ecosystem, Shyft will enable third-party Trust Anchors, such as banks, exchanges, or any organizations that already perform KYC/AML compliance, to collect user data off-chain using traditional collection strategies to attest the data. A machine learning system called the Shyft Conservator will provide additional security to the blockchain by investigating and confirming the validity of the information collected. The attested data is then associated with an individual’s cryptographic signature and gets recorded in a secondary ledger, in parallel to the transaction ledger. Third-party application providers may retrieve compliance data for regulators without disclosing the identity of the user through encrypted channels. The individual’s reputation can then be confirmed through their Creditability score, which defines their reputation, believability and likelihood that they are credible.
The decentralized and distributed nature of blockchain solves the incredible challenge, responsibility and systematic risk that currently resides with many organizations of how to hold, maintain and protect consumer data that currently resides in centralized locations, many of which are out of date and not well maintained. Functioning as a distributed network, Shyft has no single point of failure susceptible to centralization risk inherent in legacy compliance systems. The Shyft Network’s blockchain-based system will let users securely obtain, store, inquire into and work with compliance-satisfying data, helping reduce costs, increase effectiveness and strengthen consumer data security.
The Shyft Network is intended to serve both traditional and blockchain-based industries. Startups and established businesses may participate by:
- Providing the compliance data layer — Organizations looking to upgrade their compliance system act as nodes, or Trust Anchors, on the Shyft Network. Trust Anchors may include any organization with KYC/AML processes and rules of compliance integral to their customer onboarding and maintenance, such as banks, token issuers or exchanges.
- Creating and developing applications — Leveraging the compliance data blockchain, Trust Anchors and third-party businesses may build applications to support compliance onboarding and maintenance, thus opening up a new marketplace for Shyft Apps and Developers.
- Consuming network services — Consumers may use the decentralized compliance data on the Shyft Network for identification services