The Know Your Customer (KYC) regulations require that professionals make an effort to verify the identity, suitability, and risks involved with maintaining a business relationship.
Initially, the objective of KYC guidelines was to prevent businesses from being used by criminal elements for money laundering. However it was extended to enable businesses to better understand their customers and their financial dealings.
This project is to provide an Issuer in the Decentralized Identity ecosystem that delivers a Verified Credential as the result of a KYC onboarding process. The result of the KYC process will be delivered by a trusted service provider. In brief, this project involve two main activities, business and technical:
- Business: Research, negotiate and close a deal with a trusted company to provide the KYC onboarding resources (API)
- Technical: Implement an AGENT that act as an ISSUER that can provide a Verified Credential certifying the result of the KYC onboarding process
Note that this project will deliver a Proof Of Concept (PoC) capable of issuing KYC verified credentials to users who pass the validation process of the provider. However, this initial phase will not deliver a use case for the issued KYC credential nor a business model to cope with KYC verifying costs. So, it should be seen as an essential building block for creating Self-Sovereign Identity projects that require KYC verification from a trusted source.
The KYC PoC will set the bases to integrate KYC services into Self-Sovereign Identity systems. Why is that important? Due to compliance or regulatory pressure, ID verification is being required more often, making users to pass a KYC verification for each service since current KYC methods are “single-use”. A SSI platform can significantly reduce that friction by making the KYC process “recyclable”, so a user that holds a KYC credential can show them to many businesses that require it.
This team has been working in the project and made the following progress:
On the business side:
- research and contacted several KYC service provider
- get average pricing for different levels of service (range from $0.5 to $5 per transaction depending on service, country and volume).
- ID verification from multiple countries
- 2nd ID verification (i.e. passport, driver license, etc)
- proof of life
- advanced security (sanctions, PEP, watchlists, adverse media sources)
- start negotiations with one known provider (provider name will be disclosed if a final agreement is reached. It’s name and business records are an important proof of trust of the system)
On the technical side:
- generate the architecture of the components of the system
- backend consuming KYC API
- issuing agent
- frontend
- credential wallet supporting KYC onboarding
- define SDKs and components
We are delivering a component to the SSI ecosystem that helps users to preserve their identity as much as possible while complying with regulations. Users will go through the KYC verification process and receive a credential that can be shown to other parties as a proof of having passed the KYC process. This scenario is a real use case of a Decentralized Identity creating value in privacy, regulation, usability, and adoption.
The team is aware of the risk involved when dealing with contractual terms with financial related institutions. Base on the experience, we will implement a strategy to look for companies with diverse approach to the service (i.e. more financial vs more technical) and with a variety of position in the market (i.e well established with traditional models vs new and innovative flexible companies)