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Smile ID's KYC & Compliance Glossary

Unlocking Africa’s digital potential, Smile ID provides key definitions for navigating identity verification and compliance. This concise guide is essential for businesses aiming for secure growth across the continent.

A

Active Liveness

This is a verification process in which the user must perform specific actions, like blinking or turning their head, to prove they are physically present during the verification process. This helps ensure the user isn't just a picture or recording.

Adaptive Compliance

The ongoing process of adjusting compliance practices to keep up with changing regulations. This allows for a more efficient and user-friendly verification process, focusing stricter measures on higher-risk scenarios.

Adverse Media

Negative news or information about an individual or business. AML checks often include screening against adverse media to identify potential risks.

AML Compliance Checklist

A business should follow a list of tasks and procedures to ensure they meet Anti-Money Laundering (AML) regulations. This checklist typically covers customer due diligence (CDD), transaction monitoring, suspicious activity reporting (SAR), and record-keeping requirements.

AML Compliance Program

The set of policies, procedures, and controls a financial institution implement to comply with AML regulations. This program typically includes customer due diligence (CDD), transaction monitoring, suspicious activity reporting (SAR), and employee training.

Anti-Money Laundering (AML)

Regulations and procedures designed to prevent criminals from disguising the origin of illegally obtained funds.

Attribute

A piece of information used to describe an identity, such as name, date of birth, or address.

Audit Trails

A chronological activity record within a digital identity verification system. It tracks user actions, system events, and verification results, providing a detailed log for compliance and security purposes.

Authentication

The process of confirming a user's identity. This is often done through a login process where a user enters a username and password.



C

Cash-Intensive Businesses

Businesses that deal with a large amount of cash in their daily operations. Examples include casinos, pawn shops, and money service businesses. These businesses are considered at higher risk for money laundering due to the difficulty of tracing cash transactions.

CDD (Customer Due Diligence)

It is the process businesses undertake to verify a customer's identity, understand their financial activities, and assess their risk profile.

Central Bank of Kenya (CBK)

Kenya's central bank and main financial regulatory body. It issues guidelines and enforces compliance with AML regulations.

Central Bank of Nigeria (CBN)

Nigeria's central bank and apex monetary authority, established by the CBN Act of 1958. It is responsible for maintaining the country's external reserves, promoting monetary stability and a sound financial environment, and acting as a banker and financial adviser to the federal government.

Channel Risk

The Money laundering (ML) /Terrorist Financing (TF) risk is associated with the way a financial service is delivered (e.g., online banking, money transfer services). For example, internet-based transactions may have a higher risk of identity theft.

Chargeback Fraud

When a customer disputes a legitimate purchase with their bank or credit card company, claiming they didn't make it or are unhappy with the service. This can be a real issue for businesses.

Churn

The rate at which customers stop using a service. A high churn rate can signal problems with your onboarding process or user experience.

Compliance Risk

The risk that a company will fail to comply with relevant laws and regulations, including AML regulations. Compliance risk can lead to financial penalties, reputational damage, and even criminal prosecution.

Continuous Authentication

The ongoing process of verifying a user's identity throughout a session, not just at login. This is becoming increasingly important for high-risk activities.

Counter-Terrorist Financing (CTF)

Refers to the global effort to stop money flow to terrorist organisations and individuals. This includes various strategies employed by governments, financial institutions, and international organisations.




F

Facial Recognition

A biometric technology that identifies or verifies a person by comparing their face to a stored image.

False Acceptance Rate (FAR)

The percentage of unauthorised users who are mistakenly granted system access due to a verification process flaw.

False Positives

Alerts triggered by transaction monitoring systems that turn out to be legitimate transactions and not suspicious activity. While false positives are not ideal, they are better than missing true suspicious activity.

FATF Grey List (Greylisting)

This refers to the Financial Action Task Force's (FATF) designation for countries with strategic deficiencies in their Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF) regimes. These countries are placed under increased monitoring and must work to address the deficiencies within a set timeframe to avoid being blacklisted.

Financial Action Task Force (FATF)

An international organisation that sets global standards for AML and combating the financing of terrorists (CFT). FATF recommendations are used by governments and financial institutions around the world to develop and implement AML/CFT regulations.

Fingerprint Biometrics

A biometric authentication technology that uses a person's unique fingerprint pattern for identification or verification. Fingerprint patterns consist of ridges and valleys on the surface of a finger, and these patterns are very unique to each individual.

Friction in Authentication

Challenges users experience during the authentication process, such as remembering complex passwords or answering multiple security questions. Too much friction can lead to user frustration and abandonment.




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