Know Your Investor:Ensure Smooth Investor Onboarding Process

by Alex Hales
Know your investor

In the digital era, the investment industry is experiencing challenges related to investor onboarding procedures. For securing investments, the onboarding process plays a crucial role as it is the first interaction between the company and potential investors. In case an organization does not have a robust investor verification service, the entity gets a negative message that demotivates the party to invest in the business. Cybercriminals have multiple tricks to exploit loopholes in security measures. In this regard, the investment industry must apply a powerful know your investor solution to safeguard the incoming entities. Ensuring adherence to KYC/AML regulations will also become seamless for the companies. 


Investor Verification Service: Working Mechanism behind the Authentication System

The know your investor procedure can vary depending upon the countries and their local jurisdictions. The general outlook of the procedure is as follows.


  • The solution guides the investor to display their ID card in front of the webcam for an in-depth verification
  • The latest OCR technology captures data from government-generated records and saves it in the organization’s database
  • Know your investor service also cross-checks the party’s credentials against multiple global checklists. The main objective behind this step is to catch any highly risky clients and assess the risk linked with them
  • After the completion of the process, know your investor service displays the final verification results to the clients


Documents Acceptable for the Investor Verification Service 

Below are some official records that are admissible for know your investor solution. There are different templates for the following documents in various countries. However, the combination of AI with the KYI solution allows the technology to process multiple templates without lowering the quality of the output. Implementation of artificial intelligence produces results in real time. Hundreds of artificial neural networks in AI enable the technology to deal with a massive inflow of data while ensuring the quality of results. 


  • Official documents from all the stakeholders
  • Relevant information to the association
  • Proof of Address (POA)
  • Government-generated ID records
  • Documents from company directors of the organizations
  • Important details of financial organizations
  • Evidence that highlights the completion of the investor onboarding procedure


Choosing the Relevant Path for Know Your Investor Solution

Authentication through MLROs

Rest assured because compliance experts will verify the investors by authenticating ID cards and official documents.


Verification by a Personal Team

Ensuring complete authority over investors’ data through a manual procedure. The company will acquire the investor’s ID card and corporate documents, safely storing them in the back office. 


Appropriate Investors for KYI Solution

The following is a listicle of suitable entities that can proceed in the know your investor solution.


  • All the shareholders of the relevant companies
  • Private Equity Firms (PEFs)
  • Directors and other top management members of the organization
  • Clients with a high net worth

Ensuring Quality of Service (QoS) During the Investor Verification Service

Investing parties and companies that are opting for the know your investor solution must do in-depth research regarding the service. The following characteristics must be in the system. 


  • Reliability
  • Safety
  • Confidentiality


The aforementioned factors are critical because the investor’s credentials are sensitive. If cybercriminals get their hands due to the shortcomings of security protocols, it will result in reputational and monetary loss to all concerned parties. 


Hackers always exploit vulnerable systems to their advantage and also use techniques to hide illicit money. For example, criminals use chargeback fraud to blur the origin of money by flowing it through multiple corporate hierarchies. 


The Significance of Securities Exchange Commission Acts (SEC) for Know Your Investor Service


The security interventions i.e. Acts, enforced by the SEC have two main purposes. Investing parties must be aware of them before moving forward with their decisions. Reducing terrorism and money laundering cases is important in the contemporary world. 


  • Every investing entity must go through the registration process with the organization and share the required financial data
  • As per the SEC criteria, the information must be valid to guarantee secure payment transactions between concerned parties


The latest online service of investor authentication is a progressive approach for the investment sector. Helping investors show compliance with international guidelines and avoiding monetary repercussions. The AI-driven system produces output in real-time without compromising accuracy. The aforementioned pointers are significant in order to safeguard the rights of all parties during the procedure.

Concluding Thoughts

The investment industry is making huge advancements regarding safe onboarding process for investors in companies. However, the threat of external attacks from hackers will be there. In this regard, it is crucial that financial institutions and the investment sector upgrade the authentication system with the passage of time. Such measures will enable real investors to work with the organization. Adhering to know your investor system ensures that cybercriminals do not enter the company’s database. Such measures disseminate a positive message to potential parties about the safety of their investments.

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