Where Did IDV Start?
IDV is the product of two very Important acts in US History – the Patriot Act of 2001 and the Sarbanes-Oxley Act of 2002.
The Patriot Act of 2001
The Patriot Act of 2001 was passed after the 9/11 terrorist attacks and led to the introduction of KYC (Know your Customer) laws to the nation. The laws were introduced as a move to detect and stop terrorist activities.
The first component, known as the Customer Identification Program (CIP), is simple and well-known. In CIP, the customer or client provides personal identification details as requested by the institution or bank. The client’s name, address, date of birth, identification number, driver’s license, or passport, as well as other documents, may be asked.
The second component is Customer Due Diligence (CDD), which assists the bank in predicting a client’s transactions and thus spotting any suspicious behavior. The bank can give the client a risk rating to determine how frequently their account can be monitored and identify clients who are at risk of doing business.
Sarbanes-Oxley Act of 2002
The act, also known as the “Public Company Accounting Reform and Investor Protection Act” (in the Senate) and the “Corporate and Auditing Accountability, Responsibility, and Transparency Act” (in the House), is also known as Sarbanes-Oxley, SOX, or Sarbox. It was enacted on July 30, 2002. (Pub. L.107–204 (text)(PDF), 116 Stat. 745,
The legislation was implemented in response to several significant business and accounting scandals, including Enron and WorldCom. The bill’s sections address the duties of the board of directors of public corporations, impose criminal penalties for specific types of misconduct, and call on the Securities and Exchange Commission to establish rules outlining public corporations’ legal obligations.
Each of its 11 sections delivers a different mandate covering oversight, auditor independence, corporate responsibility, financial statements, annual reports, and more. At the heart of it all is security.
SOX also mandates protections for financial records. Security is a growing concern as cyber-attacks continue to penetrate some of the world’s most encrypted systems. These breaches can ruin an organization’s reputation. It can also land an organization in hot water with regulators if the proper provisions aren’t followed.
The Sarbanes-Oxley Act of 2002 (SOX) lays out the procedures public U.S. businesses must follow when sharing, storing, and safeguarding financial data. The law’s Section 302 mandates that businesses create “internal controls” to guarantee the accuracy of their financial reporting, and Section 404 mandates that businesses evaluate and record the efficacy of those internal controls.
Noncompliance is not an option. The federal Securities and Exchange Commission (SEC) enforces SOX with steep penalties: up to tens of millions in fines for the organization and 20 years in prison for its CFO.
Infocore can provide the IDV data to fuel your KYC programs in countries all over the world.
