AML: guarding the digital persona

Constantly challenged by innovative fintech companies, lawmakers are continuously reshaping legal regulations in order to protect customers, companies and their business clients from illegal activities that might threaten the integrity and the safety of all the stakeholders mentioned, with tools like identity verification. Arising from local and global legislations, Anti-Money Laundering (AML) is positioned as the legal guard that is protecting companies and their clients from the intrusions of illegal money-related activities.

The European Fifth Anti-Money Laundering Directive (AMLD V) from 2018 has recognised the possibilities of developing technologies that can ensure secure ways of remote electronic identity verification in its point (22) of Recitals, stating that accurate identification and verification of data of natural and legal persons are essential for fighting money laundering or terrorist financing.The latest technical developments in the digitalisation of transactions and payments enable a secure remote or electronic identification.

Mintos and AML compliance

The European regulation that is “bodyguarding” companies and users from illegal breaches is The Fourth Anti-Money Laundering Directive (AMLD IV), passed in 2015. It is the main legal instrument in the prevention of the use of the Union financial system for the purposes of money laundering and terrorist financing, and its objective is the protection of the financial system by means of prevention, detection and investigation of money laundering and terrorist financing. 

The request for identity verification that Mintos is also obliged to comply with comes from its Article 14 stating that member states of the EU have to require verification of the customer before business relationship is established and before transactions are being carried out.

In July 2018, the Fifth Anti-Money Laundering Directive (AMLD V) was approved with an amendment related to electronic verification, as the financial services environment has flourished with many new online services and businesses, directing the changes in existing regulations. 

From this amendment, member states need to make sure that the obliged entities to whom the customers are referred to take adequate steps ensuring that customers provide relevant copies of identification and verification data “immediately, upon request”, adding an amendment:including, where available, data obtained through electronic identification means, relevant trust services as set out in Regulation (EU) No 910/2014, or any other secure, remote or electronic, identification process regulated, recognised, approved or accepted by the relevant national authorities.” 

As a company originating from and registered in the European Union’s member state Latvia, Mintos Marketplace AS (Mintos) is performing its business activities in a strong compliance with legal enactments of the Republic of Latvia, including the Law on the Prevention of Money Laundering and Terrorism and Proliferation Financing (AML Law).

In accordance with the AML Law, Mintos needs to prevent any possible risk of money laundering and terrorism and proliferation financing, and identify and report unusual and suspicious transactions. 

AML Law in the Mintos practice 

“The safety of the people shall be the highest law.” (Marcus Tullius Cicero)

1. From law to the business practice

Anti-money laundering (AML) and know your customer (KYC) regulations are concrete actions emerging from the aforementioned laws and regulations. Requirements for the Mintos AML compliance are the result of that, too. Nevertheless, we adopted these practices without hesitation in order to safeguard our marketplace and all those involved in its operations. Mintos in-house AML team is skilled in investigating and processing all suspicious activities and individuals on the marketplace. 

2. Identity verification for the money-laundering prevention

In late 2018, we introduced a remote identity verification procedure, provided by a company named Veriff that offers a high-end video verification during which the system reads the data from the document and checks its validity, while the face comparison algorithms analyse the person’s identity. Further down the process funnel and when needed, the company collaborates with different registers that provide the option for an in-depth evaluation of the data reliability. 

3. Company’s integrity, customers’ security

By having AML procedures in place, Mintos doesn’t just act responsibly toward the requested compliance while keeping the company’s integrity uncompromised. This way, Mintos also provides the safe and legally shielded environment for the activities of investors on the marketplace. Identity verification also ensures that the possibility of fraudulent activities carried out by third persons is reduced to a minimum. 

4. The myth “Unnecessary complication” 

In few occasions, some Mintos investors reluctant to undergo the verification process in order to continue their investing with Mintos have questioned the necessity of Mintos AML procedures; are we really obliged to add more layers to the security of a marketplace with a total of EUR 3.7 billion of loans funded?

It is exactly thanks to the implementation of the AML compliance that Mintos can now offer safe and smooth service to its +200 000 investors. By operating according to the requirements of the AML procedures, we are avoiding threats of occasional unnecessary interruptions in investors’ activities that would otherwise emerge from the absence of our compliance to AML regulations. 

5. KYC & AML, on the global level

The amount of money laundered globally in one year is estimated to be between 2% and 5% of global GDP, between $800 billion and $2 trillion, according to the United Nations Office on Drugs and Crime. In order to achieve AML and KYC compliance, financial technology companies are developing and adopting digital fraud prevention methods. There are numerous fintech companies providing identity verification services for other fintech companies.
In short, identity verification is a service, provided by and used by businesses operating in the domain of financial services, which ensures that users and customers provide information that is associated with the identity of real persons.

Since 2015, Mintos investors’ have earned EUR 66 million in interest alone, and only in 2019, 100 000 new investors have joined Mintos as a globally accessible marketplace of choice for investing and earning. We are opening the market to loans as a new asset class, and we are doing it very successfully. Being compliant with the AML requirements is safeguarding this success, both of Mintos and of the investors on our marketplace.

6. Data privacy and protection

Mintos has also implemented the European Union’s General Data Protection Regulation No. 2016/679 (GDPR) compliant policies, procedures and processes. All clients data received within the AML compliance procedures are being collected and processed in GDPR compliant way. More detailed information on how the data is being processed on the Mintos marketplace can be found in the Mintos Privacy policy.


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