Non-compliance risk can be costly and catastrophic to a financial institution’s (FI’s) reputation. Is blockchain technology an enabler toward aspirations for stakeholders within the compliance ecosystem?
The users have started embracing blockchain to improve and expand their business market. The blockchain lends itself well to improving compliance processes. Newrl mimics the architecture of the human brain which makes it great at optimizing resources in a decentralized setup. Newrl enables compliance for businesses by removing anonymity in the blockchain. Businesses don’t have to necessarily integrate the KYC solution within their own application relieving them from security concerns. Users themselves are responsible for managing KYC records and information in their database for frequent and easy access. The users can provide temporary “view-only” access to information to existing and new businesses upon request. The process is simplified from the consumer perspective as well as they don’t have to verify their KYC multiple times. No other blockchain enforces KYC norms at the chain level at present.
Most public blockchains are built on the premise of anonymity owing to their libertarian foundation starting with Bitcoin. This may avoid censorship, but it opens the chains to abuse by money launderers and terrorist financiers. Newrl addresses this concern by incorporating digital fingerprints of KYC documents (“hashes”) along with information about the jurisdiction of the owner for each wallet on it. The wallet owner either uses a centralized authentication service or a non-custodial wallet application to ensure the authenticity of the KYC documents.
Newrl manages to maintain privacy by:
- Not making the actual documents public while still ensuring adherence to KYC/AML norms.
- Enforcing regulations specific to jurisdictions of users as well as assets at the chain layer, not only the application layer.
- Accompanying legally enforceable contracts to most token issuances with legal recourse is feasible if needed.
- Enforcing all Contracts on Newrl through a legal court of law.
Challenges do exist with blockchain in the areas of performance and security and pose considerable barriers to the adoption of the technology. But still, blockchain is considered more secure than a conventional database as it can be specifically designed to ensure data integrity across a network consistently.