SOLO Network Launches Bank Reliance Pilot With U.S. Regulators for Reusable KYC

SOLO Network has started a bank reliance pilot. This pilot is trying to reduce the number of times banks have to verify the customer information in the United States. The pilot is being done with the help of U.S. Agencies. It lets banks that’re part of the pilot use customer information that has already been verified by another bank.

The U.S. Treasury is helping with this. FinCEN is watching to see how it goes. The Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation are also watching as observers.

It is important to note that this pilot does not mean that SOLO Networks business model has been approved by regulators. Instead it is a way to see if reusable compliance information can make things more efficient while still following the rules.

A new way to do KYC and KYB

Banks and fintech companies often do the same Know Your. Know Your Business checks many times. This creates a lot of work and cost. It also makes it harder for customers to get started with a bank.

SOLO Networks pilot is trying to fix this problem with a bank reliance model. When a bank finishes verifying a customer it can create a KYC or KYB certificate. This certificate shows that the verification work has been done.

Another bank can then use this verified information of doing the verification all over again.

Reusable compliance with a record of what was done

A key part of the pilot is creating verification certificates. These certificates say what identity verification, business verification and compliance procedures were done. The network also keeps a record of what was done. This record shows what steps were taken, when they were done and which bank did them.

The goal is not to get rid of compliance responsibilities. It is to make it easier for banks to use the compliance work that has already been done.

Why this pilot matters

This pilot is happening at a time when banks are being pushed to make compliance more efficient. Verifying customers has become one of the time-consuming and costly parts of banking. This is especially true for banks that work with fintech companies and Banking-as-a-Service programs.

Times multiple banks do the same KYC and KYB checks on the same customer. SOLO Network is trying to create a system that lets verified information be reused safely while following the rules.

Banking-as-a-Service creates compliance challenges

This pilot is especially important for the Banking-as-a-Service ecosystem. Sponsor banks are responsible for making sure their fintech partners follow the rules. This includes verifying customers and watching for money laundering.

As fintech partnerships have grown it has become harder to comply with the rules. A reusable verification network could help reduce the number of times customers have to be verified. It could also give banks proof that the verification work has been done.

Regulatory coordination is significant

Even though this pilot is not an approval it is still important that federal financial agencies are involved. FinCEN is watching to see how it goes. This suggests that regulators are interested in seeing if reusable compliance frameworks can help with customer verification and money laundering.

Regulators have been trying to make financial crime controls more efficient while still keeping an eye on things. This pilot gives them a chance to see how reliance models could work in the world.

A broader move toward financial identity

SOLO Networks approach is part of a bigger trend in the financial industry. Of verifying the same information over and over banks are looking for ways to share verified customer data securely.

This could be used for more than verifying customers. It could also be used to prevent fraud, screen for money laundering and verify businesses.

However there are still questions about how to govern this data, who’s liable and how to get customer consent.

What happens next?

This pilot will let banks and regulators see how reusable KYC and KYB certificates work in practice. The results could influence discussions about bank reliance, compliance and digital identity infrastructure in the U.S. Financial system.

For now this is a test. It is not an endorsement. The important thing is to see if compliance work can be reused across banks in a way that’s transparent, auditable and follows the rules.

The line

SOLO Networks bank reliance pilot with U.S. Regulators is an important experiment, in making financial compliance better. By letting banks reuse verified KYC and KYB information the network hopes to reduce duplication make onboarding more efficient and make compliance more transparent.

As banks and fintech companies keep looking for ways to meet money laundering and customer verification requirements, reusable compliance infrastructure could become a part of the financial services ecosystem.

#KYBAML compliancebank reliancebanking infrastructurebanking technologyBanking-as-a-ServiceCompliance Technologydigital identityfinancial crime preventionfinancial regulationFinTech compliancefintech infrastructureIdentity VerificationKYC automationRegTechreusable KYCSOLO NetworkSponsor BanksU.S. bankingverification infrastructure