How does identity affect the financial industry?
In the United States and other countries, the financial industry is highly regulated. To protect financial institutions from fraud, and to protect citizens from money laundering, banks, credit unions, and other types of financial institutions are mandated by law to ensure that a person who opens a financial account is who they say they are. Even cryptocurrency transactions are increasingly coming under these laws. After a financial account is opened, the institution must ensure that only the proper person can access the opened account.
Both onboarding (opening an account) and authentication (accessing an established account) may rely upon one or more of the following factors.
- Something you know. A password or a personal identification number (PIN).
- Something you have. A debit card (physical or virtual) or a driver’s license.
- Something you are. A biometric feature such as a face, a finger, or a voice.
- Something you do. Some special action that you perform.
- Somewhere you are. Your geographic location.
Additional information on Financial Identity
Here is a sampling of what John E. Bredehoft of Bredemarket has written on the topic of Financial Identity.
(7/11/2025) Crypto Transfers Without KYC
Have you ever played a smartphone game that gives you a teeny bit of crypto?
So little crypto that it’s not measured in Bitcoin, but in satoshis (where 100 million satoshis equals one bitcoin)?
If so, you probably didn’t have to undergo a Know Your Customer (KYC) check to verify your financial identity.
More at https://bredemarket.com/2025/07/11/crypto-transfers-without-kyc/
(6/24/2025) AML Fun: Be a Home-based Money Mule!
The term “money mule,” which first appeared around 2005, refers to a person who transfers illicit money for someone else—sometimes knowing that the activity is criminal, sometimes unknowingly.
More at https://bredemarket.com/2025/06/24/aml-fun-be-a-home-based-money-mule/
(6/10/2025) What is “Know Your Business” (KYB)?
I run in circles that use the acronym KYB, or “Know Your Business.” But I realize that many of you don’t use this acronym every day, so I thought I would explain it.
Let’s say that you encounter a business such as ByteDance or HiveLLM or Lorem Ipsum and you want to know more about it.
There are good reasons to understand a business before engaging with it.
More at https://bredemarket.com/2025/06/10/what-is-know-your-business-kyb/
(4/21/2025) Why Invela TPRM?
During my three months working with a third-party risk management (TPRM) client, I never heard anyone mention Invela.
Perhaps with reason. Although LinkedIn says the company was founded in 2024, it didn’t post its first blog until April 20, 2025, or its first LinkedIn posts until April 21.
More at https://bredemarket.com/2025/04/21/why-invela-tprm/
(4/20/2025) Don’t Try to Scam a Police Captain
The only information she provided was her work address.
At the time (2019), she was a police captain in Apex, North Carolina.
Oops.
More at https://bredemarket.com/2025/04/20/dont-try-to-scam-a-police-captain/
(4/17/2025) When Beneficial Ownership Diverges from Legal Ownership
As Unit21 points out, you don’t have to literally own (either on your own or through a trust) 25% of an entity to be a beneficial owner. Here’s another criterion of a beneficial owner:
Any individual that holds a significant ability to control, manage, or direct the legal entity
More at https://bredemarket.com/2025/04/17/when-beneficial-ownership-diverges-from-legal-ownership/
(4/12/2025) FinCEN Domestic BOI Changes: Terrorists Have Not Already Won
A Bredemarket message about financial identity and anti-money laundering (AML) enforcement.
More at https://bredemarket.com/2025/04/12/fincen-domestic-boi-changes-terrorists-have-not-already-won/
(4/12/2025) Don’t Know Your Business and Corporate Transparency Act Limited Enforcement (Oh BOI Again)
I will let you judge whether this is welcome relief from bureaucracy for American companies, or a huge FinCEN loophole that facilitates AML financial identity evasion by simply letting companies represent themselves as domestic, allowing them to launder as much money as they please for terrorists, drug dealers, and others.
Not that I have an opinion on that.
(4/9/2025) Anyone Interested in Tax Fraud?
Anyone interested in tax fraud—a true financial identity challenge that is timely right about now?
authID recently shared a link to an Identity Week article on the topic, “Americans express concern about their personal data in tax fraud.” The article addressed findings from Allstate Identity Protection.
More at https://bredemarket.com/2025/04/09/anyone-interested-in-tax-fraud/
(1/14/2025) My “Banking Changes” Post Needs an Update
But when I was recently reading a Bluesky post from mclevin that stated (correctly) that the decline in tellers didn’t start with artificial intelligence, but automated teller machines, it occurred to me that even the once-revolutionary ATM is itself outdated in financial terms.
Think about it.
What are the two most important functions of an ATM?
- To deposit paper checks.
- To obtain physical cash.
I think you see where this is going.
More at https://bredemarket.com/2025/01/14/my-banking-changes-post-needs-an-update/
(12/26/2024) Title vs. Physical Possession of a Vehicle
Because of their expense, certain NPEs such as vehicles and real estate are associated with title, or proof of ownership.
Just because I have physical possession of a car or house doesn’t mean that I’m the lawful owner. Maybe I am house sitting. Or renting a car. Or I am a squatter or thief. When it comes to legal (and financial) title, possession is NOT 9/10ths of the law. Otherwise, Hilton and Hertz would be out of business.
More at https://bredemarket.com/2024/12/26/title-vs-physical-possession-of-a-vehicle/
(12/24/2024) Oh BOI
“On December 23, 2024, the Fifth Circuit of the United States Court of Appeals (the “Fifth Circuit”) issued an order that has the effect of reinstituting the deadlines under the Corporate Transparency Act (the (“CTA”)….”
More at https://bredemarket.com/2024/12/24/oh-boi/
(12/23/2024) Financial Fraud by Kids? No, by Impersonators
If you look at the evidence, it may appear that financial fraud is being committed by kids. But that’s not accurate; it’s being committed by fraudsters who are impersonating kids, according to the National News.
More at https://bredemarket.com/2024/12/23/financial-fraud-by-kids-no-by-impersonators/
(12/20/2024) Adherence Does NOT Require 100% Compliance
As many of you know, I spend the majority of my time in identity/biometrics, where in some cases a 99% accuracy rate is considered woefully inadequate. Imagine if your bank had a million customers and 10,000 of them couldn’t login…or 10,000 fraudsters COULD log in. The bank would throw a fit with its biometric vendor.
More at https://bredemarket.com/2024/12/20/adherence-does-not-require-100-compliance/
(5/10/2024) My (Sort Of) Financial Identity Fraud Experience
I refrained from discussing this for a couple of days, but I was recently a victim of attempted financial identity fraud.
Well, SORT OF attempted identity fraud. I don’t know if this really counts, since I don’t know if the fraudster had my identity.
But the issue was resolved in less than 48 hours.
By the way, I have purposely changed the names of two of the companies I mention, to protect my PII. Which is a shame, because “Wildebeest Bank” went above and beyond in correcting the issue.
More at https://bredemarket.com/2024/05/10/my-sort-of-financial-identity-fraud-experience/
(5/3/2024) Defeating Synthetic Identity Fraud
I shared a video I created about synthetic identities and their use to create fraudulent financial identities.
More at https://bredemarket.com/2024/05/03/defeating-synthetic-identity-fraud/
(11/3/2023) Kelly Shepherd, #fakefakefake
The fraud possibilities from fake LinkedIn accounts are endless, and could be very costly for any company who falls for a fake synthetic identity. In fact, FiVerity reports that “in 2020, an estimated $20 billion was lost to SIF” (synthetic identity fraud). Which means that LinkedIn account holders and Partnerships Managers Karina, Alice, and Maria Walter could make a LOT of money.
Now banks and other financial institutions have safeguards to verify financial identities of people who open accounts and apply for loans, because fraud reduction is critically important to financial institutions.
Social media companies? Identity is only “important” to them.
More at https://bredemarket.com/2023/11/03/kelly-shepherd-fakefakefake/
(10/18/2023) The Imperfect Way to Enforce New York’s Child Data Protection Act
More at https://bredemarket.com/2023/10/18/new-yorks-child-data-protection-act/
(10/5/2023) I Let Generative AI Write a First Draft
I’ve previously said that you may have to go through five iterations of a generative AI prompt to get satisfactory results, which led to my conclusion that AI yields results in five minutes (and that humans will therefore be pressured to yield quick results also). So if I took the time to tweak the prompt, rather than just going with the first result I received, I’d get a better story. For example, rather than using the term “financial services,” perhaps I should have used “financial identity verification” to hone in on my interest in financial identity.
More at https://bredemarket.com/2023/10/05/i-let-generative-ai-write-a-first-draft/
(8/24/2023) Quick Tech Takes on Speech Neuroprosthesis, AEM Dynamic Media, and Graph Databases in IAM
For example, how does such a solution benefit banking and financial services providers who wish to support financial identity?
Identity-first security to enable trusted, seamless customer experiences
From https://www.indykite.com/banking
Yes, I know that every identity company (with one exception) uses the word “trust,” and they all use the word “seamless.”
But this particular technology benefits banking customers (at least the honest ones) by using the available interconnections to provide all the essential information about the customer and the customer’s devices, in a way that does not inconvenience the customer. IndyKite claims “greater privacy and security,” along with flexibility for future expansion.
In other words, it increases velocity.
(8/18/2023) Worldcoin’s “Face/Off” With Authorities in Argentina and Kenya (and alarmists worldwide)
Depending upon Worldcoin’s internal architecture:
- It’s possible that the iris code could be linked to my phone number, either intentionally or unintentionally. But even if it is, an iris code in and of itself is useless outside of the Worldcoin ecosystem. In the same way that an Aware, IDEMIA, NEC, or Thales fingerprint template (not the fingerprint image) can’t be used to generate a full fingerprint image, a Worldcoin iris code can’t be used to generate a full iris image.
- If I choose the “with data custody” option, my biometric images could be linked to my phone number. Again, they could be linked either intentionally or unintentionally. If such a linkage exists, then that IS a problem. If a user chooses to back up both their World App data and their Orb biometric image data with Worldcoin (and again, the user must CHOOSE to back up both sets of data), how does Worldcoin ensure that the two sets of data can’t be linked?
Presumably Argentina’s AAIP will investigate Worldcoin’s architecture to ensure that there are no financial identity threats.
Which leads us to Kenya….
…I’ll make the point that I made before.
Worldcoin is NOT a tool to identify and exploit poor people.
In fact, as the term is commonly understood, Worldcoin does not, and cannot, identify ANYONE.
This is by design.
(8/15/2023) Communicating How Your Firm Fights Synthetic Identities
Brown was synthetically created from a stolen social security number and a fake California driver’s license. The creator was a man named Corey Cato, who was engaged in massive synthetic identity fraud. If you want to talk about a case that emphasizes the importance of determining financial identity, this is it.
More at https://bredemarket.com/2023/08/15/communicating-synthetic-identities/
(8/8/2023) Catching Financial Fraudsters with Physical Evidence
There are a variety of ways that you can catch fraudsters who try to steal someone’s financial identity, but sometimes the simple ones work best.
More at https://bredemarket.com/2023/08/08/catching-financial-fraudsters-with-physical-evidence/
(7/31/2023) Educational Identity: Why and How Do Educational Institutions Verify Identities?
As you can see, educational identity is not as clear-cut as financial identity, both because financial institutions are more highly regulated and because blocklists are more controversial in educational identity. Vladimir Putin may not be able to open a financial account at a U.S. bank, but I bet he’d be allowed to enroll in an online course at a U.S. community college.
More at https://bredemarket.com/2023/07/31/educational-identity/
(7/29/2023) Financial Identity: Which Firms Can Remotely Onboard Financial Customers?
What locational, technological, and organizational changes have taken place at banks over the last 50 years? And now that you can open an account to buy crypto on your smartphone, does your financial institution’s onboarding solution actually WORK in determining financial identity?
More at https://bredemarket.com/2023/07/29/financial-identity-liminal/
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