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ThisIsMe has launched a new prepaid service offering. Standing alongside ThisIsMe’s Partners and Enterprise service offerings, Prepaid offers a pay-as-you-go system that represents great value for clients who only require low to moderate usage of ThisIsMe’s consumer and business services.For ThisIsMe, the launch of Prepaid signals an exciting milestone for the company as we continue to broaden our appeal and improve the accessibility of our services.&nbsp;<h2>How does Prepaid Work?&nbsp;</h2>Prepaid functions as a pay-as-you-go system and charges no monthly fees.&nbsp;Clients using Prepaid can charge their account with any amount above a minimum of R295. Thereafter, any prepaid service transactions will automatically be charged from this loaded amount. Credits do not expire and entail no obligations – once loaded, credits can be spent as and when the client wishes.&nbsp; Access to ThisIsMe’s range of services is facilitated through our Partners platform: a web-user interface that offers efficient and streamlined access to our broad range of world-class solutions. ThisIsMe’s Partners platform is completely online and facilitates the secure, efficient and accessible use of our services.&nbsp;<h2>Who is Prepaid For?&nbsp;</h2>ThisIsMe’s prepaid service offering has been optimized for clients who will process low to moderate volumes of service requests.&nbsp;ThisIsMe’s Prepaid service offering may be best if your business:&nbsp; <ul><li>Processes smaller numbers of requests associated with identity verification and data validation&nbsp;</li><li>Requires access to a wide variety of identity verification and data validation services, yet only in low volumes</li><li>Experiences low-volume and varied demand for services related to identity verification and data validation&nbsp;</li><li>Does not require API integration</li><li>Does not require multiple access accounts to ThisIsMe’s Partners platform</li></ul>ThisIsMe’s Prepaid service offering has been optimized for the requirements of businesses such as wealth managers, small- and medium-sized law firms, real estate agencies, and conveyancing firms.&nbsp; ThisIsMe’s prepaid service offering can be used by any client; however, they have been optimized to best suit clients with lower processing demands who do not need to make significant use of our consumer and business services or require API integration. &nbsp; Clients who process larger batches of data will be better served by ThisIsMe’s Partners or Enterprise service offerings.&nbsp;<h2>ThisIsMe – Leaders in Identity Verification and Data Validation Services&nbsp;</h2>Prepaid provides access to ThisIsMe’s core range of services. These services include the ability to scan documents, evaluate risk, validate bank accounts, and screen for politically exposed persons and sanctions. ThisIsMe’s prepaid service offering does not cover services that require high-risk credit information calls.&nbsp;To get started and sign up for ThisIsMe’s Prepaid service offering, <a href="/getting-started">click here</a>.&nbsp; To find out which service offering will best suit your business, <a href="/contact-us">book a consultation</a> with our team here.&nbsp; As South Africa’s leading provider of world-class due diligence and remote-onboarding solutions, ThisIsMe is proud to be at the forefront of a trust-based and privacy-compliant digital world.&nbsp;

A new prepaid offering from ThisIsMe allows companies with a smaller requirement to easily fulfil their verification needs

ThisIsMe Launches New Prepaid Service Offering

Grasp the concept of social engineering fraud and understand how it is used to commit some of South Africa’s most costly types of economic crime.

How Social Engineering Exploits Trust and Identities to Commit Fraud

<div>Today, businesses must grapple with a rapidly changing economic crime threat landscape, ensure strict regulatory compliance, and provide a world-class digital customer experience. In the context of these demands, how might a business strike a balance between security protocols like KYC and the desire to not subject customers to admin that risks annoying customers or, at worst, losing them altogether?&nbsp;</div><div> </div><h2>A Novel Threat – The Rise of Customer Fraud&nbsp;</h2><div>Today, businesses face a rapidly evolving economic crime landscape. The nature of existing threats is changing, with a greater emphasis than ever on the threat posed by external perpetrators of economic crime, especially customers.&nbsp;</div><div> </div><div>PwC’s Global Economic Crime and Fraud Survey tracks the trends that define the economic crime threat landscape. In the survey’s various categories of fraud, the category of “customer fraud” was only introduced in 2018, due to its historically minimal threat to businesses.&nbsp;</div><div> </div><div>However, in 2022, customer fraud has exploded and now ranks as the second most common type of economic crime – its incidence rate is three percentage points higher than in 2020. Notably, for companies with annual global revenues of more than $10 billion, customer fraud was the number one type of fraud experienced. For all companies with annual revenues of less than $10 billion, customer fraud was the second most common type of fraud experienced, behind cybercrime.</div><div> </div><div>The growth of customer fraud represents a global trend in the increased threat posed by external perpetrators of economic crime. In total, 69% of all the fraud experienced involved an external perpetrator. The threat posed by customer fraud – and the broader threat posed by external perpetrators of economic crime – necessitates that businesses implement KYC protocols to secure business perimeters and their transactions with customers and business partners alike.&nbsp;</div><div> </div><h2>Striking the Balance – KYC, Without Compromising Customer Experience&nbsp;</h2><div>Today, businesses operate in a rapidly changing world – threats of economic crime, regulatory compliance obligations, and customer expectations have all seen significant changes over the course of only the last several years. Seismic events such as the Covid-19 pandemic have accelerated the rate of change.&nbsp;</div><div> </div><blockquote>“Partly as a result of the pandemic, customer expectations are expanding beyond companies delivering high-quality products and services to them ensuring data privacy [and] providing&nbsp;a world-class digital experience to customers.” – Deloitte.1&nbsp;</blockquote><div>Growing consumer demand for world-class digital customer experiences pose a unique challenge for businesses. On the one hand, the pervasive threat of customer fraud necessitates the implementation of KYC protocols. On the other hand, businesses cannot afford to let these protocols worsen the customer experience.&nbsp;</div><div> </div><blockquote>“CDD procedures are among the main sources of dissatisfaction for customers. The process of collecting and verifying information is often difficult and strenuous, filled with endless requests&nbsp;for documents and additional in-person periodic evidence submissions.” – FATF.2 &nbsp;</blockquote><div>However, the emergence of new technologies has transformed CCD/KYC procedures. In 2017, ThisIsMe transformed the South African RegTech industry by cutting FICA compliance down from two weeks down to three minutes – an achievement that got the company featured as one of the Emerging 50 Rising Stars on the 2018 FINTECH100 list.&nbsp;</div><div> </div><div>The transformation of FICA compliance – enabled by new digital technologies – allowed businesses to save time and money and ensure the highest levels of AML/CFT compliance, while consumers benefited from easier documentation provision and near-instantaneous personal information validation. Today, this innovation continues in the provision of excellent KYC services that can ensure security without compromising on customer experience.&nbsp;</div><div> </div><h2>Optimising Compliance – Tailored KYC Solutions to Fit Every Demand&nbsp;</h2><div>Every business has its own unique set of requirements for security and KYC optimisation and service provision. Adapting digital security protocols to a business’s unique requirements is key to ensuring maximum effectiveness, minimizing costs, and ensuring the best possible customer experience.&nbsp;</div><div> </div><blockquote>“Be too passive and the organisation risks missing a fraudulent transaction, with all the financial and reputational fallout that follows. But be too proactive, and they risk alienating, or even losing, their customer base.” – PwC.3&nbsp;</blockquote><div>South Africa’s application of a Risk-Based Approach (RBA) means that every Accountable Institution has to design and implement a framework of security protocols that are to be deemed sufficient by the Financial Intelligence Centre (FIC). By using a tailored approach to risk, businesses can reduce due diligence requirements for individuals that are identified as being low risk. Discussing the utility of revolutionary new technologies for enhancing the customer experience, the Financial Action Task Force (FATF) commented that…</div><div> </div><blockquote>“Innovative technology-based solutions – both digital ID and AML compliance transaction monitoring tools - can facilitate more accurate and up-to-date risk assessments at an optimised cost and provide greater confidence in the conclusions of that risk assessment, enabling greater use of simplified due diligence where appropriate.” – FATF.&nbsp;</blockquote><div>Greater detail and accuracy in risk assessments save time and money by allowing businesses to conduct due diligence that is appropriate to the level of risk posed by an individual. This not only saves the business time and money but also provides a better customer experience.&nbsp;</div><div> </div><h2>KYC and Customer Experience – Have Your Cake and Eat it Too</h2><div>Today, the availability of transformative technological solutions to ensure security and compliance – all of which can be tailored to the demands of a specific business – mean that organizations can strike a balance between security and un-intrusive administration, therein upholding the highest standards for security and regulatory compliance while simultaneously providing an excellent customer experience. &nbsp;</div><div> </div><h2>KYC, Enhanced Due Diligence and Identity Verification Services for South Africa&nbsp;</h2><div>As South Africa’s leading provider of world-class due diligence and remote-onboarding solutions, ThisIsMe is proud to be at the forefront of a trust-based and privacy-compliant digital world. To experience how our full suite of advanced due diligence services can serve your business and its customers, book a demonstration by contacting our team <a href="https://thisisme.com/contact-us" target="_blank">here</a>.&nbsp;</div><div> </div><div>Citations</div><ol><li>Deloitte. Can You Measure Trust Within Your Organization? 2022. </li><li>Financial Action Task Force. Opportunities and Challenges of New Tech for AML/CFT. 2021. </li><li>PwC. Global Economic Crime and Fraud Survey. 2018. </li></ol>

Understand how new KYC solutions allow businesses to conduct comprehensive identity verification within a seamless, world-class customer experience.

Does KYC worsen the customer experience? Not anymore.

<cite>Sub 5-minute read </cite>

<h2>The Rise in Economic Crime and the Decay of Trust </h2>

Trust – understood as “our willingness to be vulnerable to the actions of others because we believe they have good intentions and will behave well towards us” – is the fabric that binds societies and economies together and ensures they can function well. The Covid-19 pandemic demanded more societal trust that ever before as peopleand businesses came together to overcome mutual challenges. 

However, this demand for trust between individuals, business, and project stakeholders was often betrayed as criminals exploited people’s vulnerabilities for personal gain. Economic crime exploded during the pandemic and types of social engineering fraud reached record levels. This sharp rise of economic crime during the pandemic holds key lessons for combatting such crimes in the future. If we want to foster a stronger, more trusting post pandemic economy, learning from Covid-19 is not an option; it is a necessity. 

<h2>Identity Fraud, Phishing Scams, and the Abuse of Vulnerability</h2>

The speed, unpredictability and consequences of the pandemic profoundly shook many people’s sense of safety and economic security. As noted by SABRIC’s 2020 <a href="https://www.sabric.co.za/media/20oouwbg/sabric-annual-crime-stats-2020.pdf">report</a> on cybercrime, “social vulnerabilities resulting from fear and confusion caused by the pandemic and adjusting to lockdowns were exploited by criminals”. 

Phishing scams – a form of social engineering that tricks people into handing over sensitive information by exploiting the trust people place in authority – spiked to record levels during the pandemic. As cybersecurity systems become uncrackable, this exploitation of trust is becoming more profitable – social engineering has become the primary method employed by criminals when targeting victims across digital channels.1

SIM swap fraud, which is nearly always committed by phishing scams, increased by 91.35% in 2020 compared to 2019. In addition, over 92% of all mobile banking fraud was committed using SIM swapping, representing losses of over R42 million. Due diligence services that can detect incidents of SIM card swapping, such as ThisIsMe’s SimSwap service, are central to curbing this threat.

Shockingly, Business Email Compromise (BEC) scams saw a 30% increase in the first 100 days of the pandemic.2 The chaos created by the near-instantaneous shift to online communications at the start of the pandemic – combined with the lack of verified identities online – made it easy for fraudsters to exploit the disarray and phish for information using (BEC) scams. When conducting BEC scams, fraudsters impersonate trusted authority or business partners and send fraudulent emails that are designed to trick employees into giving away sensitive information or sending the criminals money. In the US alone during 2020, the FBI reported adjusted losses from BEC in excess of $1.8 billion.3

Social engineering fraud is only possible in the absence of verified identities; consequentially, verified identitiesare also the solution to such fraud. To find out how ThisIsMe can help you rebuild trust with verified identities, contact our team here. 

<h2>Business Partner Fraud – Vendor Due Diligence and Supply Chain Risk Management </h2>

As the world battled Covid-19, criminals exploited the immense demand for PPE and other medical supplies. Mirroring global trends, the United States reported that non-delivery fraud, price gouging, securities fraud, misbranded products and identity fraud were alarmingly common at the height of the pandemic.4

In South Africa, <a href="https://www.youtube.com/watch?v=I8ZkpS-xMG4&amp;ab_channel=CarteBlanche">investigations</a> revealed how, during the height of the pandemic, fraudulent buyers fooled insufficient due diligence checks and scammed PPE suppliers out of millions of Rands of stock. 

These examples of business partner fraud are not isolated. PwC conducted a survey of 245 South Africanbusiness respondents (174 of which were C-Suite). Respondents were asked to identify the external perpetrator responsible for the most disruptive economic crime incident in the last two years. 18% of respondents cited vendor/supplier, 15% cited joint venture/alliance partner, and 13% cited consultant/advisor. Combined, these three groups – all categorized as business partners of some form – were responsible for 46% of the most disruptive economic crimes against the responding businesses. 

Shockingly, however, 24% of respondents to PwC’s report had no third-party due diligence or risk monitoring program whatsoever, even though 20% of respondents cited vendors/suppliers as the perpetrator of their most disruptive financial crime incident. If businesses want to operate in an environment free from crippling distrust, this discrepancy must be addressed, and comprehensive vendor due diligence procedures adopted. 

<h2>Fraud Risk Management with Enhanced Due Diligence </h2>

Fraud committed by a business partner is a devastating event. Of all South African respondents to PwC’s survey, 1/3 cited distrust as being the most significant emotional impact of such incidents. Of those organizations that had reported experiencing economic crime, nearly one in five South African respondents cited that they had also been accused of committing an economic crime. When assessing the likelihood of who would point the finger, 44% were competitors, 43% were employees, and 31% were customers. Only in a quarter of incidents did a regulator make the accusation.6 This growing culture of finger pointing highlights the damaging effects that distrust (caused by economic crime) has on an economy.

The years following the pandemic will be characterized by economies rebuilding and recouping the losses suffered during the pandemic. However, by undermining the faith we place in our transactions, pervasive fraud sows distrust and makes us shy away from investment – a pattern that has been proven to slow economic development.7 Restoring this trust is therefore crucial if we want to foster a strong economy in which people feel empowered to transact without suspicion or the fear of debilitating losses from economic crime. 

To manage the risks of fraud, enhanced due diligence procedures must verify the identities of business partners to validate company registration details and the identities of the company directors.

<h2>Restoring Trust with Identity Verification Services </h2>

Trust, which is so fundamental to the well-being of societies, economies and nations, has been in decline for years. We are more suspicious of businesses, government and each other than ever before.8 The share of the global population that felt like most people could be trusted has fallen by 20% over the last 15 years.9

<blockquote>“Virtually every commercial transaction has within itself an element of trust, certainly any transaction conducted over a period of time” – Kenneth Arrow, Nobel Laureate for Economics.</blockquote>

By undermining the faith we place in our transactions, pervasive fraud sows distrust and makes us shy away from investment – a pattern that has been proven to slow economic development. Restoring this trust is therefore crucial if we want to foster a strong economy in which people feel empowered to transact without suspicion or the fear of debilitating losses from economic crime. 

Although it is essential to start rebuilding this trust, it is naïve to simply ask people to trust one another. The risk of loss is too high. Trust must be rebuilt on verifiable identities that can offer peace of mind by affirming the integrity of those we do business with. 

As South Africa’s leading provider of world-class due diligence and remote-onboarding solutions, ThisIsMe is proud to be at the forefront of a trust-based and privacy-compliant digital world. To experience our full suite of advanced due diligence services, book a demonstration by contacting our team <a href="https://thisisme.com/contact-us" target="_blank">here</a>. Citations<ol><li><meta charset="UTF-8">SABRIC Annual Crime Statistics 2020.&nbsp;</li><li>Mimecast. The State of Email Security 2020. </li><li><meta charset="UTF-8">Federal Bureau of Investigation. Internet Crime Report 2020.&nbsp; </li><li><meta charset="UTF-8">Congressional Research Service. “Covid-19 and Emerging Global Patterns of Financial Crime”. 2020.&nbsp; </li><li><meta charset="UTF-8">PwC’s 2020 Global Economic Crime and Fraud Survey. </li><li><meta charset="UTF-8">PwC’s 2020 Global Economic Crime and Fraud Survey. </li><li><meta charset="UTF-8">Conal Smith. “Trust and Total Factor Productivity: What Do We Know About Effect Size and Causal Pathways?”. 2020. </li><li>Edelman Trust Barometer 2021. </li><li>Deloitte. The link between trust and economic prosperity. 2022. </li></ol>

As we rebuild after the pandemic, identity verification, enhanced due diligence and supply chain risk management are crucial to fight economic crime.

How to Fight Economic Crime with Enhanced Due Diligence and KYC

PwC’s <a href="https://www.pwc.co.za/en/publications/global-economic-crime-survey.html" target="_blank">2020 Global Economic Crime and Fraud Survey</a> provided valuable insight into the rapidly evolving patterns of South Africa’s economic crime landscape.&nbsp;South Africa has long been a hotspot for economic crime. Since 2009, the country’s incident rate has been, on average, 27 percentage points higher than the global average. In 2020, South Africa was tied with China for the country with the highest reported incident rate of economic crime. Interestingly, South Africa’s level of fraud awareness far outstrips the global standard: 73% of South African respondents indicated a high or extensive knowledge, in contrast to only 65% of global respondents.1 &nbsp;Fewer Incidents, Yet Higher Losses&nbsp; Despite South Africa’s high awareness of economic crime, total losses have increased by 4%. Between 2018 and 2020, South Africa reported total losses from economic crime in excess of $1.7 billion (more than 25 billion South African Rand). 7% of South African incidents reported losses of between $50 million and $100 million, while 4% reported losses of more than $100 million.&nbsp;Although these losses are high, such numbers are often hard to quantify and other losses such as missed opportunities, reputational damage, loss of market position, rife distrust, and impact on morale and productivity are nearly impossible to measure.2 &nbsp;<h2>Customer Fraud and New Types of Financial Crime&nbsp;</h2>For the first time ever, “customer fraud” was the most prominent type of economic crime listed in PwC’s report – 47% of South African respondents had experienced it in the last 24 months, compared to 34% of global respondents. Alarmingly, customer fraud was only introduced into the survey in 2018, meaning that the last five years have seen the emergence of a completely new threat, which has now become the most common type of economic crime.&nbsp;Customer fraud was foretold to be the 3rd most disruptive economic crime for the next two years. Three out of the top four responses listed external threats when requested to predict an organization’s most deeply felt economic crimes over the next 24 months –19% cited bribery and corruption (1st), 14% cited customer fraud (3rd), and 11% cited cybercrime (4th). Accounting/financial statement fraud placed 2nd, although this is an exclusively internal threat.&nbsp;Although daunting, the issue of customer fraud is one that can be addressed. While other types of economic crime such as bribery and corruption are far harder to tackle, customer fraud is one where “dedicated resources, robust processes and technology have proven effective in prevention”.3 &nbsp;Customer due diligence checks such as KYC and credit reporting hold the key to trusted transactions.&nbsp;<h2>Outsourcing, Vendor Fraud and Operational Risk&nbsp;</h2>In efforts to cut costs, there has been a global trend towards the outsourcing of business functions to third-party contractors. Although this approach has the benefit of being cheaper, it also presents new security threats.&nbsp;Respondents to a PwC survey were asked to identify the external perpetrator responsible for the most disruptive economic crime incident in the last two years. 18% of respondents cited vendor/supplier, 15% cited joint venture/alliance partner, and 13% cited consultant/advisor. Combined, these three groups – all categorized as business partners of some form – were responsible for 46% of the most disruptive economic crimes against the responding businesses.&nbsp;Fraud by business partners, suppliers, vendors, and consultants can be devastating. Investigations have uncovered how South African businesses have routinely been scammed out of hundreds of thousands of Rands after fraudulent suppliers secured credit by impersonating legitimate businesses and faking credit checks. Intensive due diligence measures – such as ThisIsMe’s Company Credit Check and Company Sanction Check – must form part of a larger business strategy to manage risk and ensure transactional security.&nbsp;<h2>Distrust – The Damage of Economic Crime&nbsp;</h2>Although the financial losses from financial crime are immediate and devastating for the affected business, economic crime has another lingering and invisible effect: distrust. 1/3 of South Africans cited distrust as being the most significant emotional impact of incidents of economic crime,4 &nbsp;which is mirrored by the fact that we are more suspicious of businesses, government and each other than ever before.5&nbsp;The share of the global population that felt like most people could be trusted has fallen by 20% over the last 15 years.6 &nbsp;This pervasive issue undermines the entire economy. A lack of trust can make some longer-term investments appear too risky as businesses become reluctant to invest their trust in project stakeholders like suppliers, consultants, and contractors. Businesses, therefore, default to ‘safer’ short-term investments, but such investments handicap growth by only being able to generate small and incremental gains over short timeframes. Distrust slows economic development.7&nbsp;Restoring this trust is therefore crucial if we want to foster a strong economy in which people feel empowered to transact without suspicion or the fear of debilitating losses from economic crime. &nbsp;Although it is essential to start rebuilding this trust, it is naïve to simply ask people to trust one another. The risk of loss is too high. Trust must be rebuilt on verifiable identities that can offer peace of mind by affirming the integrity of those we do business with.&nbsp;<h2>Enhanced Due Diligence, KYC and Identity Verification Services South Africa &nbsp;&nbsp;</h2>The explosion of customer fraud – combined with the complex threat landscape created by the growing popularity of outsourcing – places serious emphasis on the need for proper due diligence procedures.&nbsp;Shockingly, however, 24% of respondents to PwC’s report had no third-party due diligence or risk monitoring program whatsoever, even though 20% of respondents cited vendors/suppliers as the perpetrator of their most disruptive incident of financial crime. This discrepancy must be addressed if businesses wish to operate in an environment free from crippling distrust.&nbsp;As South Africa’s leading provider of world-class due diligence and remote-onboarding solutions, ThisIsMe is proud to be at the forefront of a trust-based and privacy-compliant digital world. To experience our full suite of advanced due diligence services, book a demonstration by contacting our team <a href="https://thisisme.com/contact-us" target="_blank">here</a>.&nbsp; Citations&nbsp;<ol><li>PwC. Global Economic Crime and Fraud Survey. 2020. </li><li>PwC. Global Economic Crime and Fraud Survey. 2020. </li><li>PwC. Global Economic Crime and Fraud Survey. 2020. </li><li>PwC. Global Economic Crime and Fraud Survey. 2020. </li><li>Edelman Trust Barometer 2021. </li><li>Deloitte. The link between trust and economic prosperity. </li><li><meta charset="UTF-8">Conal Smith. “Trust and Total Factor Productivity: What Do We Know About Effect Size and Causal Pathways?”. 2020. </li></ol>

Examining how the due diligence process can reduce operational risk and fight South Africa’s rise in economic crime, vendor fraud and customer fraud

SA’s Shocking Customer Fraud, Vendor Fraud and Economic Crime Statistics

Since its enactment in 2016, the EU’s General Data Protection Regulation (GDPR) has shaped global norms and values – nearly all ensuing national data protection laws have been modelled off it. South Africa’s Protection of Personal Information Act (POPIA) was no exception and its enactment brought South Africa on par with global standards. 

However, China’s new Personal Information Protection Law (PIPL) is noteworthy. Its approach is not only at odds with the norms established by the GDPR; it also explicitly states China’s desire to shape global standardsfor data protection. Contrasting POPIA and the PIPL highlights how political contexts shape legislation andreveals how data protection legislation may look in the future. 

<h2>How Data Privacy Fosters Trust – The Tangible Economic Benefits </h2>

Both laws should be applauded for requiring the explicit consent of the individual before their personal data can be processed. These requirements for the acquisition of data subject consent – a staple in other leading privacy bills like the GDPR – is a mechanism designed to empower individuals to make informed decisions about howand when their personal information is collected and processed. This fosters digital trust. 

Digital trust has become a major concern for businesses and consumers alike. For stakeholders and customers, it relates to whether they can trust that their data is secure, and if their personal information is correct, safe, and private. In an <a href="https://www2.deloitte.com/us/en/insights/topics/digital-transformation/the-importance-of-digital-trust-qa.html?id=us:2el:3dp:wsjspon:awa:WSJCMO:2022:WSJFY22">interview</a> with Deloitte, the director of MIT’s Connection Science laboratory Sandy Pentlandexplained the value of transparency when dealing with personal information.

<blockquote>“I’m going to deliver this service to you, and then without really making it clear, we’re going to sell your data on the side. That’s a violation of trust. A consequence is that if I don’t understand your business model and what you are offering me and what the value is to you, I can’t trust you. It’s that transparency in value, the relationship, and the motivations that are often left on the floor” –Sandy Pentland, MIT.</blockquote>

The formal recognition of data subject rights, combined with the prosecution of non-compliant businesses, creates an environment in which consumers can trust that businesses will not abuse their personal information once it is collected. This is invaluable, because countries in which businesses, governments and other institutions engender more trust experience stronger per capita real GDP growth. Macroeconomics has shown that as trust improves, economic prosperity grows.

<h2>POPIA vs PIPL – The Political State and Regulatory Compliance Obligations </h2>

The two laws diverge on the issue of state and governmental accountability. Enforcement of the PIPL is the responsibility of the Cyberspace Administration of China – a state backed regulator that also controls the list of approved news sources. Although the PIPL empowers individuals in their transactions with the private sector, the law does not restrict the state’s ability to collect and process its citizens’ personal information. 

In contrast, South Africa’s POPIA is enforced by the <a href="https://www.inforegulator.org.za/">Information Regulator</a>, an independent body that is accountable to the National Assembly and subject only to the law and constitution. POPIA therefore applies equally to businesses and the state (with a few exceptions for judicial and national security purposes). By establishing an independent regulator, POPIA is similar to the European Union’s GDPR and California’s CCPA. When contrasted with China’s PIPL, South Africa’s POPIA highlights the democratic values enshrined in our constitution. 

Regardless, both national regulators have the power to impose harsh punishments, and both require the identification of a party responsible for data protection and compliance (the PIPL goes further to require the specialized appointment of a “personal information protection officer” if certain thresholds for data processing are exceeded). For businesses and organizations, POPIA can serve fines of up to R10 million (±660,000 USD)and ten-year prison sentences, while the PIPL’s fines are heftier; up to 50 million Yuan (±7,800,000 USD) or 5% of the last year’s annual revenue. 

<h2>Risk Management – Data Breaches and Information Abuse </h2>

Data breaches have become so pervasive that they have negatively affected the public image of technology and media companies. According to a survey by Deloitte, only 17% of respondents cited trust in the technology and media sector – unsurprising, considering the heightened levels of public scrutiny after the sector’s history of leaks and apathetic data security measures. The importance of this cannot be overstated, as in the same survey, 85% of respondents were “very or fairly likely” to sever an existing relationship with an organization if it does something that negatively impacts trust.

In the wake of repeated data breaches, regulatory oversight is now necessary to help ensure that businesses properly manage personal information. POPIA directly covers the issue of protecting against data breaches and adopts a Risk-Based Approach (RBA) that requires businesses to take reasonable precautions to protect against reasonably foreseeable risks. This means that if a business is instituting protective measures to combat reasonably foreseeable threats, such as common types of data breaches, then that business should be able to make a defendable legal case against the regulator and avoid penalties in the event of such a data breach. 

The PIPL does not directly cover data breaches; that job is left mostly to the <a href="https://www.china-briefing.com/news/china-cybersecurity-regulations-what-do-the-new-regulations-say/">Cybersecurity Law</a>, which takes a far more complex and controlling approach. Data is categorized as ‘general data’, ‘important data’, or ‘core data’, and each of these categories comes with their own security and processing requirements. The Law also stipulates multiple scenarios in which companies must undergo security reviews, both for national and international data handling. 

<h2>Cross Border Compliance – The Complex Road to Universal Standards?</h2>

POPIA and the PIPL both regulate cross border data transfers, but China’s PIPL is far more constrictive – in some cases it even requires businesses to undergo a security assessment by the Cyberspace Administration of China before being allowed to transfer personal information out of China. The PIPL has also made it even more costly and inefficient for companies to store Chinese data overseas, thereby promoting the storage of all Chinese personal information on mainland China. Such constraints have serious implications: following other firms, LinkedIn withdrew from China in 2021 <a href="https://www.linkedin.com/pulse/linkedin-leaving-china-sam-maiyaki/">citing</a> “a significantly more challenging operating environment and greater compliance requirements”. 

However, national standards for cross-border data transfers are not new. The GDPR requires the EU commission to “determine whether non-EU countries “offer guarantees ensuring an adequate level of protection essentially equivalent to that ensured within the Union”. Compliance with these requirements is desirablebecause countries that meet these requirements face lower trade barriers to doing business with EU citizens.

Lower barriers to trade have tangible effects: a report issued before the UK complied with GDPR requirements estimated that not meeting them would cost UK firms between 1 billion and 1.6 billion Pounds due to theadditional compliance obligations. The extraterritorial scope of modern data privacy legislation can seriously constrain or promote business – developing global standards that protect personal information but minimize compliance obligations is therefore an objective worth pursuing. 

In <a href="https://digichina.stanford.edu/work/translation-personal-information-protection-law-of-the-peoples-republic-of-china-effective-nov-1-2021/">Article 12</a> of the PIPL, China clearly outlines its ambitions to be at the forefront of such global standards for personal information protection…

<blockquote>“The [Chinese] State vigorously participates in the formulation of international rules [or norms] for personal information protection, stimulates international exchange and cooperation in the area of personal information protection, and promotes mutual recognition of personal information protection rules [or norms], standards, etc., with other countries, regions, and international organizations.”</blockquote>

Although Article 12 speaks of “cooperation in the area of personal information protection”, the highly restrictive nature of China’s current legislation sets it at odds with existing norms established by the GDPR. Successfully negotiating global standards for data protection, reconciling China’s more restrictive approach with current norms, and generating the necessary multilateral support would be an immense challenge. China’s powerful economy would grant it significant bargaining power within such negotiations, but different political contexts would likely see nations disagree on issues of state accountability, national security, and the degree to which individuals are wholly protected by such legislation. 

The value of data protection laws for the protection of individual rights is proven and recognized. How nations will negotiate a solution to the increasingly complex intersection of such legislation remains to be seen. 

<h2>Ensure Regulatory Compliance, Today </h2>

The rapidly expanding web of regional and international laws can make regulatory compliance a daunting task. The regulatory requirements that compel businesses to consider KYC, AML/CFT and privacy and cybersecurity – all while operating in a risky digital world packed with the sensitive personal information of clients – can seem inconceivable. 

As South Africa’s leading provider of world-class due diligence and remote-onboarding solutions, ThisIsMe is proud to be at the forefront of a trust-based and privacy-compliant digital world. To book a demonstration and ensure future regulatory compliance, contact our team <a href="https://thisisme.com/contact-us" target="_blank">here</a>. Citations&nbsp;<ol><li><meta charset="UTF-8">“Why Data Protection Matters for Economic Development: The Case for Strengthening Inclusion and Regulatory Capacity.” 2021. </li><li><meta charset="UTF-8">Deloitte. New Models for Building Trust: An Interview with MIT’s Sandy Pentland. April 2021. </li><li>Deloitte. The Link Between Trust and Economic Prosperity: Repairing the Global Erosion of Trust Has Economic Advantages. May 2021. </li><li>Deloitte. The Chemistry of Trust, Part 2. 2021. </li><li><meta charset="UTF-8">Center for Global Development. “Why Data Protection Matters for Economic Development: The Case for Strengthening Inclusion and Regulatory Capacity.” 2021. </li><li><meta charset="UTF-8">Center for Global Development. “Why Data Protection Matters for Economic Development: The Case for Strengthening Inclusion and Regulatory Capacity.” 2021. </li></ol>

What are the differences between SA’s and China’s data privacy laws, and how might China shape the global future of personal information protection?

POPIA vs China’s PIPL: What is the Future of Data Privacy?

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Accountable and Reporting Institutions (AI’s and RI’s) are all too familiar with the headache surrounding FICA requirements of verifying customers. Thankfully, the risk-based approach adopted with the 2017 Amendments to FICA puts the power in the hands of AIs and RIs.&nbsp;Our suite of products and services provide confirmation of an individual’s identity, most probable address, contact number, and employer information in real time, allowing our clients to corroborate information and documents they’ve been supplied with.&nbsp;When riskier transactions present themselves, elevated risk checks supporting enhanced due diligence exercises can easily be performed via the same platform.

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When getting onboarded, clients, customers and staff are often subjected to cumbersome procedures that fail to adequately reduce the inherent associated risk for the organisation.Simplify your customers’ journey and optimise internal resources by replacing legacy procedures with ThisIsMe’s state-of-the-art onboarding solutions. Our leading digital onboarding services are designed to satisfy all onboarding requirement and range from simple CID (Customer Identification) transactions to enhanced customer due diligence exercises. ThisIsMe also offers bespoke onboarding solutions for clients whose complex set of demands require an approach that is tailored to their specific business requirements and risk determination strategies.&nbsp; Our services can be consumed via Mobile SDK (Android and iOS) and through API microservices, thereby giving you the flexibility to inject smart validation into all stages of the onboarding process.

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ThisIsMe provides direct, real-time identity verification services by utilising the Home Affairs National Identification System (HANIS) database – a system that provides multiple solutions for the verification of an individual’s national identity and deceased status.&nbsp;The rapidly increasing demand for real-time application processing has made identity verification a critical component of any business’s engagement strategy.&nbsp; ThisIsMe’s identity verification services empower businesses to mitigate risk associated with identity fraud by quickly and accurately verifying a client’s identity, all while maintaining the highest standards for data security, confidentiality, and customer experience.&nbsp;

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By using a photograph or captured selfie to cross-check and verify identity, ThisIsMe’s Biometric Verification Solution offers the highest degree of real-time risk mitigation for businesses engaging with clients in a digital or face-to-face environment. The service scans a photograph or captured selfie and transforms facial features into digital biometric information. The information is then used to cross-check the photograph against a provided Identity Document or Passport, thereby confirming or invalidating the individual’s provided identity information.For South African citizens, ThisIsMe offers an enhanced service that crosschecks a photograph and a given identity document against the digital image held by the DHA on the Home Affairs National Identification System (HANIS).A detailed report is generated confirming the matching results between the various images including those retrieved from the HANIS database.

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ThisIsMe’s risk assessment services help to ensure regulatory compliance by complimenting an effectively implemented risk-based approach.&nbsp;Our Anti-Money Laundering protocols, Politically Exposed Persons checks, and Sanction Screening solutions provide a detailed and timeous identification of potential risk, thereby allowing businesses to properly execute their risk mitigation procedures and ensure regulatory compliance.&nbsp; ThisIsMe offers multiple additional tools for the further investigation into potential risk, including risk related to mobile telephone numbers, email addresses, or credit-risk specifically. Our Credit Risk Assessment solutions range from a simple Credit Score and Summative Credit Profiles, all the way through to a Complete Consumer Credit Report.

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ThisIsMe’s Information Validation Services allow for the quick and efficient validation of documents and information. Our services allow businesses to reduce costs and streamline cumbersome administrative tasks such as client onboarding or the management of a customer base, while still maintaining the highest standards for data accuracy, security, and customer experience. &nbsp;ThisIsMe offers a range of solutions that provide access to data sources covering Contact Information, Address Data, Employer Information, Property Ownership, CIPC Business Principal Statuses, Trusts, and Marital Status Information. &nbsp;Access to this information is provided in multiple forms, via multiple channels, thus ensuring the most appropriate solution to each of our clients’ unique business requirements and existing workflows.

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