Tuesday, May 30, 2023

Know Your Investor: What is Investor Verification and Accredited Investor?

You probably came across the word “accredited investor” while searching. Some investment options are only available to accredited investors. A person might be wondering what an accredited investor is and what the advantages of being one are. Let’s discuss what it takes to become an accredited investor and who is eligible.

Accredited Investor 

An accredited investor is a person or a company who can buy commodities that aren’t regulated by the (SEC). They get access to a greater choice of investment options, including property investment crowdsourcing and venture financing, that aren’t accessible to everyone. Who fits the bill as an accredited investor verification is determined by the SEC. 

These laws are intended to confine accredited investors to individuals who have the “financial sophistication” and personal wealth to bear the higher threat of unregulated investments. Unauthorized investments are riskier than recognized investments because they lack the very same declarations and controls.

What is KYI?

KYI is known as “Know Your Investor” similarly to and falls under the umbrella of KYC (Know Your Customer), which is essential for managing risk in the digital era by validating investors and investment firms. It is an investment verification service.  For a very long time, KYI and compliance standards have been routine in crowdfunding, e-commerce solutions, insurance, and other financial sectors. However, as blockchain becomes more widely adopted and AML/KYC law becomes more severe, an increasing number of businesses are seeking for platforms to undertake the requisite complete KYI processes.

For individuals who are new to the fintech sector, determining exactly what is required for a comprehensive KYI platform might be overwhelming. To get started, put together a list of three key functions that each KYI system must perform.

Mitigate Risk

KYI standards and practices are primarily intended to reduce the risk for firms when engaging with their investors. Without proper protocols in place, the company may be vulnerable to risks such as identity theft, money laundering, and other illegal actions, which can impact the brand’s reputation as well as the bottom line. A well-designed KYI program will safeguard the company’s operations while also assisting the compliance team in managing these risks more efficiently.

Furthermore, in today’s growing digital marketplace, investors are rightly concerned about their information being compromised. Throughout the compliance process, confidential material (such as identity documents and confidential papers for legal entities) must be safeguarded; as a result, organizations owe it to their investors, clients, and stakeholders to collect compliance data easily and reliably.

KYI provides tools to secure the privacy of both your company and your investors at every stage. Your organization will benefit from an AI-driven platform that enables comprehensive identity verification, Enhanced Due Diligence, anti-money laundering (AML) threat monitoring, and other smart safety protocols. In addition, the digital architecture offers cutting-edge technology and data handling to protect the investors’ data, reducing risk and reinforcing confidence within the back-office compliance operations.

Remain Compliant

Whenever it comes to business crime and data protection compliance, lowering the risk is only a part of the problem. Beyond safeguarding the company’s operations and investors, a company must also ensure that it complies with all applicable jurisdictional requirements, regardless of where it does business. In today’s dynamic business environment, it’s easy to forget about this. The consequences for non-compliance, on the other hand, can be harsh enough to have a significant impact on the bottom line, so it’s critical to make sure the procedure safeguards from fines, sanctions, lost income, and other possible repercussions.

Workflows Should Be Streamlined

Compliance, regardless of the size or scope of the firm, can be a very costly process. Traditional AML/KYC arbitration processes, in addition to the increasing financial expense of sustaining a compliance workflow, constitute a significant cost of labour, with some organizations investing up to 60% of their yearly budget in hiring their compliance department simply. Companies need solutions that allow their teams to simplify and automate back-office procedures so they can focus on what matters most—their people—in terms of making compliance more accessible and affordable.

Why Verify Accredited Investors? 

In a nutshell, becoming an authorized investor gives you more investment options. Greater results may be possible as a result of expanded opportunities. These investments, on the other hand, are hazardous, with the potential for serious loss of revenue.

Benefits of Becoming an Accredited Investor

More Opportunities

Accredited investors have more investment options available to them. The most important advantage is having access to a wider selection of financial options. Venture capital, preferred shares, and other investment options are available to accredited investors that are not open to ordinary investors.

The following are some instances of accredited investor capital markets:

  • Property for sale in the commercial sector
  • Crowdfunding for farms
  • Hedge funds are a type of mutual fund that invests
  • Crowdfunding for real estate
  • Syndicates of real estate
  • Angel investment (sometimes known as venture capital) is a type of venture capital.

More Options for Diversification

An accredited certified investor can broaden their portfolios even more by connecting directly to more investments. For instance, some people may prefer to invest in property crowdfunding rather than the stock or crypto market. Although these investments are risky, they can help to reduce the unpredictability of other assets.

Opportunity to Earn More Money

Some of the riskier assets offered to accredited investors may yield larger returns. “Riskier” is the crucial word here. With the opportunity of higher gains comes the risk of greater losses.


Quick KYC for investor verification can do wonders for businesses by preventing them from getting into business with fraudsters and scam artists, or even an inexperienced investor who does not meet the requirements of an accredited investor.