The peer-to-peer bitcoin marketplace Paxful announced today, April 2, 2019, that it’s introducing AI-powered identity verification to help improve know-your-customer (KYC) and anti-money laundering (AML) procedures on the platform.
Teaming up with Jumio, a digital identity and address verification company, Paxful is hoping that this added verification will help to minimize fraud risk.
Speaking to Bitcoin Magazine, Ray Youssef, co-founder and CEO of Paxful, said that the platform was already emphasizing account verification as a way to prevent fraud.
“Prior to implementing Jumio, we had a zero-tolerance system for scammers, fraud and any other illicit financial crime,” Youssef explained. “We required all customers to verify their accounts through email and phone verification [and] we encouraged them to use two-factor authentication for added protection to their account.”
But with the aid of Jumio, the platform will be capable of improving its KYC and AML procedures and compliance program in every operating country through a biometric facial recognition feature provided by Jumio.
According to Youssef, this was the feature his team desired most to help combat fraud because it’s not only effective in protecting their users but was also the “least complicated for our customers to implement.”
Through the AI-powered identity service and end-to-end verification process, Paxful will verify users’ identities with an ID scan, biometric authentication and liveness detection. This latter feature prevents someone from simply using a static image or prerecorded video to fake an identity.
Users who reach an equivalent of $1,500 in trade volume or wallet activity on Paxful will be required to verify their accounts through ID verification. Users who reach $10,000 in trade volume or wallet activity will also be asked to verify their addresses.
It was also important to Paxful that this advanced ID verification did not require the use of a smartphone.
“They can just as easily use a web camera as well,” Youssef said. “Given that we have a large customer base in emerging markets, this was a key benefactor in going with Jumio. They make it easy for our customers, no matter where they are, to provide ID and address verification.”
The introduction of AI-powered ID verification comes at a time when Paxful has seen a steady rise in the number of users trading bitcoin on the platform. In 2018, for instance, Paxful saw an increase in volume of around 125 percent, Youssef said, crediting the surge with an emergence of cryptocurrency trades in Africa.
“Africa is our top market and has reached an average of 17,000 trades per day,” he explained. “Many Africans are used to KYC. For example, in Nigeria you must KYC with a fingerprint scan to get a SIM card for your phone. Africans have been preyed upon and exposed to great fraud risk so they welcome KYC if it will guarantee a safe and open system.”
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