Understand the challenges.

Regardless of which country you are from, a growing wave of support for alternate capital sources is well underway. This support has been crafted into a myriad of crowdfunding models, public demand for regulatory changes designed to broaden the availability of funding sources for individuals and companies, and similar demands to expand the opportunity to invest in these same individuals and companies.

But, as one would expect, when governments adopt changes to support new and innovative market demands they require protection for the very people they have sworn an oath to serve.

Just ask any person, regardless of where in the world they are, what two challenges they are facing in this market and two issues will surface to the top: fraud and regulatory compliance.

Fraud

Fraud is a complex part of today's technology-based global economy. It's still impossible to measure what is in the hearts and minds of the people in our society but we all know there are the good guys and there are the bad guys. The bad guys are always on the move looking for new opportunities to exploit weaknesses in a system.

Prudent participants in this market warrant similar protections as they would be given from any other financially-centric market. This includes a complex array of risk mitigation ranging from detecting risky devices (computer, mobile device, etc.) wishing to interact with the portal, verifying a person's identity, considering someone's social reputation trust and keeping a close eye on their cross-market behavior.

Regulatory Compliance

Equity crowdfunding and open investing in exempt offerings may be on the verge of being new to the US market but its been around for a while in other parts of the world. What's interesting is the positive effect the Jumpstart Our Business Startups (JOBS) Act has had not only the US economy but also economies around the world as they look to emulate this important piece of legislation. There are also implications to the EB-5 Immigrant Investor Program to consider.

Regardless if you are in the US or elsewhere, the clear expectation is that there are or will be regulations that will need to be complied with to ensure the market is sound.

Our Role

Here at ciValidator we have taken a broad look at the market and developed unique products and services to satisfy your needs. It doesn't matter if you are a crowdfund backer, an investor, a peer-to-peer borrower or lender, a portal, intermediary or issuer, we have a solution to support you.

ciValidator:CORE

Allow us to share some sobering and staggering statistics to help you better understand why we developed our CORE product:

• In the United States alone, the FBI reports that securities and commodities fraud in 2011 included $8.8 billion in restitution orders; $36 million in recoveries; $113 million in fines; and $751 million in forfeitures.

• Add to the above, statistics from the US government that reports roughly 8.1 million Americans were reportedly victims of identity fraud in 2010.

• And, according to the APWG Industry Advisory dated October 2012, there were at least 93,462 unique phishing attacks worldwide during the first half of 2012. This is more than the 83,083 attacks they observed in the second half of 2011.

As a Federated Identity Management provider, ciValidator:CORE is not limited to the crowdfunding and investment markets. CORE functionality can provide immediate value to any organization that would like to offer a single sign-on solution with integrated fraud and identity verification.

ciValidator:CORE Functional Features

• Single Sign-On (SSO)

• Integrated Proxy Detection

• Integrated GeoIP Detection

• Integrated Identity Verification (More than 200 countries) | Federated Identity Management

• Integrated Social Network Identity-to-True Identity Detection and Trust Calculation

• Stacked Multi-Channel Two-Factor Authentication

• Duplicate Identity Detection and Linking

• Dynamic Knowledge Base Validation

• Streamlined Implementation via APIs

ciValidator:CORE Architectural Features

• oAuth Secure Protocol

• Secure Socket Layers

• Encrypted Database

• Unique Secure License Key

• ISO 27001 Data Center Accreditation

• SOC 1/SSAE 16/ISAE 3402 (Previously SAS 70 Type II) Data Center Accreditation

• PCI Level 1 Data Center Accreditation

• FISMA Moderate Data Center Accreditation

• Sarbanes-Oxley (SOX) Data Center Accreditation

ciValidator:CP

On April 5, 2012, the Jumpstart Our Business Startups (JOBS) Act was signed into law by President Barack Obama. The Act requires the SEC to modify existing rules, write new ones, and issue studies on capital formation, disclosure and registration requirements. These changes not only introduced the exciting new world of equity crowdfunding they also opened up the market for Regulation D (Reg. D) securities.

ciValidator:CP provides support for changes to US securities regulations as stated in Title III of the JOBS Act. Title III places limits on how much a crowdfund investor can invest over a 12-month period. The limit is based on net income or net worth.

The challenge for crowdfunding portals and intermediaries is the need to gain visibility of crowdfund investor behavior across the aggregate of all crowdfunding portals and intermediaries. Without a centralized solution like ciValidator:CP it is impractical, if not impossible, for the portals to comply with this requirement.

ciValidator:CP Functional Features

• Cross-portal and cross-platform monitoring of entrepreneurs and issuers to detect behavioral fraud.

• Integrated OFAC detection.

• Issuer company, directors and officers relationship and behavior tracker.

• Integrated support for investor limit enforcement based on stated net income and net worth.

• Integrated with ciValidator:CORE.

ciValidator:EIB

In an effort to support current regulatory requirements we have developed the Equity Investing Balance API that allows intermediaries to post and retrieve basic investment information for a given investor and/or issuer.

ciValidator:EIB API Features:

Investments

• Accepts SSN, investment amount and investment date;

• Calculates the investment balance for the current date minus 364 days;

• Allows intermediaries to update and delete investments; and

• Allows intermediaries to view the current investment balance and history based on SSN.

Offerings

• Accepts EIN, offer amount and offering date;

• Calculates the offering balance for the current date minus 364 days;

• Allows intermediaries to update and delete offerings; and

• Allows intermediaries to view the current offering balance and history based on EIN.

What Equity Investor Balance API Does NOT Do:

• Does NOT accept the investor’s net income or net worth and calculate the allowable investment limit for that investor. The intermediary must do this.

• Does NOT accept the offering limit for the issuer and calculate the allowable offering limit for that issuer. The intermediary must do this.

Notes:

The ability to accept, calculate and enforce aggregate investor and issuer limits across portals/platforms for a given entity is a feature of ciValidator:CORE + CP. The Equity Investing Balance API was developed as a simple and quick way to serve those that want basic functionality without the robust feature set available in ciValidator:CORE + CP.

ciValidator:BG

One of the regulatory requirements that many private and public organizations must comply with is the need to conduct universal (bad actor) background and securities enforcement regulatory history checks. This is also referred to as due diligence. This process more often than not involves a lengthy and expensive encounter with a specialized legal services provider. These delays and costs can without a doubt prove to be a major challenge for expense-sensitive organizations. The problem is that this strategy is needless, expensive overkill.

We offer three types of due diligence background checks:

BG Professional: To verify the professional background of an individual.

• National Criminal Background Check

• National Sex Offender Background Check

• Education Credentials Verification

• Professional Credentials Verification

• Professional Reference Check

BG Individual: To comply with regulatory requirements for criminal (Dodd-Frank "bad actors") and securities enforcement.

• National, County and International Criminal Background Check

• National Sex Offender Background Check

• Supports Dodd-Frank "bad actors" legislation, PATRIOT Act and FATF amongst others.

• Includes more than 400 watch lists, fugitive lists, exclusions lists, global sanctions lists, fraud warnings, debarment lists, disciplinary actions, enforcement actions, and more.

• Provides critical, risk-relevant intelligence, driving successful AML compliance/KYC compliance and fraud protection for the industry.

• We specialize in the hard-to-find: our intelligence is unmatched in its international negative news, PEP, OFAC and Iran Sanctions Screening.

• Looks for negative information by tapping into ~10,000 individual sources of public-source newspapers, magazines, television and radio transcripts, trade specialty publications, geographic special interest publications, academic journals, and gray literature.

• On-going monitoring of individuals to ensure up-to-date information is provided. No other provider offers this capability of on-going due diligence.

BG Company: To verify the legitimacy of a company and its officers (up to four BG Individual checks included).

• Authenticate you are dealing with a real business

• Verify global identity - using 3rd party corroboration

• Help prevent fraud

• Screen against the U.S. Treasury OFAC terrorist list and other government control lists

• Provides a risk-based approach to their Customer Identification Program

• Help enable compliance with Section 326 of the USA Patriot Act

• Provide customer profiling information in support of Anti Money Laundering (AML).

Accredited Investor Verification Service (AIVS)

Title II, Section 201(a)(1) of the JOBS Act directs the SEC to amend Rule 506 of Regulation D to permit general solicitation or general advertising provided that all purchasers of the securities are accredited investors. It also says that “[s]uch rules shall require the issuer to take reasonable steps to verify that purchasers of the securities are accredited investors, using such methods as determined by the Commission.” This same criteria would apply to EB-5 Immigrant Investors.

Essentially what this means is that natural person accredited investors can no longer self-certify their net worth and/or net income, which is the basis for establishing an entity as an accredited investor. The problem is that what comprises reasonable steps isn't defined and the Commission is reluctant to provide a prescriptive method to do so.

In addition, the SEC clearly stated, "... we believe an issuer would be entitled to rely on a third party that has verified a person’s status as an accredited investor, provided that the issuer has a reasonable basis to rely on such third-party verification."

AIVS is a service that can be used by the individual investor or the intermediary (on behalf of their issuers). This service provides a flexible means for the investor to provide evidence of accredited investor status.

AIVS Features

• Support for JOBS Act Title II, Regulation D Private Placement and the EB-5 Immigrant Investor Program.

• Secure, fraud-proof electronically signed certificate.

• Reuse with multiple intermediaries; no need to prove accredited investor status repeatedly.

• Flexible evidence models: IRS and/or investor-provided.

• Affordable consumer and wholesale pricing (for intermediaries).

• Data port to civalidator:CP.

Click on the Buy AIVS Now link below to complete the online form, attach the supporting documentation and pay for the service. Simple!