When you own or manage a data center, it’s essential to undertake appropriate due diligence on all new customers and partners (such as resellers). Here’s how to do so frictionlessly.
Why is due diligence needed for data centers?
The responsibilities of data center management include doing all you can to avoid your data center being used in fraud schemes. Not only does this make the world a better place, it also avoids your data center being flagged as untrustworthy. Being associated with criminal activity can lead to reputational damage, not to mention the disruption that dealing with law enforcement and forensic officials can cause to your day-to-day operations.
The 2021 T-Mobile case highlights this. A malicious individual in Turkey accessed more than one hundred T-Mobile servers in the US, compromising the names, dates of birth and telephone numbers of millions of the firm’s customers. Both the reputational damage and the disruption were significant.
In recent years, the reach of Know Your Customer (KYC) requirements has expanded beyond anti-money laundering and anti-terrorism funding defenses in the financial sector. KYC now falls under the customer due diligence umbrella for many businesses, meaning that processes need to be in place for vetting all new customers and partners.
Thankfully, there is a wide range of digital onboarding tools and solutions available to help with these processes, providing slick, frictionless solutions that enable data center managers to undertake appropriate due diligence on their customers and partners routinely.
Legal requirements and best practice
Know Your Customer standards apply to financial institutions, such as banks and investment companies, as well as to corporate entities in the finance world. They include requirements around customer identification, customer due diligence and enhanced due diligence.
From a data center perspective, privacy laws also come into play. These vary based on the jurisdiction of the data center and its clients.
While data centers fall outside of the legal requirement to implement KYC, best practice dictates that they implement the same degree of stringent checks that financial insitutions do in order to prevent instances of fraud. This is particularly important because fraudsters regularly use data center IP addresses as their proxies. By replacing or obfuscating their actual IP addresses with data center proxies, fraudsters can carry out their illegal activities with a high degree of anonymity. This is clearly something that data center owners need to do all they can to prevent.
How to carry out due diligence on new customers and partners
Carrying out due diligence means vetting customers and partners digitally. That means learning more about who they are and taking steps to verify their identity. There are neat, off-the-shelf solutions available to help you do this. Partnering with SEON, for example, means you can implement a streamlined digital onboarding process that not only weeds out fraudsters but also reduces your KYC costs.
A comprehensive digital onboarding process that includes appropriate due diligence for data centers should be easy, fast and seamless for customers to complete. This is where buying in an appropriate solution comes into its own – you can layer identity checks and verification processes in a way that applies risk scoring as part of the process. This can trigger enhanced checks for any new customers or partners who, for whatever reason, raise red flags during the due diligence process.
Part of the process involves carrying out digital footprint analysis. An individual’s digital footprint is made up of the information that they leave behind each time they go online. Social media profiles are an obvious part of this digital footprint, but it also includes everything from website registrations and upvotes on articles to comments on forums.
Analyzing an individual’s digital footprint – the data for which is freely available – can help to flag up warning signs of potential fraudulent behavior or risks of association with malicious activities and individuals. The analysis can be undertaken behind the scenes, meaning the process is virtually frictionless from the customer’s perspective.
Undertaking such analysis is now a core part of responsible data center management. If you own or manage a data center and you don’t have robust customer due diligence processes in place, it’s time to start making some changes. Fast.