Half Year Report and Accounts
Melbourne, Feb 29, 2016 AEST (ABN Newswire) - iSignthis Ltd (the "Company") (
ASX:ISX) today announced the Financial Report on the results for the half year ended 31 December 2015. In accordance with Listing Rule 4.2A.
Highlights for the Half Year
- Successfully completed a $10.45m capital raising to institutional investors at an issue price of $0.40
- Executed new agreements with CrownBet, The Flying Merchant, Clearhaus, Coinify, Alpha Payment Cloud and TikForce
- Independent legal reviews and/or regulator engagement confirmed acceptance of the iSignthis service as AML/CTF KYC in the United States, Isle of Man and Gibraltar, as well as EU and other jurisdictions.
- Cash at Bank as at 31 December 2015 of $11.2m
- Investment of $1.8m for the half year in direct cost of operations, business development, product development and R&D
- Strengthened Balance Sheet with Net Assets of $12.3m ($3.5m at 30 June 2015)
- Lodgement of application for an EU wide eMoney License to the Central Bank of Cyprus to allow for value added services to our KYC customers.
- Building Brand Awareness by way of attending and exhibiting at major trade conferences
- Regulatory engagement and response to consultations on regulations in key markets and jurisdictions
- Business focus now firmly on gaming, wagering, trading, forex and other high value, high volume, high KYC frequency regulated businesses
The iSignthis service can identify 51% of the world's population corresponding to the number of banked or financially included persons in the world, irrespective of their country of domicile (excluding high risk /non cooperative countries shown in red below).
iSignthis uniquely identifies and verifies identity using the data and metadata generated from verification of electronic payments executed against regulated payment instruments transacted on secure payment networks. The iSignthis service can be utilised by AML/CTF obligated businesses operating out of any FATF cooperative jurisdiction (shown in green and blue). The core technology associated with this unique approach has been patented in a number of jurisdictions, including the US, Australia, South Africa and others.
That is, the iSignthis process does not rely on customers self uploading document copies to remotely identify themselves - a practice that some technology companies are promoting, but which practice does not meet AML/CTF KYC regulations for verifying identity in FATF cooperative jurisdictions, including the UK, EU and Australia.
The use of credit and debit cards as the source of information enables iSignthis to 'tap' an active and live source of identity data to generate data from any of 9.6Bn cards, corresponding to 3.55Bn persons. The convergence of payment and identity allows iSignthis to deliver the two key requirements AML/CTF obligated businesses need in order to deliver services to customers online - the assurance of payment tightly coupled with the provision of our Know Your Customer (KYC) service.
Isle of Man -A further example of iSignthis Service applicability to gaming sector As announced, iSignthis is pleased that the Company's remote Know Your Customer (KYC) service is applicable to yet another major centre for offshore wagering, gaming, gambling, financial services and banking. Gaming regulators often enhance the standard AML/CTF requirements with their own local codes.
The Company has now received independent guidance and advice that our services will satisfy local legislation and regulations in the key gaming and trading jurisdictions of Cyprus, Gibraltar, Malta, Isle of Man, UK, Australia, France and Italy.
EU Regulatory Update
The Company offers services that assist its customers to meet obligations under various laws.
Principally, the company offers data and systems that allow our customers to meet their Know Your Customer (KYC) requirements, as required under anti money laundering regulations. The company also offers payment instrument verification and payment authentication, which are complimentary to the KYC service.
The European Union is in the process of updating its regulatory framework with emphasis on greater security for electronic transactions. Under the EU framework, member states have 18 months to 'transpose' the requirements into local law once passed by the EU Parliament.
There are two principal reforms that the European Parliament has enacted into law that the Company believes will drive growth for the Company's services.
The 4th AML/CTF Directive, which was passed in May 2015 by the EU Parliament.
This directive replaces the existing 3rd AML/CTF Directive, which regulates anti money laundering and wealth movement from within and outside the Union. The European Commission has subsequently called for member states to implement the requirements by end of 2016.
The 4th Directive presents advantages to the Company as it:
i) increases the frequency that KYC must be performed,
ii) provides an enhanced framework for KYC via electronic verification; and
iii) recognises other FATF member countries as being "equivalent", and thus as a source of potential end users for our customers, where those end users can be verified remotely using electronic verification
The Company has responded to the European Supervisory Authorities Consultation Paper, and views its services as meeting and exceeding the requirements.
The Payment Services Directive 2 (PSD2), provides the legal foundation for an EU single market for payments, to establish safer and more innovative payment services across the EU. The objective is to make cross-border payments as easy, efficient and secure as 'national' payments within a Member State.
The PSD2 is advantageous to the Company as:
-the European Banking Authority has announced that all online transactions in the EU will be subject to payment authentication, from spring 2017. This period provides the company with an opportunity to market its services to prospective customers ahead of the compliance date.
-payment authentication requires dynamic linking of i) the end user to the payment instrument together with linking to two factor authentication (2FA)
-fraud liability is shifted from the merchant to the issuing bank, which will allow merchants to transact online with confidence that they have regulatory and practical protection against fraud, for the first time since the advent of ecommerce.
The Company has responded to the European Banking Authority's Consultation Paper, and views its services as meeting and exceeding the requirements.
EU Jurisdictional Summary
The Company has met with regulators and/or received favourable legal advice with regards to its services in:
-The European Union's 28 member states
-The British Overseas Territory of Gibraltar and Crown Dependency of the Isle of Man
The Company has communicated or showcased its process to Gaming/Gambling regulators in Malta, Gibraltar, and Isle of Man, where local 'codes' enhance the EU's AML/CTF Directives. These are major global jurisdictions and centres for gaming, gambling, wagering, betting and online casinos.
The Company's strategy utilises the regulatory certainty of the above directives to market its services to its prospective customers as a solution to both regulatory requirements.
The regulatory requirements are new and still some months off before being mandated by law, due to the EU transposition period. Thus it is the ideal time to be making the market and regulators aware of our solution to these new requirements.
The Company notes that it has not as yet identified any competitor that can offer convergence of payments and identity on a real time transactional basis, to meet the requirements of the above directives. The directives provide opportunity across a broad number of regulated sectors, including banking, payments gaming & trading.
PCI DSS V3.0 Certification
As announced in March 2015, the Company achieved Tier 1 Payment Card Industry (PCI) Data Security Standard (DSS) v3.0 certification for its cloud based payment processing services.
The Company elected to bring its annual PCI audit forward in order to certify its V2.0 SaaS released in December 2015. The certification covers technical, security and operational procedures of iSignthis Ltd and its subsidiaries and further assures its customers of its on going compliance with the Payment Card Industry requirements.
On site audit field work has been completed and the Company is confident of completing the re-certification process in a matter of weeks.
This certification process removes any potential barriers in regards to customer integration and the processing of 'live' transactions, as well as mitigates risk and liability. In order to avoid Customer's integrating fully to V1.0 and then migrating to V2.0, the Company took the position that a slight delay to allow for certification of V2.0 would be optimal for the Company and its Customers. Customer integrations will be completed as expeditiously as possible once the Company's V2.0 SaaS systems are certified.
New Business
The iSignthis sales team recently attended and exhibited our services at major trade shows in Hong Kong and London. The iFX Expo in Hong Kong and ICE Totally Gaming Conference in London provided great exposure to our key markets in Foreign Exchange trading and Gaming. Extensive leads and sales discussions are in the process of being cultivated in to prospective proposals and sales agreements.
As previously advised, the sales process for a compliance solution can be lengthy with external factors such as regulatory review of our customer's proposed changes to their AML/CTF operations required prior to prospective customers executing agreements with iSignthis. Whilst frustrating our desire to grow the business more quickly, the pipeline of opportunities continues to grow and direct feedback to the service has been extremely positive.
We note that contracting of KYC service requires 'outsourcing' approval in advance from the regulators of some of the AML/CTF obligated entities who have expressed interest in the Company's services. The Company's strategy to actively engage with regulators ensures that the outsource approvals can be granted as expeditiously as possible.
The Company has recently also contracted with an innovative US payments processor, with details to be announced once integration has completed and volumes are understood.
Partner Integration Status
The Integration of existing customers continues to make good progress. With the introduction of significant product update to SaaS version 2.0 platform, the Company has instigated the earlier than required annual PCI DSS audit of the service.
This was deemed to be the most prudential approach by the company's executive, as certification ensures that any ambiguity as to the Company's conformance with PCI requirements is removed, with customer confidence correspondingly increased. It did however mean that receipts during this period were not booked, and partner final integration will not be completed until post certification.
It is anticipated that the annual PCI DSS audit will be concluded in the next few weeks, allowing us to commence commercial transactions on our v2.0 platform. We are continuing to work with existing customers to satisfy their requirements regarding the timing of commencement of services and guiding them through the internal changes required to their compliance documents and internal processes.
Channel Partners / Networks
The following Channel Partners have completed integration, and will be able to commence sales cycle post PCI DSS certification and final test;
- Adelante
- eMerchantPay
- IPG
Integrations commenced or soon to commence;
- Alpha Payments Cloud
- The Flying Merchant
- SmartCardPayment Systems
- Assurity (Singapore Government NAF)
Direct Consumers
The following consumers of our service are at 95% complete, and awaiting final test post certification;
- Coinify
- eZeewallet
Integrations commenced or soon to commence;
- Crownbet
- Tikforce
- SolidTrustPay has not been issued credentials nor integrated to V2.0
SaaS Card Acquiring
The following acquirers have been fully integrated, awaiting final test post certification;
- Clearhaus
- Yeepay (95% - under test, incorporating some 18 Chinese banks) Integrations commenced or soon to commence;
- E-Comprocessing
12 Month Review
In the near 12 months since re-listing as iSignthis Ltd the Company has made, and continues to make, significant progress in the growth of the business and delivery of the services offered. Introducing a disruptive, or in our case, a completely new way of digitally meeting KYC compliance requirements requires a number of steps in order to promote our brand awareness and be accepted as a supplier of choice. The considerable time and effort taken in seeking regulatory approval and independent legal review of our solution has now created a clear path for our sales team to tackle the gaming and trading market. The key market jurisdictions of Cyprus, Malta, Gibraltar, Isle of Man, the United Kingdom, Australia, Italy and France provide enormous opportunity through the number of gaming and trading business licensed in those regions and the volume of customers and transactions processed.
The additional capital raised provides further assurance of the investment market's valuation and acceptance of our overall strategy. We have begun the steps of taking advantage of our market opportunity by incorporating new entities in the United States, United Kingdom and Cyprus (key markets) and the growth of our European sales team.
It is self evident that selling a compliance solution takes time. The process can be even longer when considering we were a reactively unknown start up business, offering industry and regulators a 2015 technology substitute solution to the traditional paper based methodology of identifying customers.
It has also become evident that we have a clear value proposition in our multijurisdictional, dynamic, electronic solution and that our first mover advantage lead has extended by way of our business development, regulator awareness and technology stack, with no clear competitor being evident.
The barrier to entry for any potential followers has increased substantially over the past 12 months with what we have been able to achieve. The significant factors or advantages that we now have include;
- Protected Intellectual Property by way of multiple Patents having been lodged in a number of key jurisdictions
- Regulatory Engagement in key markets and jurisdictions, with validation of approach to meet regulatory requirements
- In-house Design and Coding of all of our Software/Systems, allowing us full control of our SaaS suite.
- Opportunities as first mover by way of a new approach to the KYC compliance problem about to be introduced by incoming regulation.
- Channel parties integrated and ready to commence downstream sales to merchants
We thank all shareholders for the support provided over the first 12 months of operation and look forward to further positive updates as they become available.
To view the full report, please visit:
http://media.abnnewswire.net/media/en/docs/ASX-ISX-439398.pdf
About iSignthis Ltd
iSignthis Ltd (ASX:ISX) (FRA:TA8) is a hybrid monetary financial institution and also a RegTech leader in remote identity verification, payment authentication with deposit taking, transactional banking and payment processing capability. iSignthis provides an end-to-end on-boarding service for merchants, with a unified payment, electronic money and identity service via our Paydentity(TM) and ISXPay(R) solutions.
By converging payments and identity, iSignthis delivers regulatory compliance to an enhanced customer due diligence standard, offering global reach to any of the world's 4.2Bn 'bank verified' card or account holders, that can be remotely on-boarded to meet the Customer Due Diligence requirements of AML regulated merchants in as little as 3 to 5 minutes. Paydentity(TM) has now onboarded and verified more than 1.5m persons to an AML KYC standard.
iSignthis Paydentity(TM) service is the trusted back office solution for regulated entities, allowing merchants to stay ahead of the regulatory curve, and focus on growing their core business. iSignthis' subsidiary, iSignthis eMoney Ltd, trades as ISXPay(R), and is an EEA authorised eMoney Monetary Financial Institution, offering card acquiring in the EEA, and Australia.
ISXPay(R) is a principal member of Mastercard Inc, Diners, Discover, (China) Union Pay International and JCB International, an American Express aggregator, and provides merchants with access to payments via alternative methods including SEPA, Poli Payments, Sofort, PRZ24 and others.
Probanx Solutions Ltd, a wholly owned subsidiary of iSignthis Ltd, provides API based access to CORE Banking solutions, SEPA Core, SEPA Instant and SEPA business scheme, for neobanks, banks, credit unions and emoney institutions, and provides a bridge to the Eurosystem's Central Bank of Lithuania's CENTROLink service.
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