Civic

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Through our decentralized architecture with the blockchain and biometrics on the mobile device, our platform provides multi-factor authentication without a username, password, third party authenticator, or physical hardware token.

Team Connections

Vinny Lingham, is Co-founder & Limited Partner at Newtown Partners and Jonathan Smith, is VP - Global Head of Platforms at Genpact Headstrong Capital Markets.

Vinny Lingham

CEO

Vinny is a serial entrepreneur who previously founded the digital gift card platform, Gyft, which was acquired by First Data Corporation in 2014. After over a decade of experience in e-commerce, he realized that no-one had a universal solution to tackle identity fraud for consumers.

Jonathan Smith

CTO

Jonathan has more than 15 years of experience in banking and technology advisory. After a successful career in some of the most complex and security sensitive environments, Jonathan brings his talent for technology leadership, innovation and delivery to the world of digital identity.

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Whitepaper

Abstract

TFreablliry tostore and share information digitallyoffers so many heneri.that.edigitbationordato has become consistent and grovrngtrend. Howeyer, alogside. advantages olcostandonvenience, newsetolconcems has developed, the ability to copy and share data has raised questions about the security of personal data. There have been countless high•orolile cIrsand lea.orpersonalinbrmation.as Civic is building an ecosystem that or leho uln`r ertahle to.el is designed to facilitate on-demand, simply beenl.t Some services hare been sow adopters secure and low-cost access to identity ..00..0.1-,,e0^.M..,where verification ("IDV") services via the dam is particularly sensitive, such as in the government and healthcare sectors.

blockchain, such that background ''""""'"he-s''''''*her. and personal information verification and the consequences potentially more seyere,botla for theindividualswhose data checks will no longer need to be ''"'"'"he'"zat'°""me undertaken from the ground up every to deal ayith legal and tenulanonal iplications. time. Civic also intends to introduce a Civic token, or CVC, that participants xe in the ecosystem will use to transact Records) implies a whole new set of responsibilities and challenges...With in IDV-related service, Civic hopes electronic records, there is a higher this ecosystem can reduce the overall risk of compromising sensitive data costs of IDV, remove inefficiencies, because of the possibility of hacking attacks ofunauthorized access., enhance security and privacy, greatly improve user experience and disrupt Center forIlealthJournalismf the current IDV supply chain.

Background

Financial Regulation
Broader Market Context As the execution and administration of financial Though largely born out of financial regulation, the trend transactions has moved progressively into Me electronic quickly spilled over into other sectors, particularly in light of realm over the past 50 years, financial institutions, Me rise in e-commerce and our increasingly digital lives. Asa consumers, and law enforcement have been faced with result orMis trend towards ever-rnore extensive collection of new challenges. In Me United States,he Bank Secrecy personal information,MeoverallINsector is large and grow-Act of 1970 (Me .135.4") first required individuals and ing, as are security breaches and data theft. financial institutions to keep records that would enable authorities to detect and prevent mon, laundering by • In.. alone, 15.4 million adults In the U.S. were verifyingthe provenance of financial transactions. More victims of Identity fraud,1696 more than 1,2015. Vic. .ensive anb-mon, laundering (WW1 laws were tins suffered losses amount., S16 em., mat introduced in the 19B0s, followed in subsequent years $1billion more than 201, by a series of laws designed to combat financial crime and certain activiti. associated wiM it, including drug • Globally, almost 1.11afIlion identities were stolen In trafficking and terrorism.

2016 alone, nearly double the numberstolen In 201, The trend VV. broadly followed in almOM every country,

• Personal Identity Infonnation (or .1,111 was Me mast with consumers a. businesses growing accustom.. common Farrn of data stolen, acoon.ng f or 42.996 Me need for financial inMitutions to conduct know your of data breach., followed by Personal financial customer CM.) IDV proce.es to verify Me Went, mturrration (rPfli at MN, and Personal Health ry of a ...Mel' and the auMeMicity of the information Information.rNI,e166m. provided WO. Customer when seeking ...Ma new product Oru, for example,whenopeninga new

• In 2016, the ser,ces industry was moM affected by count or applying for a Man. data breaches, accounting for almost 4. of breaches, followed by Me finanoe, fnsurance, and real state sectors at 22%.

• The underground marl. price Far an item of Pll a name, SSN, or dare of bid11) can be as little as MAO - SIM There is also a thrNing mad. for scanned passport and other documents such asutility bills.

Background

frictions and inefficiencies in the IDV industry buys both financial und SOCial COWs. Without PrOOf ident. an individual may be unable to ...se u range of legal ...Including the ability to vote. access. educutIon or health caw. a. receiving social welfare., . of January 2016.1.5 billion people in the bevelOping.. ta.a proof of legal identity. .Cluding .2 mill.. children aged au. yOungerb Due to a luck of identity documenualstation in t and Me high costs of obtaining it. many indlvibhe U.S. and globally ure wholly or partially denied access. banking facilities, resulting in populations of sunbanke. or wth a limited financial history n , e significant hurdles in

Approximately 9.0 million U.S. households, Aoth0,0 A 0,,d0tA^A made up
of 15.6 million adults and 7.6 million children, were unbanked in 2015— disproportionately impacted by a Dck of, or lint., financial approximately20.SmillionU.S.households... Di., SW evUrriPle.were underbanked in 2015:- FDIC° HispanIcs and .2W of African Americans have been denied access to a serWce clue to a rilstaken or unverllied idntity, a signfficaptly higher ProportIon than the corresponding figure for all U.S. con,OiTer,at Another widespread problem, particularly in many low-income countries, is that new births go wwegiSteted because parents struggle to acquire the necessary documentation to haw verified and recorded reliably by the relevant authorites.

Background

The Costs of Data Acquisition Not only are traditional IPV processes often seen as Intrusive or timwconsuming by consumer, but they come at a fignIficant cost to the financial Mantutions requi. to mr, them out az a matter of law, and to avoid commerclal lossesdueto fraud.

Doe to the differences in regulation, the informagon required for different activgles, and the varying efficiency of different Institutfons. lov processes, it g impossible to derfve a flat cost per customer, Anecdotally, ftcosts a financial Mstitutfon such as hank aPPrOgimatefY $15-goto on-hoard a Vnglecustomervoith isbb,despite the process being similar Of not idential) for most organizations a. being repeated every time the same customer attempts to access another product or servfce {e.g. toopen another account or apply for a loan). These processes and their associated costs pose sign,. icant challengesforf inandal institutions,

'There's a high risk of getting PK wrong... You need to carry out rigorous tests on major clients at least every 12 months, and that, very expensive. Many global banks are finding that their relationships with smaller regional banks and financial services f irms are not worth the cost anymore, and they are exiting those relationships. Five years ago there WaS a strong correspondent banking network, and that is now being dismantled.'

Moreover, the time taken to conduct a ICYL audit is also increasing year-on-year, as more stringent regulations continue . he introduced. This has a detrimen.1 effect on customer relations and invariably also impacts cus.rner acquisition and lly, institutions are being forced to collect sensitive data that they arguably do not need, such as a Social Security Number, in order to transact with a customer. As a result, the costs °OWL are spiraling for the financial industry, and are inevitably passed on customers in one way or another.

The same overheads and inefficiencies are present in otlIer sec.rs where highly sensitive data may need.. verified,includingin background checks foremployment, working with vulnerable people, and driver checks for ridesharing. The sharing economy, which relies heavily ontust,grew an averageof 32.49,perannumfrom2014 to 2016,and now comprises 2) adultsinthe demonstratingthe growth and scale driving demand for 11,/ services beyond the financial services sector.

0[G]lobal surveys revealed a single clear message: the costs and complexity of KY< are rising, and are having a negative impact on their busines.s. While financial firms' average.. to meet their obligations are $60 million, some are spending up to $500 million on nompliance with KYC and Customer Due Diligence (C0D).'0°

CommtundIngthem data acquistlionthallentgesmetheculturalshOs that have taken place over recent decades Whle 0 was once the norm to settle on a career early to I....amain within the same organization for many mama not permanently.s ts mar, common or ....duals to have many lobs and even daterent careers over themtose of then Imes in Me had after graduation, those whom...tad ...en 201,6 and 2010 had a9MOzanatelZU,Wks. compared total 1 Moto lorlhosegradtoltng between Maa and 1990,

vadat churn ts swn in consumer markets. with customers more likely to mulch banks,creatcard inManet providers as new or more cost.efficient options become available. Greater transparency and access lo tnlormation has led to greater compelMon at both the mks ..1.1ies markets. along with a growing demand for 10v, demonstrating that the existing ruhher-methods ol bureaucracy that were establish. in the 1950s are no longer lit.rwurpose.

Intemet.sawyMillennialsa.4.erationZ hew.. partners in tIhmaonlae.w li1Wn tehceo bsyas. Millenianlsamoentustatebythefieion nemg vodd,nad theywill happily swap providers to omply avoid it o With this group estimated to spend over SID trillion et liktimesoorganizatIonswouldbesavvy to he more accommodatingotseamlessontcaniingemarieooks. Generation Z, although not price-conscious, Is reported to he financially cautious and supremely interested in value and authenticity,. may respect a more practical UM/ecosystem, 01 course, the cultural revolution inherent in the digitization of information brings with it another broad trend and set of concerns in relation to personal privacy.

Privacy and Security

The suite of technologies known as ockcha blin or distributed ledgers that have emerged in recent years offers a qualitatively different solution to the problems faced by organizations in the process of conducting IDV on their customers. In particular, smart contracts, or code executed on the blockchain, bring significant advantages over existing applications and frameworks of thinking.The following is an overview ofthosetechnologiez Open blockchains like Bite°. have a number of properties that set thern apartfrom thecentralized databasestypically used to rEeord information..ile they cannot beconsidered uniformly better or worse in general,their relative advantages include:

Low-cost
WIth no middlemen to impose uncompetitive fees a. with reward mechanism built into the PrelOCoLtransfers require onlvsmall transactIon fees.

Immutability
Theleigerispolicedbyeierymember of the network a. its integrity checked a. agreed byte network as a whole on an ongoing basisAny changes that one or other party attempts to make tothe blockchain are recognized and rejected by the mojor.

Transparency
Everything that takes place on the ledger is visible to anyone. It is possible to see everything that has ever been recorded on the blockchain. Irreversibility
Because the ledger is immutable, a transferthat has been accepted into the network cannot be reversed. With no trusted intermediary to 'rnnc'i'sehr'n's r7: 7g:irr7unntrTs! bitcain transactions are immune chargebacks aryl are like paying in physical cash,. online.

Pseudonymity
blockchalft the address itself does the token, the larger the network notsontainthewwssftiftl. AssurnWs and We more resources would be best practice, this enables a high required, meaning that the cost degree of pnvfts when required.

Security
Wockbalnaskiressesereeffectively Because the bockchain is maintained histstrIng so liandomcha sectersthat by a large network of particfpants, cannot intrinsically be associated nooneactorcan easily gain enough with a specific individual. Mile it influence to submit a fraudulent is easy for the owner to prove they transaction or successfully alter control anaddressil they wish.and recorded dW. Although possible it Is often possible to Wild up a Phtureof transaction always outpaces the benefit.

Product Description

The IDV industry as it presently exists relies on each institution obtaining and keeping records of clients' PII. As do=1 tahrZeseVr':4,hri:kgst ctahni: approach. Civic,already a (rm. player in the IDV space, ,ntends to leverage the above-described innovations in blochcbain and smart contracts rcleatTi'r?oeclut="ri="t° ecosystem. The key innovationenabled by this blockchain-based approach is the efficient and secure verification of previously-audited Pll third parties withouttheneedtosharetheunderlying PlIbetweenthoseparties,retainingllser controloverthe data.

-.Mowing isa description of fivic's existing identity productsandservices, whawillactasfoundationalelements of, and reference implementation., thenew productthadvicnow intends to introduce.

Through itsdecentrali.ed architecture Thus, the SIP allows for a voluntary xithtlIeblo
Civic, identity partners can request ser's information through custom PR codes to be scanned by the user with the Civic App. Once a user has unlocked the Civic App with his or her biometrics, the user can scan these codes, review exactly which information is being requested, and choose whether to approve or deny the request.

Data backuo VS. Decentralized data source

To maintain the highest level ofprivacy, away hammered. points being used Pll must be controlled by the User at totransactandmovetowardsverification all times and be stored locally on their of ownership before a transaction takes dea.This physical separation creates place. Fc,,exampkeredittanddetailshave a particularly difficult path to data theft blaclonarket value Lecause transactions as individual devices need to hetargeted cantake placesimplyWith knowledgeof on a person by person basis in order to thedata. Once a creditcardnumberhas steal PII, and prevents thetypes of mass to be presented with blockhhased data breachestowliichwe havehecome proof that the user indeed owns that accustomed. ltalso allowsearlyadopters number,thevalue of simply havingthose of the Civic Ecosystem to store a much details progressively deteriorates with rnore limited amount of sensitive data adoption of the Ecosystem.

and still have a high level of certainty about the authenticity of the actors kthisjuncture it is less irnportantwhere they are dealingwith. Moreover, when a the data is stored and rather that the User's Pll is shared with other parties, it ownership proofs are protected. It is always shared directly by the User. currently makes sense for distributed perto-peer protocol for this sharing, data mdelstobeeasilyadoptedina more prornotingcompliancewith privacy and sensitiveenvironment.Thebenefithereis data protection regulations in even the that largeorganizallonscan leveragethe strictestjudsdictions,

efficiencies of perrnIssloned distributed data storage forthingslike whl.has However,asadoptiongrows,thevalueof the added benefit of always having the specific identity attributes on the black latestdatathattheUserhaspermIssbnetl market should decline as entities move the organization to access,