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Why you should invest in an Identity Verification (IDV) solution for your business?

Why you should invest in an Identity Verification (IDV) solution for your business?

#IDV #CTF #AML

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February 4, 2022
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3 Minutes

How businesses need streamlined apps for KYC and AML / CTF compliance programmes

What is IDV? What is verified? Advantages of ID Verification Use Cases

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idv process

Are you losing good customers to a cumbersome onboarding process? Do you want to stay ahead of potential data breaches and risks of farming out the customer verification process to third-party vendors? Does your business belong to an industry like “Gambling and Casinos” that has age limitations? Do you conduct cross-border business and need to know who you are doing business with? Is your business a regulated industry that requires you to implement compliance based on the geography?

Well, now you no longer need to be concerned. Whether you are a Cryptocurrency business that needs to know the nationality of your customer, or a P2P micro lending firm wanting to validate address, you can now verify and validate the documents received during customer onboarding. Identity Verification is the new kid on the block, serving all your identity proofing needs.

According to Gartner, “high confidence in the identity of customers” is very important for a robust fraud management programme. In its Market Guide for Identity Proofing and Corroboration Report, Gartner mentions that 32% of enterprises are concerned about identity theft and frauds arising in the new account creation processes; while 23% have concerns about fraud by account impersonation. This has led to the practice of identity verification to ensure the trustworthiness of a consumer’s identity, and corroborate that the customer is who he says he is.

These concerns have been further exacerbated by reports of breaches that revealed names, addresses, government identifiers, and more, arising from manual or third-party processes. Thus companies in verticals like banking, finance and insurance, healthcare, government, education, retail, and telecom; are attempting to reduce their reliance on potentially compromised personally identifiable information (PII) by using SaaS-based automated IDV services.

What is IDV?

Identity Verification (IDV) is an automated service for identity proofing and customer authentication provided to companies with anti-money laundering obligations and risk compliance programmes, as mandated by the nature of their business or industry.

IDV includes the verification and validation of the following, where the customer is an individual or an entity:

  • Personal Credentials (Name, Number, Age, Address, Email, Phone, and so on).
  • Business or Entity Information (Business Type, Industry, Business Registration, Registration Year, Address, Email, Phone, and so on).
  • Nationality (Country of Residence/Operation, Citizenship, Place of Birth/Registration, and so on).
  • Identity details (Tax Numbers, Social Security Number, and so on).

This authenticates Proof of Address, and helps to prevent customer fraud by ensuring evidence of existence.

What is verified?

Documents provided by customers as part of the KYC or onboarding process are verified in real-time through a restful API.

These include:

To ensure interoperability across multiple systems and countries, IDV services support:

  • Multiple Languages
  • ID Types
  • Multiple Countries

What does the process of IDV entail?

idv process

Capture: ID documents are scanned.

Extract: Customer Identity Information is extracted using advanced technologies.

Screen: ID documents are verified using real-time online checks from available databases.

Information Extraction and Export: Verified details extracted from various documents are sent to the client via the API.

Advantages of ID Verification

Whether you are a financial institution, a Trust Body or a regulated entity, you need to comply with the norms. This means balancing customer satisfaction and fraud prevention, best achieved through a frictionless automated solution.

which are able to assess the identity of a user not only by relying on digital credentials, but also by rounding off and enhancing this assessment through the continuous, comprehensive use of other sources or signals within their context.
Why your business or organisation must use an IDV service:

  • A digitised verification processes is quick, seamless, and frictionless.  
  • It optimises conversion rates as customer onboarding process is speedy, smooth and secure.
  • Helps root out ‘bad actors’ and potential fraud and business losses, at the first instance.
  • The KYC requirements are met.
  • Helps attain AML Compliance.
  • Improves CDD procedures.
  • Meets key compliance directives like PSD2 and GDPR.
  • Automated ID verification takes out manual intervention by third-party providers, thus saving time and mitigating risks of data breach of PII.
  • The process of IDV uses multiple layered checks has a high accuracy rate, helping to manage risk at the first stage.
  • Frauds like impersonation, identity theft, forgery, credit card and chargeback fraud, can be averted.
  • Useful in instances when customer accounts are provisioned over the Web or a call centre. 
  • ID verification takes into account the different approaches adopted by countries to the types of information collected, of benefit to companies operating across geographies. 
  • Business with online operations can be proofed from the risks of identity fraud and financial crime while building trust in the online channel.
  • As IDV services support multiple languages and identity verification across countries worldwide, it allows ease of business as organisations can operate in new and emerging markets with more fluidity.

The benefits of deploying a dynamic risk-based IDV service that identity proofs a customer through technology use helps maintain high levels of compliance.

Use Cases

  • KYC/KYB during customer onboarding or new relationship formation
  • Customer authentication in
    - High-risk industries (gambling, virtual currency, money service business, etc.)  
    - High-risk or sanctioned countries
    - High-risk or high-value transactions
    - Cases of positive results during screening for PEPs, negative media checks, SDNs and blocked persons, shell firms, UBOs
    - Instant loan disbursements or policies
    - Credit card validation
    - Sectors like mobile services. where SIM swaps and identity fraud are common threats
  • AML/CTF compliance for “regulated entities”: insurance firms, FIs, accountants and accounting firms, casinos and gambling, MSBs, lawyers and conveyancers, dealers in precious metals and high value goods, security dealers, trusts, financial advisors, bookmakers, investment advisors, real estate developers, art dealers
  • Customer validation based on industry requirements

    - Age (required by gambling, bookmaking and betting industries)
    - 22/54-56 Fotheringham Street Enmore NSW 2042 (mandated by microfinance institutions and FIs for loan disbursements, or prevent losses by ecommerce businesses)
    - Credit Card expiry date (required in case of card-based loans by FIs)
    - Country of operation or residence (required by virtual currency exchanges as some countries have banned crypto holdings, and by FIs to assess risk where transactions involve sanctioned countries)

The benefits of deploying a dynamic risk-based IDV service that identity proofs a customer through technology use helps maintain high levels of compliance.

#KYC #CTF #AML

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