5 Important Things You Should Know About ID Verification

As we advance further into 2021, it is apparent that the concerns and opportunities about customer data protection within financial institutions are undergoing significant changes. Due to technological advances, ID verification is playing a substantial role in the sound implementation of numerous activities.

Increasing social media usage and smartphone adoption has provided people with access to financial services regardless of their location. Consequently, new techniques of ID authentication have come about. However, significant obstacles arise in the event these ID verification systems are manipulated, raising new challenges for financial institutions.

Given concerns like rising identity theft, account takeovers, and countless other financial crimes, it is important to be aware of the know-how of ID verification. In this article, we will be discussing 15 things you must know about ID verification if you aim to safeguard yourself or your business against ever-increasing cybercrimes.

What is ID Verification?
ID verification is the essential method of ensuring that an individual is who they claim to be prior to opening a savings account, applying for a personal loan, provision of mortgages, or other financial activities. Not only does ID verification play an important role in battling customer onboarding fraud, but it also plays a part in the KYC (Know Your Customer) and AML (Anti-money Laundering) process which is mandatory for assessing and monitoring customer risk.

What is Digital ID Verification?
Digital ID verification takes the ID verification concept into today’s remote world. With inflating data violations, account takeover attempts, and identity theft, the demand for remote processes came into the spotlight. Organizations today need to identify identity frauds on time and verify if users with accuracy online.
Digital ID verification methods, such as biometric verification, facial recognition, consent verification, and online document authentication can help businesses, government agencies, and financial establishments verify the identity of their customers online.

Methods of Digital ID Verification
Digital identity verification can be performed using numerous different methods. These methods include but are not confined to:

1. Verification of identity documents: Analyzes that the official ID documents (e.g., government-issued ID card, driver’s license, passport, utility bill, bank statement, etc) are legitimate.

2. Biometric verification: Uses biological characteristics to verify individuals. For example, a selfie can be used to authenticate that the individual displayed in the selfie is the same individual whose image appears on the document.

3. Liveness detection: Verifies whether a selfie is authentic by identifying spoof attacks such as imposters behind face masks or replayed videos.

4. Knowledge-based authentication (KBA): In this process, “out of wallet” questions are generated according to the information provided by the customer. These questions are unique to each individual and can only be answered by legitimate customers.

Benefits of Identity Verification
Online identity verification enables remote customer onboarding in order to improve customer experiences. New clients today demand accounts to be opened online. Therefore, financial institutions such as banks need to allow account opening via online and mobile channels.
For many financial institutions, this also means adding online ID verification to their services in order to weed out fraudsters. The quicker they are able to accomplish this goal, the better they are able to sustain themselves in a highly competitive and digitally-enabled market.

Global ID Verification Regulations
Global regulations have set standards for the application of online identity verification solutions.

For instance, AMLD5 provides guidelines for countries in the EU and focuses on AML and terrorist financing. In the U.S., financial institutions are monitored by the CIP (Customer Identification Program) which makes it mandatory for financial institutions to verify the true identity of each individual that enters into a banking relationship.

Additionally, a global regulatory body known as the FATF (Financial Action Task Force) has put forward numerous recommendations, also known as the FATF Standards, which ensure that countries worldwide perform sufficient KYC and AML procedures to prevent organized financial crimes, instances of corruption, and terrorism.

Summing It Up
Given the magnitude and consequences of fraud, it is essential that financial service providers detect fraudsters in the initial stage of customer onboarding. Digital ID verification can be employed to identify whether an individual is genuinely who they claim to be. Financial institutions can reap the benefits of ID verification methods such as biometric verification to help combat fraud by verifying a customer’s identity in real-time – whether they are present in person or online.