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What are verification procedures?

Verification procedures have a number of purposes, from preventing fraud and money laundering to validating a customer's identity. As verification procedures become more sophisticated and commonplace, this blog details why, when and where they take place today.

July 5, 2022
Blog Post
Identity Verification
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The process of verifying identity has been around for hundreds of years. In fact, the earliest recorded passport dates back to King Henry V in 1414. Of course, the documents that we use today are vastly different from older forms of ID that were essentially pieces of paper. Now, identification documents contain essential security features, such as electronic chips, holographs, and raised surface patterns. All of these can be used to verify that an ID is real and the person is who they’re claiming to be.  

In the modern world of business, having robust verification procedures in place is essential. This is because not only is identity verification an important part of authenticating an individual’s claim to a certain identity, it’s also a vital part of know your customer (KYC) and anti-money laundering (AML) regulations. Fall foul of these, and you may face huge fines.

Here, we’ll discuss exactly why verification procedures are so important, the information you need to verify, and how our solutions can help you meet stringent AML and KYC requirements.

What are ID verification processes?

ID verification procedures are the processes by which an ID is authenticated and verified. These procedures are in place to ensure that the identity a person claims to possess matches with the data they’re providing.

These verification processes can be used to ensure that an ID has not been stolen or forged. Plus, they can also be used to ensure that a person is exactly who they say they are and that this person isn’t barred from accessing your services.

Why are procedures in place?

Customers use identification to verify their identity when attempting to access a gated service. Customers will usually need to produce an identity document when they’re opening a new bank account, traveling abroad, purchasing a property, or proving their age.

In some of these instances (such as purchasing wine from a local store), looking at the ID and briefly inspecting it is enough to verify information about the customer. However, in other instances (such as opening a bank account), a business will need to employ verification procedures to safeguard its business against fraud. These procedures ensure:

  • Compliance with anti-money laundering (AML) and know your customer (KYC) legislation
  • Fraud prevention
  • Age verification
  • Identity verification
  • User onboarding

By successfully checking the identity of a user, you can be confident that you’re giving the right people the correct level of access to the right things. You can also ensure that there’s a real person behind the transaction or process.

Plus, by employing technologically advanced and AI-based ID verification, you’ll also be able to process more customers in less time. This means that honest customers will have no problem accessing your services. In fact, if you incorporate them correctly, you will find that your verification procedures actually improve your conversion rate.

The exact verification procedures you’ll need to have in place will be determined by the service you offer. However, for banks and financial services providers who are seen as ‘gatekeepers’, the procedures required are vigorous. This is because ID verification plays a role in broader anti-money laundering initiatives. As a result, if they’re used as havens for illicit business (even unknowingly), banks stand to face severe reputational, financial, and legal repercussions. This makes accurate ID verification a matter of great consequence.

Meeting legal requirements

Verifying the identity of a customer and having rigorous verification procedures in place has increasingly become a regulatory and compliance issue. For example, in the US, the PATRIOT Act outlines the minimum requirements for identity verification in Section 326. It states that:

“(2) MINIMUM REQUIREMENTS —The regulations shall, at a minimum, require financial institutions to implement, and customers (after being given adequate notice) to comply with, reasonable procedures for—

(A) verifying the identity of any person seeking to open an account to the extent reasonable and practicable;

(B) maintaining records of the information used to verify a person’s identity, including name, address, and other identifying information.”

But, regulatory requirements extend far beyond the US. In the European Union, six anti-money laundering directives have been issued in recent years. In December 2020, the Sixth Anti-Money Laundering Directive was adopted into law. This legislation aimed to empower financial institutions and authorities to do more in the fight against money laundering and terrorism financing. In doing so, the sixth directive expanded the scope of existing legislation, clarified certain regulatory details, and toughened criminal penalties across the Union. As a result of this, tougher punishments are now handed out for those who fail to have sufficient verification procedures in place.

Now we’ve outlined what verification procedures are and why they’re so important, let’s discover more about the steps you need to include in your verification process. To help you even further, we’ll also explain how our full-service identity verification solution for compliance and KYC can make it easy for you to connect with honest customers while keeping fraudsters at bay.

Validating a verification

In order to validate a customer’s verification attempt, you first need to verify that the information they’ve provided is accurate. To do this, you need to make sure that the customer is exactly who they are claiming to be.  

For this reason, you need to extract data from the customer’s government-issued identification document. Details such as the customer’s name, their date of birth, and other identifying information all need to be checked and cross-referenced with data from other sources. These include credit bureaus, utility companies, watch lists, and government agencies.

However, matching the information to a government database only tells you that the information provided is legitimate. As a result, at this stage of the process, you’ll also need to ask the customer to send you a selfie. This photo can then be matched to the photo on their government-issued ID. If a match is confirmed, you’ll know that not only is the information provided correct, but that the person submitting the information is the person the ID belongs to.

In addition to this, to make the verification as thorough as possible, you should also take steps to ensure that the verification is live and the person is real. One of the best ways of checking this is via optional background video recording. This allows you to conduct additional and advanced fraud prevention checks without the need for any customer input.

To speed up the process of gathering customer information even further, we use artificial intelligence. Using webhooks, we can instantly receive primary data, such as names, expiration dates, birth dates, and document numbers.

Plus, to make the process as easy as possible for your customer, we use Assisted Image Capture. This advanced form of AI provides a customer with real-time assistance, letting them know if there’s a problem with the selfie they’re attempting to submit. This means customers don’t have to wait for hours for feedback or to discover they’ve failed verification due to a simple problem like poor lighting. Ultimately, Assisted Image Capture means more of your customers will be verified on the first attempt and your conversion rate will improve by up to 30%.

Verification of documents

To verify an identity, you also need to make sure that a user’s document is authentic. After all, although the process is difficult, passports and ID cards can be forged by bad actors who will then attempt to use these falsified documents to access your services.

Thankfully, photos of government-issued IDs can be digitally checked to establish their authenticity. This process can also be carried out remotely to ensure full accuracy. Depending on the degree of automation you’d like from your verification procedures, this process can be done either entirely by machines, or with some level of user input. Here at Veriff, we use machine learning to compare photos of IDs with our specimen database. If required, our in-house specialists can then follow up this inspection.

To help make matters easier, our identity verification solution supports over 10,000 government-issued IDs from 190 countries. This means that you can verify customers from all over the world with confidence.

Reviewing the verification

If any inconsistencies appear or there’s doubt as to whether the verification should be authenticated, then the session can be fully recorded and manually reviewed.

Similarly, when reviewing the verification, it’s also worth checking whether the person is prohibited from using your services. Veriff offers Politically Exposed Persons (PEP) checks, which screen multiple government databases to identify individuals entrusted with a prominent public function. Sanctions checks are also available, making it possible to run user data through government sanction databases to determine if a user is barred from using the service you’re providing.

Documenting a verification and keeping records

If you’re a growing business that’s managing multiple verifications simultaneously, then it’s best practice to continually monitor the results. This way, you can see where every customer sits in the process. If required, you can then show this information to law enforcement agencies and demonstrate the steps you’ve taken to validate customers and meet KYC and AML regulations.

With our solution, you’ll always have live data at your fingertips. This is because, through Veriff Station, you can see session statuses in real-time. As well as seeing who was approved, who was declined, and who needed to resubmit, you can also see where the customer is from, the document they used, and the reason they failed the verification process.

To make sure your customer data is secure, you can also restrict data permissions using Admin and Support roles. This way, you can make sure that your business stays GDPR compliant.  

Book a consultation with Veriff

Interested in learning more about the verification procedures you need to follow and the rules you need to comply with? At Veriff, we can help.

We understand that a one-size-fits-all solution doesn’t work. This is why our online identity verification solution contains a number of optional features that make it possible to scale fraud protection up or down according to your requirements for compliance, speed, and conversions.

To discover more about how we can help your business verify identities and stay compliant, book a personalized demo with our team today.