Author: Ady

Categories

6 Relevant Employment & Income Verification Documents

Employment Verification Documents

Sometimes it is not clear what documents are needed to verify an employee. And, therefore, today we will discuss a list of 6 relevant employment and income verification documents that comply with local law. This will make it easier for the employee and the employer to clarify which documents need to be onboarded and verified.

What are Employment Verification Forms?

Employment Verification is needed when a company hires a new candidate and when a lender wants to evaluate an applicant for a new loan. The employment verification helps to make sure that the employee the company is going to hire has held a position in the previous company. This employment verification also helps to sneak a sneak peek into the employee’s responsibility and experience in the previous company.

What is Form I-9?

This document is eligible for each new employee to work in the U.S. Primarily completed by the employer, and this form is mandatory for all new employees. Form I-9 collects all the documents that are necessary to know an employee’s identity and work state. In the first part of Form I-9, the employees fill their personal information like social security number, name, and address.

And, this form also includes the employer’s proof of an employee’s work eligibility, which is the most important part of Form I-9. There are three categories of documents that need to be completed in Form I-9:

  1. Proof of employment eligibility and identity: This document includes U.S. Passport or Passport Card. Permanent Resident Card or Alien Registration, Foreign Passport with Endorsement to Work via Form I-94 or I-551, and Employment Authorization Document Card.
  2. Proof of identity only (must be combined with a document from List C): Current U.S. Driver’s License, Federal, State, or Local ID Card, U.S. Military Card or Draft Record, School ID Card with Photograph, U.S. Coast Guard’s Merchant Mariner Document (MMD), Military Dependent’s ID Card, Canadian Driver’s License, Native American Tribal Document, and Voter Registration Card.
  3. Proof of employment eligibility only (must be combined with a document from List B): U.S. Social Security Account Number Card, Certification of Report of Birth by the U.S. Department of State, U.S. Citizen ID Card, Native American Tribal Document, Consular Report of Birth Abroad, and Identification Card for the use of Residents of the U.S.

Let’s understand the Employment Authorization Document issued by the Department of Homeland Security:

The employers must maintain a copy of Form I-9 (completed by employees) three years after the hire date. There are serious penalties and imprisonment for any non-compliance and disclosure.

What is an Employment Verification Letter? 

The Employment verification letter is an Employment Verification documents issued by a new employer that works as proof that the new employee has held a role that they’re claiming to have held. The Employment verification letter is also known as the Proof of Employment.

Employment verification letters can be different in content and format, but this letter mostly helps center the dates of employment, employee responsibility, and employee’s job title. 

Additional information to complete the letter are:

  1. The name and address of the firm requesting the verification letter.
  2. A stand company letterhead or employer business address and name.
  3. The form also includes the job title of the former or current employee.
  4. The joining date of former and current staff members.
  5. Include the salaries and bonuses of former and current employees. 
  6. Lists of the employee’s responsibilities.
  7. Employee’s signature, contact information, and name to make it easier for the recipient to contact the employee.

What is an Unemployment Verification Form? 

Suppose an employee is out of his job or terminated from the firm, with no valid explanation. Then, the employee can apply for the support of the State’s Unemployment Insurance. 

The Unemployment Verification Form may differ in each state, but the employees fill them out. 

And, when you are filling out the Unemployment Verification form, this form includes a section that mentions the employee’s total earnings and reason for termination. 

Therefore, the employers can explain whether the employee’s claims are relevant. 

What are Income Verification Documents? 

If an employee is looking for a new line of credit involved in property-lease negotiations and loan organisation, this demands a verified source of the employee’s total earnings. Therefore, you need income verification documents.

What is a State-specific income verification form? 

Most states have their forms for employment and income verification. In some states, the employer confirms an employee’s earning information with the help of Form H1028. This form is used when an employee cannot provide information related to their earnings. 

What is a Loss of Income Form? 

In Florida, they use Form CS ES 2620. This form helps to document the loss of income. Sometimes, an employee may require verifying proof of income loss related to the current or former job, and in such cases, loss of income forms are useful.

What is Paystub? 

In some cases, Paystub can be used as proof of employee earnings. However, the chances of this document being fake are high, and therefore the employer may demand a more trustable form (State-specific forms) like Form H1028. 

Why is it important to complete an Employment or Income Verification Document?

Both employee and employer must keep all the essential documents. This is an essential part of securing documents related to Income and Employment Verification. 

If there is any false disclosure, then the guilty person needs to face imprisonment and penalties. 

Categories

A Deeper Insight Into Digital Identity – Transforming the Future of Digital Identity

digital identity

The world has gone digital. Work, food, education, entertainment, or everything else you can think of has become completely digital. Your digital identity plays a vital role in how your experiences will be online. If you don’t follow the right measures, hackers can get access to your digital identity. Your digital ID can be sold on the dark web for a couple of dollars. So, what can you do to stay safe online? Before we dive deeper into the concept of digital ID, and how it is slowly changing the way we operate online, let’s try to understand Digital identities.

What is a Digital Identity?

A digital identity is online data that’s connected to an individual, a business, or any entity. This information can be anything ranging from social media posts, banking information, usernames, passwords, or more. Hackers work around the clock to get access to this sensitive information.

Traditionally, proof of identity is something all of us provide to prove we are who we claim to be. Proof of identity is required for a number of reasons. However, when it comes to digital identity, the term is used for digital data or digital interactions.

In both versions of identity, one factor is common. Any version of identity uses credentials and data to identify ourselves, and access products and services. Both traditional identity and digital identity allow users to prove who they are and then access resources. 

At its core, your digital identity is a web of information. Your Digital ID information can include aspects, information, and credentials. Any information that helps you verify your identity, is part of your Digital identity.

For a social media user, their digital identity would include:

  • Personal information (Name, DOB, and more as asked by the platform)
  • Login credentials (usernames, passwords, and biometric data)
  • Any additional information related to user behavior on-site (user permission, subscriptions, connections, settings, etc)

Components of Digital Identity

If you want, you can easily break down digital identities into two primary components:

  • Attributes: Attribute is the information that’s related to your representation in the system. This information includes personally identifiable information (PII) such as ID number, payment details, login credentials, and more
  • Activities: Activities are a record of what you’re doing as a user. All the activities you do become a part of your identity. It can be something as simple as reading comments or posting online. In government environments, these activities include digital signatures, search queries, or legal activities. 

As the world is continuously evolving about digital identity, it makes sense that digital identity data is leveraged to verify identity data.

Challenges and Risk Revolving Around Digital Identity

While there are endless benefits of having a digital identity, they’re also at most risk of getting hacked or stolen. If you’re also concerned about the risk of digital identity verification.

Businesses and other institutions face a lot of challenges while managing digital identities. Here are all the risks of digital identities:

1. Security and Privacy

The biggest question around digital identity data is security. If you have any kind of business, you have to rely on identification and authentication services to protect your systems and the identifying information of your customers and employees. 

2. Regulatory Compliance

Many forms of digital ID also include some type of sensitive data. A user in a healthcare portal will have a corresponding ID that includes protected information under HIPAA. 

3. Ownership and Ethical Handling

Recent data collection processes, especially in the United States, haven’t emphasized user ownership of digital identities. Companies can collect and sell user data as per their preference.

The question of ownership of data and ethical management and use of digital ID is a huge question. Modern compliance frameworks like GDPR and CCPA are attempting to improve the data handling for users. 

4. Fraud

Proving who a user claims to be is crucial for businesses. Without proper measures in place, businesses can end up onboarding fraudsters that look like real users. A hacker can easily use a digital identity for harmful purposes if they want.

Global Impact of the Use of Digital Identities

The above-mentioned challenges are ever-present in the modern digital ID landscape. Digital identities are becoming more crucial for having a proper online experience. Here are some of the recent trends that have come from the use of digital Identity:

  • Modern smartphones have made using digital forms of payment much easier. There is a push in the UK, and the United States to expand the use of this technology. 
  • A major discussion point during the ID2020 summit in New York was for the UN to start considering the potential of blockchain technology. The reliance on digital marketing technology can support universal forms of digital ID verification. 
  • Germany has been circulating E-versions of ID cards for their citizens. While these don’t replace physical IDs, they are used in multiple locations and provide a better online experience. 
  • Canada is also making plans to roll out its digital ID scheme known as the Pan-Canadian Trust Framework to provide national digital IDs and unified logins. 

Conclusion – Understanding Digital Identity

Now that digital identity is about to become an industry standard, verification and authentication of digital identity are becoming crucial. ID management solutions are helping in reducing the challenges in digital ID management. 

Proper adoption of Digital ID can lead to more innovation in several industries. Verifying and authenticating digital Identities is the need of the hour. This can be achieved via online document verification solutions.

Categories

Age Verification: Use Cases, Regulations, and Guidelines

age verification

Digital age verification is crucial in this day and age. So in this article, we will talk about how age verification works, different rules and regulations, and minor protection in different parts of the world. Almost everyone can get easy access to digital products and services. According to a survey in 2015, almost 1.46 billion consumers purchased goods over the internet. This number increased drastically by 46% since 2021. This can be credited to the COVID-19 Pandemic. In the current situation of the world, more and more people love to purchase products online. While the rising number of online customers is great for online businesses, it also creates challenges.

Today, minors can easily get access to age-restricted content from all over the internet. Unlike the offline world, where minors can’t get access to alcohol or tobacco, buying goods online is completely different. According to research, more than 1 million minors fell prey to ID theft in 2017, which resulted in a $2.6 billion loss.

What Is Online Age Verification?

Online age verification is a process to protect individuals and audiences from consuming non-age-appropriate content. Merchants of age-restricted products need to take responsibility to sell their services only to people over their age. For online businesses, it is essential to understand the age of their users, and digital age verification is a great way to get around it. It is a safe way for minors to perform online activities, and maintain regulatory compliance.

Digital Age Verification vs Manual Age Verification

Since the inception of adult-based services, verifying your age has become a common practice. Tobacco and alcohol stores don’t allow minors to purchase and consume these products. According to regulations by the Food and Drug Administration (DSA), the minimum age for buying and selling tobacco products is 18. These laws can perfectly work in offline stores as there is someone available physically to verify age. When it comes to online stores, verifying the age of an individual becomes challenging. 

So, it makes sense that minor protection rules should also apply to digital businesses. Digital business vendors often just ask for usernames and passwords to protect the users. There’s a huge need for verifying the age of minors before they interact with these platforms. Fortunately, just recently there have been huge developments in the online age verification methods. 

Compared to a couple of years ago, verifying an individual’s age has become relatively easier by relying on biometrics technology. There are several age verification systems available today that rely on AI and Machine learning to smartly identify if the individual behind the screen is minor or grown-up.

How does Digital Age Verification Work?

Age verification helps businesses onboard legitimate customers and prevent minors from using age-restricted processes. Here’s how most age verification processes work:

1. Submit the Date of Birth

The user has to submit date of birth information including date of birth using an online form as provided by the vendor. 

2. Upload Documents

Users upload date of birth documents that are issued by the government. These include documents such as ID documents, driving licenses, or passports.

3. Verification Process

Based on the information provided by the users, businesses verify the age of the users. This happens by using a document verification solution or an online ID verification solution. Based on this verification, the end-user is verified and declined.

Global Age Verification Guidelines

Different geographical locations have different guidelines when it comes to age verification. If there’s one thing similar about all the guidelines, it’s that all of them focus on parental controls. The main purpose is to make parents aware of appropriate services for their children and obtain consent for the children to use these services. 

1. Age Verification in UK

The UK government made some changes in 2017, to make sure that a country is a safe place for children. Following that, some changes have been made to the laws to limit easy access to age-restricted products and services. 

The online age verification provider, interactiveAgeCheck (iAC) is responsible for minor protection. This is backed by CitizenCard, UK’s biggest photo-ID and age verifier organization. It thoroughly considers recommendations made by the UK Council on Child internet safety.

2. Age Verification in Europe

The GDPR (General Data Protection Regulation) is issued by the European Union and applies to the citizens living in EU states. It has a complete set of rules and guidelines for the collection of personal data. This information includes biometrics, health, and genetic information. The GDPR’s Article 8 allows the age of consent to be anywhere between 13-16. This suggests that anyone over the age of 16 in the EU is allowed to consume age-restricted products and services. 

3. Age Verification in USA

The Federal Trade Commission’s minor protection law is named COPPA. It’s one of the most impressive and crucial minor protection laws in the USA. The rule book outlines how companies should collect and verify information related to children under 13. complying with these regulations doesn’t just include age-restricted content warnings, or integrating an age verifier.

The Cellular Telecommunications and Internet Association issued guidelines on restricting career content not suitable for younger audiences. It outlines different content rating standards so that the parents are aware of the type of content suitable for their children. By using internet access control offered by major internet carriers, consumers can limit access to specific websites using filters or block certain websites. 

4. Age Verification in Australia

The Australian Communications and Media Authority (AMCA) put out a new guideline in 2008 to prohibit minors’ access to age-restricted content. These regulations apply to anything aired in Australian media or hosted on TV channels within the country. The broadcasting Services Act of 1992 played a vital role in the development of these frameworks. 

For every content rating group, these rules offer a different set of customer verification, the MA15+ guidelines require:

  • A warning message that the content is MA 15+
  • Safety information for parents to protect their children who are below 15

The RA18+ guidelines contain rules regarding:

  • Warning about the risk of using proof of age by another person or someone who’s not eligible based on their age
  • Consider which evidence is provided, and how it’s presented

Risks of Not Completing Age Verification Checks

There are some risks of not having the age verification methods. These include non-compliance and a drop in market reputation for offline and online businesses at the same time. Generally, the perceived level of risks involved figures out the level of control and application of the regulatory framework.

Here are some risks of not having proper age verification mechanisms in your process:

1. Compromised Market Reputation

Building a great business requires providing customers with the best customer experiences. User satisfaction is crucial in building loyalty for customers and building a good reputation for your brand. Not investing in age verification software can hurt your business by having a negative brand image. Not having a proper age verification process can lead to easy access to age-restricted products and services, it puts minors more at risk. 

2. Non-Compliance fines

All kinds of vendors and organizations have to comply with GDPR, regardless of the type of products and services they offer. The purpose of this regulation is to maintain privacy and secure record-keeping. These regulations are equally important while verifying the age of individuals during onboarding processes. Non-compliance with GDPR can lead to hefty fines for businesses. 

Till 2016, non-compliance fines for COPPA were 160,000, which were later increased to 43,280 dollars.

3. Financial Losses

Online businesses can reduce fraud in chargebacks by parents for non-consenting transactions. Having an age identifier or verification process integrated into your onboarding process can help in reducing financial losses. 

Conclusion: Importance of Age Verification

In the end, the age verification process is crucial to protect the young generation from the adverse effects of age-restricted products and services. Merchants have to take on the social responsibility to secure minors and restrict their access.

Categories

What Is The Importance of KYB and Ultimate Beneficial Ownership (UBO)?

Know Your Business (KYB) and UBO

Today’s topic is Know Your Business (KYB) and Ultimate Beneficial Ownership (UBO). We will also understand the need and the importance of KYB – know your business and Ultimate beneficial ownership. 

There are B2C companies that follow various steps to verify their customers’ identities. This is known as the Know your customer (KYC) process.

Other businesses and financial institutes are obligated to do the same verification process for businesses they onboard. This process is also known as Know Your Business (KYB) or Business Risk Assessment. In the past few years, the need for KYB regulation has been changed by the Financial Action Task Force (FATF).

What is Ultimate Beneficial Ownership (UBO)? 

UBO is a beneficiary or a legal entity that is responsible to verify the identity of the customers and ensure that it is not fake. The Ultimate Beneficial Owner also gets the profits for businesses, this is why financial institutions need to identify UBO’s identity. 

UBO verification plays an important step in Know Your business verification and provides relevant information to decide whether FIs should onboard specific businesses. This helps to reduce the chances of various frauds and financial losses. So, you know the importance of Know Your Business. 

When it comes to UBO, the United States FinCEN (Financial Crimes Enforcement Network), the European Union’s 4th and 5th Anti-Money Laundering Directives, and the CDD rule, all are intended to guarantee a better way to assess risks that would be helpful to strengthen the anti-money laundering measures.

What is the Customer Due Diligence Rule? 

The FinCEN Customer Due Diligence rule has four fundamental requirements to ensure the transparency of the financial Institutes and to detect any mishaps related to this: another step that explains the importance of know your business. 

Here are the four key requirements:

  1. The identity of the users and the customers is verified. 
  2. The account of the beneficial owners is verified. 
  3. To verify and identify beneficial owners who own 25% or over 25% of a legal entity. 
  4. Developing a customer risk profile for a better understanding of the customer relationship, customer purpose, and customer nature. 

What is the Importance of Know Your Business (KYB)? 

This process helps various businesses to catch the upcoming risk related to the business and their customers or clients. 

This process also helps the regulated entities and banks to stay compliant with the industry regulations.

When we talk about the importance of Know Your Business (KYB), we are trying to say that it is crucial to identify deterring frauds and to protect businesses from mishaps that can lead to huge financial losses. 

This process includes verification of the documents related to the bank records, incorporation, and the source of wealth. And, various KYB platforms are helpful for the businesses to create records with the UBOs and to get access to the databases. Best KYB platforms also help to perform KYC on the UBOs (as an individual) and the operational workflows, and investigation to track the data. This helps to get access to the information for the brief analysis, relevant parties and reporting by regulators. 

As per the regulatory requirement, maintaining a robust compliance program (with KYB) and using risk mitigation strategies with proper due diligence for UBOs is necessary to prevent your business from nefarious intent and also a regulatory requirement.

How does DIRO Play an Important Role in Know Your Business Process? 

It is crucial for business and financial institutes to maintain the integrity of their organization, firm, or institute without neglecting the compliance regulations. This also includes managing and detecting the risks related to the businesses and financial institutes.

DIRO online document verification technology can play a vital role in reducing the load of the verification process in KYB, and UBO verification processes. This is crucial to avoid identity theft and various other financial threats.

DIRO document verification technology provides a quick way to verify incorporation documents, bank accounts, business documents, utility bills, credit bureau reports, tax returns, etc.

DIRO also helps to ease the KYB compliance process with the real-time document verification solution. We as DIRO also assist with UBO identification and shareholder information.

Categories

State of Europe Open Banking Revolution

Open Banking Revolution

While the open banking APIs are being used commonly in the EU, the APIs in Europe still have a long way to go. There are some fragmentation-related challenges that have to be overcome and several challenges around stability and availability. Open Banking payments still have to reach a tipping point, what is required now is regulatory and industry pressure to overcome these challenges in open banking.

A Fragmented Europe

On the issue of SEPA instant adoption, not all banks in Europe support that and support is even inconsistent within the banking groups. For example, between 2-3 regional branches of tier 1 banks in France don’t support SEPA instant. 

This lack of harmony in the bank processes comes from the fact that it wasn’t taken care of in the PSD2. As a result, Europe has a highly fragmented market with different technological standards of APIs and on top of that, we are ignoring the fragmentation of the transaction processing. 

The utilization of SEPA can easily provide an answer to these questions as the payment happens in real-time which eliminates the problem of cut-off times, and the fact it is also instant means predictable statuses and transaction outcomes. These are the major reasons why the European Banking Authority and NCA should focus on SEPA instant adoption. 

As there is not a single pan-European Open Banking API supporting payments, industry initiatives have resulted in API standards for accessing bank accounts. 

However, in terms of variation across banks, there are fewer frameworks. Some banks have also taken and decided to implement their own payment standards. Given the complexities and broken system of Open Banking APIs in Europe, having the right solution to help you overcome fragmentation in the market is vital to delivering value back to your organization. 

While SEPA is part of the solution, customers have to pay a certain charge for these transactions, which could prevent users from adopting it more widely. This is why there need to be other standard solutions for Open Banking.

Unlocking Data Access Across Industries

As the open banking landscape is slowly shifting towards open finance, embedded finance is often highlighted as the ultimate application of open banking technology. An ideal example of how FinTech journeys can boost customer experience.

Convenience is the key to creating superior user experiences, that’s why embedded finance is highly anticipated. It’s this kind of “under-the-hood” thinking that we believe will become the future of finance. But before we can try to perfect embedded finance and prepare for open data economies, we have to level the playing field by providing access to data.

The Future of Open Banking 

Overall, Open Banking APIs offer stability and are improving at a significant rate. The UK has achieved a significant amount of success in embracing Open Banking, and Europe is right on track. But there’s still a long way to go for banks in Europe to embrace Open Banking APIs. If they take the right measures, it can be great for the future of open banking.

Notifications of planned and unplanned downtime are inconsistent, and banks often go offline for hours or even days without notice. The primary question is what banks can do to enhance the industry? It is high time that regulators step in and build regulations. These regulations can lead to better customer-business relationships and reduce the flow of fraud. Some of the basic measures include bank account verification, proof of address verification, and KYC. Admittedly, there’s no real solution here, but the only solution is that regulators need to put their minds together and focus on their projects. 

Categories

AML and KYC Compliance with Open Banking

open banking kyc and aml

Regulatory compliance is the biggest challenge for most financial institutions as it keeps changing. Financial services must have regulations that minimize the risks of customers engaging in illicit financial activities such as money laundering. Every financial institution is aware that collecting and leveraging financial data is costly. The time taken to onboarding customers tends to be lengthy and most customers leave the KYC compliance process in between. Businesses operating in the financial industry are finding it hard to access financial products due to the extensive information it requires.

Compliance costs are increasing annually due to the constant changes in the KYC and AML regulations which is vital to reduce the risk of financial crimes. According to a report, major financial institutions spend up to $500 million annually to stay compliant with KYC and AML regulations. Open banking can help in reducing compliance costs by streamlining the onboarding process by leveraging customer data to mitigate risks. The use cases of Open Banking can include retrieving information about the customer and the institution onboard. With open banking, the basic data such as name, DOB, country of residence, and address can be accessed easily. Without open banking APIs, a huge series of information won’t be available to banks such as a source of wealth, transactional data, and other sources of information.

Although open banking is a helping guide to traditional banking compliance teams instead of a substitute for them, many onboarding and AML decisions will continue to rely on financial institutions’ judgment and risk factors.

Open Banking and KYC

KYC is a due diligence process that financial institutions need to follow during the initial relationship with clients. In its entirety, KYC and background checks help banks and other institutions determine if the person is who he/she claims to be and if they are involved in some illegal activity. 

Depending on the financial service that’s being offered to the customer, the level of due diligence and the amount of risk faced by businesses change. There are three levels of KYC verification and all of them have the same objective. The only major difference is the amount of information that has to be collected from the customers. 

  • Simplified Due Diligence: This level of due diligence is applied to customers with the lowest level of financial risk. The information required to complete this is basic such as name, surname, and date of birth. In the EU, each state is allowed to make up its policies regarding data collection and they have to apply the guidelines offered by regulators. 
  • Ordinary Due Diligence: This level of due diligence is applied to low to medium-risk customers. Medium risk customers can be businesses that offer financial services of their own as insurance and credit services. Ordinary due diligence requires more data compared to simplified due diligence such as the location of the business and customers, source of income, and national insurance number (if required). 
  • Enhanced Due Diligence: This is the strictest due diligence that’s applied while onboarding high-risk customers. High-risk customers can be businesses that deal in financial services, politically exposed persons, persons on sanction lists, and businesses that operate in high-risk countries such as the Cayman Islands. 

In the current regulatory landscape, there is no fixed information that’s required by banks or regulators. A common or centralized digital ID verification method is required for banks and other financial institutions to reduce the risk of financial fraud while offering a seamless customer onboarding experience. While this is almost impossible to achieve, the ideal thing to do is a partner with FinTechs that can offer seamless online document verification software, online KYC verification software, and other solutions that can mitigate risks and improve customer onboarding.

Open Banking and AML

In the current environment, banks have a limited view of what their customers are up to. The information available is limited to the information that firms can collect from clients or public data sources. It also means that to comply with AML regulations and to monitor transactions, banks and regulators have to rely on information that comes from unreliable sources. 

With the widespread implementation of open banking and open banking APIs, this situation can be easily solved. As open banking relies completely on data sharing among banks and third-party service providers, collecting trustworthy data to onboard and monitor customers becomes seamless. By embracing open banking APIs, banks can access data from a trusted entity about any particular client, thus making KYC and AML compliance easier.

Instead of accessing only a fraction of customer financial data, firms would be able to gain a broader view of the entities they’re doing business with. This would make banks and financial institutions better at detecting fraudulent behavior and patterns in a customer’s transaction history.

This is why digital transformation is crucial in the financial industry. Being able to access data will allow a standalone financial service provider to provide customized services to customers. Tedious and risky processes like lending and assessing creditworthiness will also become easier. Open Banking APIs will allow firms to collect quality data about customers and businesses which will not only help them but other businesses and service providers in the industry.

Conclusion: Open Banking and Regulatory Compliance

To summarize, Open Banking opens new doors for banks and other businesses operating in the financial landscape by allowing them to access more data. More customer data means a better assessment of customer behavior and the risk level a customer poses. Widespread use of open banking APIs will also boost innovation in the industry, as the third-party service provider will try to offer customized services to the customers.

Categories

Health Insurance Verification Process: All You Should Know

insurance verification

Verifying patient insurance data has multiple benefits, even though it is an overwhelming task for most institutions. No medical professional wants to deal with insurance as it’s an enormous hassle. It’s difficult to comply with and verifying insurance means going through a plethora of steps. With the rising amount of insurance fraud since the global pandemic, healthcare institutions need to verify insurance documents. The insurance verification process is not at all simple, there are several things involved. Verifying insurance is crucial for hospitals to ensure they can provide the best possible care with minimum fraud.

What Is the Health Insurance Verification Process?

The entire process of insurance verification revolves around a series of steps that check whether a patient can make a reimbursable claim to the insurance provider. The verification process involves multiple parties, which makes the process more complicated. Different patients have different insurance providers, each insurance provider has its own set of rules.

Steps for Verifying A Patient’s Insurance Information

While different insurance providers have different policies, the foundation of steps remains the same. There are three main steps any healthcare institution has to follow to successfully verify a patient’s insurance data.

1. Collect Patient’s Insurance Data

The foremost thing that you have to do is to collect some basic information from the patient as soon as possible. Insurance verification can be tiresome and time-consuming, so the sooner the verification process starts, the better. Lack of time in the insurance verification process leads to error, and that’s the only thing fraudsters aim for. 

It is ideal to ask for insurance information when the patient calls for the first time to set an appointment. Vital data that you should collect initially are:

  • Patient’s name and date of birth
  • Name of the insurance company
  • Name of the primary insurance holder (and their relationship with the patient, if applicable)
  • Patient’s policy number and group ID number
  • Address and phone number of the insurance company.
  • Confirm whether the patient holds any secondary insurance policies (if they do, you’ll need to ask the same questions for every policy)

2. Reach out to the Insurance Company Before the Patient Visit

This is probably the most time-consuming process out of all the steps. The process can easily take 24-72 hours. The ideal scenario is to reach out to the insurance company 72 hours before the patient visits the hospital. Completion of this step will ensure you have all the information you need before the patient walks through your doors. 

A. Contact By Phone

The most common and straightforward way of reaching an insurance company is to just call them. From the information that you’ve got from the patient, it’s easy to find the number of the insurance carrier. 

Once you get through to them, the first thing to do is to ensure you’re in touch with a representative. A lot of insurance providers have contact numbers for hospital admissions and referrals. Once you confirm that you’re in touch with the entity you want to talk to, the representative on the other side will ask you for some information to confirm whether this is a HIPAA-secure exchange. Once you’re through that, the representative will ask for the patient’s information for cross-checking with their database. 

Most of the time, you’ll be able to get through to a representative pretty easily. If you’re unable to get in touch with them, calling at a different time or on a different day is the only solution. 

B. Search Online

Some healthcare institutions don’t have the resources that can sit around the phone all day trying to reach out to a representative. Fortunately, there’s a way to skip telephonic communication altogether and seek out online eligibility checking resources. There’s no one particular source that can act as a gold standard, you may have to go through a series of resources and directories. If the patient has a huge insurance carrier, then chances are hospitals can submit insurance-related questions on the website and verify the insurance data. The top players in the health insurance industry in the USA are “Humana, United Healthcare, Aetna, and Cigna”.

3. Acquire As Much Information As You Can

Let’s say you got through to a representative, it’s crucial that you gather as much information as you can for insurance verification. There are some common questions that you need to ask. Most healthcare institutions have their own set of questions they need to ask for verification. Some common questions are:

  • Can you confirm the patient’s policy number and group number, the name of the primary insurance holder, and the relation of the primary holder with the patient?
  • What is the claims address?
  • Is this policy currently active, and what’s the end date?
  • How many therapy visits does the patient have left this year?
  • What is the patient’s deductible?
  • Does the insurance company require physician referrals, pre-authorizations, and certification of medical necessity for reimbursement? 
  • Are there any specific coverage limitations or documentation required?

The list of questions above are some of the most common questions, however the list increases and decreases based on the insurance type, hospital, and other factors. That’s all a healthcare institution has to do to verify insurance policy for reducing fraud and confirming eligibility. 

Reverify Insurance Every Month 

To stay on top of things and ensure that you’re aware of any changes in the insurance policy, hospitals must re-verify every month. Patients don’t have enough time to remind hospitals of every slight change. It is just a good practice to verify your patient’s insurance plan on a monthly basis.

Categories

How to Prevent Fraud Proactively?

how to prevent fraud in fintech

Today’s topic is related to the three important and effective ways to prevent the risk of fraud with a proactive approach. In order to use anti-fraud strategies, you need to be more alert and look around the corners to detect such happenings before they happen.

Since the rise of Covid-19, Fintech companies and other financial services have faced challenges to prevent fraud. 

According to the Aiteo Group, from 2018 to 2020, the cases of mobile and online fraud losses increased. And as per 27% of financial institutions’ surveys, online losses were more than 10%, and mobile losses were also over 10%. So, how can financial institutions and Fintech companies prevent such losses? 

The best way to prevent fraud is to build a proactive approach against the growing number of frauds. Here’s how FinTechs can prevent fraud proactively.

3 Key Elements to Prevent Proactive Frauds in Fintech:

1. Digital and Physical Identity Elements for Accurate Risk Assessment

According to Kount, it is important to have 100% verified documents of each user and customer to prevent fraud. Financial institutions and companies need to focus on verifying all the users’ documents with the help of digital and physical identity elements to ensure the accuracy of the documents. This helps in preventing the use of fake and stolen documents during onboarding.

When we talk about physical identity, we include social security numbers, payroll information, credit history, phone number, addresses, and tax IDs. And, when we talk about digital identity elements, we include account modification information, email addresses, login behavior, device information, payment information, account creations, and geolocation. The physical and digital elements are helpful for Fintech companies. Even financial institutions use digital ID data to get a complete profile of their users to minimize the risk of fraud.

2. Adaptive Authentication for Minimal Friction Customer Login Experiences

Adaptive authentication is an important step to verify a user’s identity to be able to trust the user or customer.  

If a user or customer is doubtful about their identity, then the financial institutions and banks can step up for multi-factor authentication. With the help of multifactor authentication (MFA), it will be easier to determine a user’s trust based on their transaction frequency, billing address, geolocation, IP address, a device used, and account age. 

According to the financial surveys, the account takeover fraud rates are over 10%, which is more than before the pandemic.

The two key benefits of using adaptive authentication are that it helps prevent account takeover attacks, and the second is that it helps provide a smooth login experience for returning and new customers. Adaptive authentication is valuable for banks and Fintech companies to expand their customer base with less friction and risk of fraud. 

According to Benjamin Teal, Fintech and AltFi Industry Expert for Equifax, “As we start to see younger consumers seek financial services, fraud mitigation strategies need to be refined to incorporate evolving consumer behavior. “

He further said, “We know that younger consumers are digitally native and have fewer obligations requiring them to remain in one place. As a result, they engage in behavior that looks very different to older consumers. Sophisticated strategies will factor in these generational differences and create experiences that lead to higher conversion while keeping bad actors out.”

3. Deep Data Insights to Determine Identity Trust

Financial institutions and FinTech companies need more than just payment-related data to uncover identity theft issues. Identity theft can appear in different stages during the account creation process, application, and payment event, and log in. And, to prevent the risk of identity theft, the FinTech companies and financial institutions need relevant data to decide if the customer is genuine or not.  

In the recent webinar, O’Neill, the Enterprise Account Executive for Kount, said, “It’s not necessarily enough to look at payments data to compete against some of the largest banks and card brands, which have massive data networks. “

O’Neill further said, “When it comes to payments-related data, it’s really easy for big banks to say they know what a normal payment looks like and therefore know what an abnormal payment looks like. And that’s true, but you need more than that to make the best decisions.”

There are other fraud indicators like email addresses, geolocation, country codes, transaction amounts, and BINs.  

And to prevent the fraud related to these indicators, it is better to use a global network of fraud and trust-related signals. 

Once the payment data is combined with all the above elements, you can get a more accurate image to prevent proactive fraud in Fintech.

DIRO for Proactive Fraud Prevention

  1. DIRO’s document verification technology is great for Fintech companies and financial institutes for the instant verification of documents from the original source.
  2. With the help of DIRO’s document verification, the companies can save time and resources.
  3. Manual verification of data can lead to various errors, and the chances are high that manual a person could not identify real or fake documents.
  4. With the help of DIROs, you can get 100% verified documents from the sources, which means no chance of fraud and fake document threats that can lead to huge losses if not identified at the time.
Categories

Customers Onboarding Under KYC & AML Requirements

customer onboarding with kyc aml

Financial institutions have to comply with various AML, CFT, and KYC regulations while onboarding customers. Businesses operating in the financial industry have to provide a risk assessment to their new customers. The reason why these compliances are vital is to enable companies to identify the level of risk a customer poses to the business. They can then apply appropriate fraud prevention methods to mitigate the level of risk each customer possesses.

The AML regulation is made up of a variety of factors to fight against money laundering and terrorist financing in banking. Banks spend millions upon millions to develop measures that can help in fraud detection and prevention during the initial stages of customer onboarding. Financial institutions and banks that fail to comply with these regulations have to face huge fines imposed by regulatory bodies. One of the biggest examples of this is the $5 billion fine faced by Facebook for not having measures that protect customers against data breaches.

Relationship between Customer Onboarding and AML

AML (Anti-Money Laundering) regulation is set in place to ensure stability in the financial system and prevent financial crimes including money laundering, terrorist financing, and so on. The losses due to money laundering are equal to 2-5% of global GDP. Every year, a global bribe of almost $1 trillion is given. The money that is laundered helps the growth of illegal businesses such as drugs, human trafficking, and so on. Therefore, regulatory bodies ensure that AML compliance is followed strictly by companies during the onboarding process to prevent financial crimes.

Most financial crimes happen because of the financial institution’s inability to detect fraudsters in the early stages of onboarding. When financial institutions fail to prevent fraud, the financial stability of an economy is impacted. 

Regulatory bodies do their best to prevent financial crimes by setting down a strict set of rules and instructions. Companies are legally obligated to perform customer due diligence checks and KYC checks to assess the risk level. Companies that perform robust due diligence checks comply with KYC requirements.

KYC & AML Requirement for Customer Onboarding

Companies have the authority of building their own unique verification process for complying with KYC and AML regulations as long as it yields results. Businesses need to hire compliance officers to fulfill and conduct the liabilities of the companies during compliance. Identifying and verifying customer ID is the most critical part of the KYC process. If a company fails to build a proper customer and ID verification process during onboarding, it could lead to huge fines imposed by the regulatory bodies.

The next step involves the company investigating the customer’s history. Based on the previous transaction history, any previous suspicious transaction is investigated and a risk profile is created. Based on the profile created by financial institutions, businesses choose a transaction monitoring pattern for the customer. Having too many high-risk customers can be risky for a business as monitoring can take up a lot of time.

The risk assessment part of the compliance contains Customer Due Diligence procedures including checking sanction lists, PEP lists, and adverse media screenings. These lists are created by regulatory bodies and they contain high-risk customer profiles for companies. Companies should determine customer risks during customer onboarding and proceed accordingly. Some things that FIs should consider while determining the risk level are:

  • Whether the documents submitted are real or not?
  • Industry in which the customer works?
  • Sanction and Politically Exposed Person List Screening
  • Financial Transactions History

If the customer is identified as a high-risk customer, enhanced due diligence (EDD) methods are applied. If there aren’t any suspicious activities during this period, the customer’s account is opened. To ensure that no illegal activities happen, continuous monitoring is required. To comply with regulations, companies need to control the financial transactions of the customer and analyze them.

How Can Companies Improve their Customer Onboarding Process?

Banks, financial institutions, payment providers, and others that provide financial services have to comply with KYC and AML regulations. The guidelines that they have to follow are seemingly endless. Financial service providers, such as banks, should ensure that they uphold a good customer experience while performing strict checks. Using manual methods of verification to combat financial fraud is outdated and ineffective. With the rise of the latest FinTechs, companies can comply with regulations all the while providing the best possible customer experience.

DIRO’s online document verification software can assist businesses in verifying customer documents like proof of address documents, bank statements, Income tax return documents, and so on. Document verification is instantaneous with DIRO, and it also provides a stronger proof of authentication with each verified document.

Categories

Remote Customer Identification in Banking

customer identification in banking

The banking process has been evolving, and the pandemic has forced the banking industry towards digital transformation. While the integration of technology has made some things easier, some banks and financial institutions take things one step beyond. Instead of using normal yet effective identity verification solutions, banks overcomplicate the process with biometrics and other not-needed technologies.

Banks can easily verify the identity of their clients’ using the banking app which comes with an integrated recognition process. While biometrics verification helps prevent the use of fake and forged identities, it sometimes creates too much friction for customers during the onboarding process. The latest technological improvements are improving the banking process and assisting in detecting and preventing fraud early on, but the same technological advancements are also being used by fraudsters. Let’s dive deeper into how technology can streamline the verification process and enhance remote customer identification in banking.

The Role of Technology in the Banking Sector

In banking, not only a person’s data but the security of financial data is also important. The security depends on the type of technological solution the bank is using for remote customer verification. With the rise of countless technologies, the efficacy and accuracy of such solutions are becoming a growing concern.

When the world suddenly went digital due to the Covid-19 pandemic, biometrics and facial recognition seemed like the perfect solution to remote customer onboarding. However, that’s not the case, while it is a fast method, it isn’t the safest one. Banks need to look out for questionable recognition technologies with low precision. Ineffective solutions can increase the false-positive reports that can lead to an increased rate of fraud.

Biometric verification is ineffective, especially at the time of the pandemic. Before using biometrics as a method of identification, the client has to first provide the banks with their biometrics data samples. While this method is reliable, it increases friction during the onboarding process. Biometric verification is more likely to be used in forensic science and terrorism monitoring. 

In Europe, banks have started to consider other methods for remote customer ID verification other than biometrics verification. Apart from using biometric data like access to financial services, banking operations have to be accompanied by additional security checks to ensure bad actors don’t get access to financial systems. Most banks rely on multi-factor authentication or two-step verification. 

To fully shift banking towards digital methods banks and governments need to invest lots of funds as the infrastructure is expensive and includes the installation of equipment for data collection. This is one of the biggest reasons why the use of biometric data was met with huge support as it doesn’t require huge investments. 

As technologies are evolving, banks are trying their best to remove the intermediary from the client/bank interactions. Human interactions are only used to provide customer service, where clients receive personalized support for any problem the bank has. 

Remote customer identification is a vital step for all customer and bank interactions. Even just before the Covid-19 pandemic, banks had physical copies of customer addresses and identity data, and banks needed to make new copies of these documents each time they make a transaction, withdraw money or conduct any transaction. This protected the banks in case the client raised any claims. With the centralization of technology, all this has changed to electronic document management.

Remote Customer Identification in the Banking Sector

The banking sector is undergoing a complete digital transformation, and banks need to use ideal technologies to enhance the remote onboarding process and eliminate fraud.

1. Online ID Verification Solutions

To reduce fraud, banks need to eliminate the use of fake identity data used by bad actors to cause huge levels of financial loss. With online ID verification technologies, banks can verify customer identities with ease. There is no limit to online ID verification tools, but the banks have to choose efficacious tools that can provide genuine results most of the time. 

2. Blockchain Technology

The blockchain serves multiple purposes, including ID and document verification. Blockchain is a decentralized online ledger and information on the blockchain can’t be changed without access. With blockchain technology, banks can verify and manage the ID data of customers. The whole idea of blockchain is to ensure that the data is secure. Customers can authenticate them at government services, banks, airports, and other services with only one identity using blockchain technology. 

3. Online Document Verification

Online document verification technologies can help banks eliminate the use of fake and forged documents. DIRO’s online document verification software can help banks and financial institutions instantly verify documents like proof of address documents, bank accounts, tax return documents, student records, and so on. DIRO can verify 7000+ types of online documents from countries all over the world. The online document verification tool verifies document data from the original web source, thus eliminating any chances of fake documents to use by bad actors.