Author: Ady

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Tips to Protect your Business from Scammers

protect businesses from scammers

Businesses of all kinds face various internal and external attacks that can harm the businesses financially and in other ways. False invoices, money laundering, and phishing attempts are some of the most common examples of fraud. With the whole world forced to shift toward digital transformation, online scams aimed at businesses are getting more sophisticated. 

According to industry experts, every second an online merchant becomes a victim of some kind of fraud. What’s even worse is that most businesses take months to notice the fraud. Unfortunately, most businesses don’t know about the best practices they can use to enhance security and keep their businesses protected from fraudsters.

Practices to Prevent Fraud for Businesses

1. Know Your Customer

The COVID-19 pandemic was the primary cause of the surge in the rate of unemployment. Identity fraud costs reached up to $43 bn in 2020 out of the total fraud losses of $56 bn. 

Know Your Customer compliance program is a vital part of running an online business. Businesses are legally obligated to perform customer due diligence (CDD) checks to verify the identity of the customers to future-proof themselves from financial fraud. 

By building successful and efficient digital compliance programs, businesses can mitigate the risk of fraud all the while improving the customer experience during onboarding. The exact type of risk management solutions depends on the business type, but generally, they’re needed to identify and assess the threat a customer can pose to their business. According to industry experts, businesses should have automated checks in place for customers to eliminate the risk of fraud from the early stages.

2. Chargeback Fraud

Another common type of fraud that businesses have had to face since the rise of digital business operations is chargeback fraud. It happens when a consumer makes a purchase online using their card and then disputes the charge with the bank, and requests a chargeback from the bank even after getting the product or services they ordered.

Businesses operating in the industries like eCommerce, online dating, online gaming, and other purely online businesses tend to suffer from chargebacks and transaction fees whenever they onboard new customers. Although, businesses can reduce the risk of fraud by identifying the common patterns. 

3. Utilize Multiple Solutions

As there are so many areas where a company can be susceptible to attacks, it is vital to use a combination of digital defensive solutions, including:

  • Online ID verification
  • Online document verification
  • Continuous customer monitoring
  • Real-time transaction monitoring

One simple solution isn’t enough to keep the sophisticated types of fraud at bay, businesses need a combination of solutions for fraud detection and prevention.

4. Machine Learning Solutions

Machine learning solutions can be utilized by businesses regardless of the industry and business type. Firms that don’t have the resources to manage huge teams for customer verification can use machine learning solutions for customer verification and fraud detection. 

Machine learning can learn from huge data sources and detect normal payment patterns and detect suspicious transactions right away. Best algorithms can also identify fraudulent transactions on more than 50 different parameters.

DIRO for Fraud Detection & Prevention

Businesses often face fraud that revolves around fake and forged documents and identities. DIRO’s online business verification software helps businesses in detecting and prevent fraud in the early stages. DIRO can verify documents instantly and provide stronger proof of verification backed by verifiable credentials. By integrating DIRO into their solutions, businesses can easily improve fraud detection and prevention techniques.

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Open Banking in 2022: What To Expect?

open banking in 2022

2021 has been kind of a relief for people all over the world trying to tackle the wave of the COVID-19 pandemic. Now that most parts of our day-to-day are becoming normal, will banks revert back to their old selves or keep on pushing with digital transformation and innovation? All the evidence suggests that banks and other businesses operating in the financial industry are aware of the benefits of digital transformation and open banking. Technologies like open banking APIs can successfully enhance the overall workflow for businesses while ensuring a seamless experience for customers. Open Banking or Open finance is growing at a steady rate in the financial industry and here’s everything that is expected of Open Banking in 2022.

Leveraging Account Data to Develop Broader Products

Financial products and services are on the verge of changing dramatically. All of this is possible because of information and payment methods made possible by open banking. By the end of 2022, the financial industry is expected to see greater adoption of technologies for mainstream activities and innovation for tougher tasks. Customers can expect to access a broader range of products and services, only if they consent to third parties accessing their financial data, for building custom products and offerings. 

With the widespread adoption of open banking and with leveraging data, the lending and creditworthiness assessment process will change significantly. With banks and third parties accessing customers’ financial data, they’ll be able to offer a wide range of personalized products and services including better lending options with lesser risks for banks. Loans that are tailored to a specific person’s financial data or transactional habits will result in a better variation in interest rates and levels of credit.

As open banking evolves with time, it’ll lead towards Open Finance, simply meaning enhanced availability of credit cards, savings, and mortgage data will allow lenders to make better decisions regarding lending and offering credit cards. This data can also be utilized to tackle financial fraud like account opening fraud, account takeover fraud, and ID fraud. Open Banking APIs like online document verification API can help in detecting fraud during the initial steps of a customer-business relationship, thus reducing the risk of potential fraud significantly.

Open Banking Payment Solutions Will Become Mainstream

Open banking payments are already leaving their mark by eliminating the unnecessary fees and poor customer experience that customers face during card payments. Businesses like investment platforms are currently allowing customers to use Open Banking to create new accounts. 

Due to this change, eCommerce businesses will experience the biggest benefit in the near future, with an enhanced checkout process and reverse payments. Open banking-powered payment methods aren’t as widely known or used in the industry, but as more and more customers rely on online payment solutions, their need for better methods increases. Reducing transaction fees and improving the overall customer experience will be the key factor in the transformation and adoption of open banking payment.

Not only the purchase, but the refund process will also become easier with reverse payments. This will provide businesses with more control over their decisions, this will ultimately mean that customers won’t have to wait for days or weeks to get their money back from the business.

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EU Money Laundering Action Plan

Money Laundering Action

The European Union launched an ambitious and multi-featured action plan for tackling money laundering. This plan sets out concrete measures for banks, financial institutions, credit unions, and other businesses operating in the financial industry. These set of rules and regulations are built to ensure better enforcement, supervision, and coordination of the European Union’s rules on anti-money and fighting terrorism financing. Let’s dive deeper into the EU’s Money laundering action plan.

Timeline of EU’s Money Laundering Action Plan

On May 7th, 2020, the European Commission (EC) published its action plan to further streamline the EU’s fight against money laundering fraud and terrorist financing. The legislative plans to roll out this action plan were timelined around July 2021. The action plan targets six main problem areas, each of which is aimed at shutting down and eliminating loopholes and weak links in the already existing rulebook against ML/FT. One of these pillars is streamlining and strengthening the already existing rulebook. 

The current EU legal framework already offers comprehensive regulatory guidelines to all the EU Member states. These regulations outline how to tackle money laundering and financial terrorism. The current approach is diversifying regulation implementation across all EU member states. This fragmented legislative anti-money laundering environment leads to additional costs, burdens, and regulatory mistakes for businesses that provided services globally. The aim of a singular rulebook is to simplify the process for all entities involved, not increase costs and burden. 

Based on this, the EBA published a new report that highlights how the EU’s framework should be fixed and changed to tackle vulnerabilities and loopholes in the existing system.

Minimum Harmonization and Open Standards

To limit the fragmentation in the interpretation and application of rules, the EU considers it essential to convert specific parts of AMLD into applicable guidelines for all banks and members. Opting for regulation instead of a directive will ensure a consistent approach to AML/CFT compliance and enforcement. A regulation should outline rules and guidelines related to:

  • List of obligated entities
  • Tasks of FIUs
  • Structure and tasks of supervision
  • Customer due diligence
  • Electronic identification and verification
  • Record keeping
  • Internal controls
  • Reporting requirements
  • Beneficial ownership verification
  • Central bank account mechanisms
  • Limit large cash payments
  • Freezing powers for FUIs
  • Sanction lists

Adoption of New Rules and Regulations

According to the EC, harmonization can also be achieved by utilizing empowerment to adopt detailed rules and regulations through delegated or implemented acts to keep up with the changing environment. 

A similar approach was introduced in 2001 to improve the regulatory procedures and implementations in the financial services industry. The process has a 4-step approach, with committees of national experts working on different parts of new legislation.

The four levels are:

  • The European Parliament and the Council adopt the framework suggested by the EC in form of a directive or regulation.
  • These directives or regulations contain guidelines for level 2. This includes the adoption of a regulation by delegated acts or implementing acts. During the second stage of the approach, the EC is backed by consulting bodies that include several EU countries’ reps. 
  • At level 3, committees of national supervisors are responsible for advising the EC on the adoption of levels 1 and 2 and for issuing guidelines and recommendations for implementing the rules. This is how the uniform and consistent application of new legislation within EU Member states is completed. 
  • At level 4, the EC is required to monitor the implementation of compliance by the member states, and for warning about differences in impact between the countries. In case there are major differences in implementation, the EC can issue amendments to regulations. 

Six Pillars of Money Laundering Action Plan

The EU is committed to building a better and stronger framework for fighting and preventing ML/TF. To enhance the current rulebook, the EU devised a methodology for identifying weak points and loopholes. 

1. Ensuring Proper Implementation of Existing Framework

For winning a fight against money laundering and terrorism financing, the European Commission expects the member states to follow the rules. The EC will be monitoring the compliance closely to find those who don’t comply with guidelines. Since the implementation of the plan, 3 member states have been reported to the Court of Justice of the EU and they’ve paid hefty fines for non-compliance. 

2. Establishing a Single Rulebook for AML/CTF

The EC has developed a single set of rules that all member states must follow to prevent ML/TF. Some of the biggest rules include digital customer identification, due diligence, and provision on beneficial ownership registers and central bank account mechanisms.

3. Constant Supervision by the EU

One major plan in the EC’s plan is to make sure that all member states are monitored by them. Monitoring the application and implementation of rules at a national level isn’t enough. The EC will now provide help and support and relevant information to member states to improve implementation.

4. Building a Support and Cooperation Structure for FIUs

The fourth pillar of this new action plan includes offering more support to the financial intelligence units (FIUs) under the new plan. The primary goal of the commission is to improve cross-border information sharing, investigation of potential fraud, streamline the process, and much more. The EC will also take over the management of the FIU.net tool to improve user-friendliness.

5. Enforcing EU-Level Criminal Law Provisions

This pillar aims to make cross-border criminal investigation easier and more efficient. It encourages sharing of information between FIUs, law enforcement, and the private sector, and enhances public-private partnerships. Further support will be provided when information sharing raises data protection and privacy concerns. 

6. EU’s Global Role

While the new action plan aims to improve the workings of member states, they also aim to be more serious about their global responsibilities. It works closely with the Financial Action Task Force (FATF), and they’ll be guaranteeing that each member state follows the regulations as strongly as possible. 

Final Take: EU’s Money Laundering Action Plan

With these 6 pillars, the EU plans to enhance its overall process of improving safeguards against money laundering and terrorism financing. The commission is also launching several other tools to make the changes and implementation as easy as possible. The EU Commission aims to implement all the changes by the end of 2022.

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Water Bill Verification for Proof of Address

water bill verification

There are times when you need to verify your residency, and an ID document isn’t enough. You may need to provide multiple documents to authenticate your address. The proof of address verification process is a crucial part of maintaining security in businesses. Businesses want to verify a customer’s proof of address to make sure they are who they claim to be.

If you want to open a new bank account, register at DMV, apply for a mortgage, or do any other important task, you need two documents:

  • Government-issued ID document 
  • Proof of address verification document 

Government-issued ID is to verify who you are, and the address document is to verify where you live.

The most common type of document that you can use for proof of address verification is utility bills. Any utility bill including water bill, electricity bill, and telephone bill can be used to verify your residency.

In this guide, we’ve outlined what is water bill verification and how it can be used to verify proof of address.

What Counts as Proof of Address?

A proof of address document tells the bank, individual, or the government where you live. Most of the time, a proof of address document is from a reputable government service. Banks and other entities ask for proof of address documents to add another layer of security in customer onboarding. 

These documents help banks and other organizations confirm who you are and if you’re telling the truth about where you live. Some companies don’t offer services oversea, or they don’t offer services to particular countries. Proof of residency documents can help them confirm if you’re a USA resident or not. 

Most companies will require you to show both ID proof and proof of address documents. You need to have two different documents on hand. Most organizations have their own list of documents that they accept as proof of address documents:

  • Utility bills – water bill verification, electricity bills verification, etc.
  • Credit card bill or statement
  • Bank statement 
  • One-off bank letter
  • Social insurance statement
  • Paycheck
  • A letter from a public authority
  • Insurance policy for your car or home
  • A rental or mortgage contract
  • Your car’s registration
  • The official change of address form
  • DD214 official documentation stating you’ve left the military
  • An official letter from your employer or college where your address is confirmed
  • Confirmation of voter registration

These are the most common documents accepted by banks and other organizations, but every organization has its own set of documents they accept. Before you submit a document, you should be aware of the rules surrounding the documents. Some organizations won’t accept water bills and other utility bills that don’t include mobile phone bills. And most companies don’t accept insurance documents that are older than 3 months (90 days).

Water Bill Verification: Uses in Address and Identity Verification

People who’ve moved to a new country or have just started living on their own don’t have access to the right set of documents. This is where water bill verification comes in. Individuals living in rural areas don’t have access to financial institutions, or other online financial tech platforms. So, individuals that have limited access to documents and online financial institutions can use water bills for proof of address verification. 

While applying for loans, or opening a new bank account, water bill verification can help in proving residency. Regulatory bodies have been pushing the use of utility bills for verifying proof of address of customers. Accurate proof of verification process with utility bills can prevent fraud in the financial industry.

Using water bills for proof of address verification can even help banks in understanding the spending history of the individual, especially if they’re applying for a loan. 

Banks and other entities should be careful while verifying water bills and other utility bills. Fraudsters are becoming smarter and smarter every day, and they can edit utility bills to trick financial institutions.

Fraudsters can easily steal someone else’s identity and try to conduct several financial activities. It’s next to impossible to distinguish between a fake/stolen or a real document with naked eyes. This is why financial and non-financial institutions need to adopt technologies.

Online Water Bill Verification

Even the best onboarding processes can be broken if a bank fails to accurately verify documents provided by the customers. Water bill verification can help customers in opening a new account. Similarly, fraudsters can use fake utility bills to open an account to launder money. 

DIRO utility bill verification solution can instantly verify utility bill data with automated user consent and impersonation checks at 9,000 utility companies in 195 countries. DIRO verifies utility bill data directly from the issuing source, thus eliminating the use of fake and stolen documents by 100%. 

The verification output is a machine-readable JSON file that can be used as an original document for compliance. DIRO utility bill verification API can be integrated with existing digital frameworks to streamline and enhance the customer onboarding process with real-time verification.

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Simplifying the KYB Process for Faster Client Onboarding

easy kyb process

As fraud continues to rise, the regulations around the world keep evolving to keep up with the constant threat. Several of these regulatory changes require companies, financial institutions, and others to verify businesses and Ultimate Beneficial Owners (UBOs) that they interact with on a daily basis. The process of verifying business identities and UBOs is known as Know Your Business (KYB). 

KYB verification requirements create additional pressures for financial institutions and other regulated businesses such as:

  • Have to comply with AML laws and regulations, including the “Corporate Transparency Act” in the U.S or AMLD5 in the EU.
  • Spending additional monetary resources to protect customer data and privacy.
  • Controlling additional expenditure for regulation compliance. 
  • Trying to make the process smooth and friction-proof to increase positive customer experience. 

Entities that have to verify businesses and UBOs require enhanced due diligence (EDD). To perform EDD, an organization has to collect additional information about a business client. This additional data can consist of:

  • Nature of business relationship
  • Identifying the source of incoming funds
  • Enhanced monitoring of transactions
  • Monitoring and reporting suspicious activities

Enhanced Due Diligence helps businesses figure out if their client is real or not and it also helps in identifying stakeholders and UBOs that aren’t possible with KYC verification. To ensure complete compliance and avoid future fraud risks, KYC and watchlist checks have to be done on UBOs to verify their identities. It is always a good idea to identify the people who control a business, this can help in building an accurate customer risk profile.

Ineffective KYB: What Does it Cost?

Before the COVID-19 pandemic, almost all the banks performed due diligence on businesses using a paper-based process. Team members conducted individual searches on numerous lists and then analyze the data collected about an entity. Analyzing small businesses and merchants is an even tougher task as their history is almost non-existent. Manual KYC/KYB/CDD processes are onerous, ineffective, and expensive and also leave a lot of room for human errors. Thus, conducting accurate CDD is almost impossible and fraudsters can easily slip by.

A study conducted by Thomson Reuters showed that out of 430 AML compliance leaders of Financial Institutions, 58% claimed that the inability to access UBO data was the biggest challenge. According to the same study, the average annual global cost for conducting CDD and KYB is almost $48 million ranging all the way to $70 million. 

Not only that, but the cost of onboarding clients is also increasing due to ever-changing compliance rules. On the other hand, corporates have claimed that FIs have made inconsistent requests, access to data that was a security concern, and so on. These barriers result in poor customer experience and an increased customer drop-off rate. 

On average, it takes 3-4 months to onboard a corporate banking customer. The huge time window leads to application abandonment and the increased friction caused the global commercial and business banking market to lose $3.3 trillion.

Integrating Technologies in KYB Process

Needless to say, that future will bring a series of brand new challenges for entities trying to comply with regulations. The only solution is to leverage automation and technological solutions to cut back on costs, enhance the process and detect and prevent fraud. Our solution, “DIRO online document verification software” can assist businesses and FIs to keep up with KYC/AML and CDD requirements.

DIRO eliminates the need for manual document verification by instantly verifying online documents required for KYC/KYB/AML compliance. Banks and Financial institutions can integrate DIRO’s online document verification software into their workflow and significantly reduce the 3-4 month onboarding time frame. 

Businesses have to adapt to today’s environment and customer requirements. Customers need instant access to products and services without having to stand in lines for hours. With DIRO’s online document verification API, companies can onboard customers quickly, and efficiently, while ensuring the standard of security is maintained. 

DIRO can verify over 7000 document types from all over the globe and also provides stronger proof of verification for verified documents. It 100% eliminates the use of fake and stolen documents, thus eliminating the chances of fraud during the customer onboarding process. 

With the integration of technologies like DIRO’s online document verification tool in the KYB process, organizations can leave the outdated processes in the past. Organizations can easily provide a smoother customer onboarding process while 100% complying with the regulations.

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Use of Biometrics for Improved Onboarding Experience

biometrics

The pandemic has changed a lot of ways we do basic activities. The retail space, banking, education, hospitality, and several other industries took the brunt of the pandemic. Fortunately, the reliance on technology improved how we used to do basic activities. These technologies have specifically increased the efficiency of customer onboarding and employee onboarding. So, instead of using physical documents and in-person verification, digital onboarding methods are being used.

Many banks are now generating lower levels of revenue, with some banks reporting a decline as low as 70% from the year before the pandemic. Many banks had to lay off employees and permanently close some of their branches. Banks that have stayed open have adopted new technologies and shifted their day-to-day operations around the technologies available to them. Customer onboarding, ID verification, customer authentication, and other processes all became digital.

While the digital transformation was already underway in the banking sector, the pandemic pushed the transformation into overdrive. Evolving customer expectations, growing FinTechs, and changing regulations around technologies are also helping in speeding up the digital transformation process. By implementing digital ID and document verification solutions, banks can improve the onboarding experience while managing fraud.

Utilizing Biometrics Technologies in Banking

Every person in the world has a unique set of fingerprints and unique hand geometry. Biometric identity verification systems examine these and other biometrics identifiers to identify individuals. The utilization of these systems improves security, speeds up the verification process, and prevents cybercriminals.

In this socially-distanced economy that we’re currently living in, cyber attacks are becoming more prevalent and sophisticated. Fake identities and synthetic identities are on the rise which makes it harder for banks to detect fraud. Almost half of U.S. consumers have experienced some kind of ID theft in the last two years, more than 37% of people have experienced application fraud, and almost 40% of consumers have experienced account takeover fraud.

But it’s not always easy to implement these new methods, and banks have to follow strict compliance standards they have to follow during customer onboarding, which can make it difficult to find a one-stop solution for all kinds of consumers. They need solutions that comply with digital privacy guidelines and updated financial regulations. They also have to make sure that the onboarding experience isn’t too difficult or time-consuming for consumers. Luckily, consumer opinion regarding new technology is changing, which means the adoption of these technologies can be easy.

Use of Biometrics for Customer Onboarding

Biometrics is the most reliable way of authenticating identities and it’s a great method of preventing ID theft and spoofing. Banks know that the use of biometric verification can be helpful as they were the first industry to use them. Banks are now also relying on facial biometrics as multi-factor authentication. This is because facial recognition does not require customers to be physically present at the branch, because of fingerprint scanners, palm scanners, and iris scanners.

Banks all over the world are using layers and layers of biometrics technologies in their daily operations. Banks are now discovering that they can use facial biometric verification since the beginning of customer relationships. This reduces complications for a customer, alleviating the pressure to remember a confusing PIN or token. Using biometrics across banking makes transactions more secure and overall increases security. Moreover, it boosts operational efficiency, all the while making the experience easier for the customers.

Use of Biometrics for Employee Onboarding

As more and more employees are working remotely because of the pandemic, that’s why securing the employee onboarding process is as important as customer onboarding. Employee security breaches are a big concern for all large organizations that deal in sensitive data of any kind. Having a biometric in the employee onboarding process is quite similar to customer onboarding.

Employee-owned smartphones are loaded with a mobile app that initiates their enrollment into your business. Or companies can build a custom employee onboarding program by combining online document verification services and biometric verification.

Digital Transformation Across Industries

Before the Covid-19 pandemic changed the world, retail banks and credit unions completely relied on manual onboarding processes. This clumsy process was time-consuming, inefficient, and insecure. Collecting identity information can be laborious and waiting for the information to be verified can take even longer, thus making the process inefficient.

Online onboarding technologies verify customer identities by comparing customer photos and IDs. And verify online documents such as utility documents, bank statements, and other documents. This improves the user experience and reduces abandonment rates. Plus it can be done remotely, without customers needing to stand in big lines and it also reduces the document handling costs for banks and other businesses.

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US Digital Banking Revolution: Importance of Digital Identity

us digital banking revolution

While most of the banking landscape across the country was on track toward a successful digital banking revolution, the Covid-19 pandemic fast-tracked the process. Regardless, some parts of the US financial industry are still operating in the dark. As the United States is often at the forefront of many things, it doesn’t make sense that the US falls behind other countries in an area as important as banking. The US digital banking revolution has been a slow process, but the situation is turning around.

Most of the time, when a customer decides to open a new bank account or send money overseas, they have to visit a physical branch. Even after so much growth in the technological department, customers still have to stand in line to get their tasks accomplished. Most customers find that the manual process takes too long and it doesn’t meet their needs. Pre-pandemic, more than 160 million people relied on online businesses, and over 56% of customers stated that the primary way they accessed bank accounts was through a mobile app.

As the digital world is growing, customers demand more convenience, time efficiency, and instant access to their finances. This isn’t possible without all banks taking part in the digital banking revolution. And, digital identity plays an important part in this.

Challenges in Fraud Management, Privacy, and Customer Experience

Most banks skip out on digital transformation because it’s a time and money-exhausting process. Going digital comes with tons of challenges for both customers and businesses. Some of the biggest challenges include online fraud, user privacy, and friction in the customer experiences. 

For example, fraudsters can easily set up fake bank accounts using leaked SSNs and fake ID documents. In 2020, the estimated amount of global fraud losses was $32.39 billion, which is triple the amount it was in 2011. Preventing fraud isn’t the only major challenge that banks have to face. Providing consumers with a seamless and secure onboarding process is also essential. Over 44% of all US customers abandon the application process during onboarding if the process is too complicated or invasive. 

Protecting consumers against fraud while providing them with a smooth onboarding experience is the most important part of digital banking.

Importance of Identity

By focusing on the identity part of digital banking, banks can build strategies that put customers at the center. This starts with a robust digital ID verification process that verifies who the user is and authenticates their ID to provide them access to digital solutions. 

In Europe, and the UK, digital ID verification allows banks to provide their customers with digital solutions almost instantaneously. By focusing on digital customer identity, banks can speed up the onboarding process, prevent fraud and scale their business as per their needs.

Importance of Getting Identity Right

There’s a lot US banks can learn from banks in the EU. They build their digital banking strategies by keeping customers at the center. They know who their customers are and they can verify their customers in a digital-first banking environment. 

A modern approach to digital ID verification is combining a government-issued photo ID document (passport or driver’s license) with biometrics data (selfie, face scan, or fingerprints) to make a secure and seamless customer authentication process.

A recent study found that almost 60% of customers prefer to use biometrics data instead of using passwords that are a hassle to remember. By the end of 2025, 85% of all banks will be using biometrics data to verify and authenticate their customers instead of using passwords and OTPs.

How US Banks Can Move Forward In the Digital Banking Revolution?

Currently, the UK is the world leader when it comes to providing a secure and seamless digital banking experience. The United Kingdom also has a lower number of physical bank branches than the US, which forces them to build their digital banking landscape even better. To be successful in the digital banking revolution, banks shouldn’t compromise between security and seamless customer experience. With the ideal online ID verification and online document verification technology, banks don’t have to cut corners. 

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Identity Verification Process for Crypto Exchanges

crypto exchanges

Since the beginning of 2021, cryptocurrency exchanges have been growing at an alarming pace. And there are over 100 million crypto users in January 2022 itself. While the market has slowed down, the crypto industry is still growing, and chances are there will be another huge spike in the number of customers. 

To handle these increases in trading consumers, crypto companies need to have infrastructure and technology. Compared to stock markets, and other exchanges that have had several years to build a proper infrastructure, these companies don’t have the infrastructure to handle customer transactions. Even though there has been a crypto downturn, the market is expected to turn back again.

This is why crypto exchanges need to have an identity verification process. Most of the time, this makes the onboarding process tough for customers. These ID procedures, if not completely automated, slow down the customer onboarding process, which leads to an enhanced customer drop-off rate. 

In this article, we will mention how some of the best crypto exchanges handle the ID verification process. What steps are they using, and how easy it is to sign up for the customers.

Best Crypto Platforms with Identity Verification

1. Coinbase Verification

Coinbase was founded in 2012, and it’s a US-based digital currency and wallet platform. It has over 56 million users and has traded over $335 billion worth of digital currencies in the first quarter of 2021. In late 2021, the company went public, which is the first platform to do so. 

While Coinbase has some account limitations, these limits are determined based on the level of verification that’s added to the account. These include account age, purchase history, payment methods, and other factors. 

The type of verification that Coinbase offers includes phone number, personal details, and photo ID. If you live in the USA, then you’ll also be asked to provide your SSN. 

2. Kraken Verification

Kraken is a US-based crypto exchange platform, and it was founded in 2011 and has over 50 currencies. Kraken claims that they’re one of the largest Bitcoin exchanges in Euro volume. The exchange has four levels of accounts with each one of them offering a different type of verification requirements. The levels are:

  • Starter
  • Express
  • Intermediate
  • Pro

The account levels depend on the level of access your account will have. Each level offers more funding options and higher limits with Pro being the highest level. 

A user must be at least 18 years old to register and use an account. All the accounts need an email address, full name, date of birth, phone number, and postal address for verification purposes. Except for starter accounts, they also need to provide employment information and SSN.

The intermediate and Pro accounts need to provide a valid ID, proof of address, and a face photo. Pro accounts need to fill in the KYC questionnaire. 

3. Binance Verification

Binance is a famous crypto exchange platform that combines digital technology and finance. According to Yahoo Finance, Binance is the world’s biggest crypto exchange when it comes to trading volume. 

Binance has three levels of verification with respective deposit and withdrawal limits:

  • Basic: Requires name, address, date of birth, and nationality, and has a lifetime limit of USD 300.
  • Intermediate: Requires an uploaded picture of ID documentation such as passport, ID card, or driver’s license.
  • Advanced: Requires proof of address documentation such as bank statements and utility bills.

4. Bitfinex Verification

Bitfinex is another crypto exchange that came into existence in 2012. They state that they’re one of the largest exchanges by volume for trading Bitcoin against the US dollar. It offers exchange trading for 38 currencies/tokens and also provides margin trading, margin funding, and an over-the-counter market for large trades. To withdraw or add fiat currencies to an account, ID and document verification are needed. Most of the time, this verification process takes up to 2-3 days. 

Although, a user can easily deposit, trade, and withdraw cryptocurrencies immediately upon account opening with a basic account that only requires a valid email address. Individual account requirements tend to differ on the type of account you’re choosing:

  • Age: you have to be at least 18 years old to have an account
  • Personal Information: A user’s telephone number, email address, and residential address
  • Identification: Two types of government-issued ID with photo, such as passport, national ID card, driver’s license, residency card, employment permit card

5. OKEx Verification

OKEx was founded in 2014, and it’s one of the biggest digital currency exchanges by trading volume. It serves millions of users in over 100 countries and it operates out of Hong Kong. At OKEx, the identity verification process contains a couple of rules and procedures that facilitate a secure trading environment for our users, who need to perform ID verification for the following activities:

  • Buying currencies on OKEx with fiat currencies, for which users may need to perform ID verification
  • Making daily crypto withdrawals of more than 10 BTC

OKEx doesn’t require identity verification for users to deposit or trade crypto on OKEx. For individuals, there are several levels of ID verification:

  • Level 1: In level one, the users are needed to enter their nationality, name, and document identification number
  • Level 2: In level two, users are required to verify themselves with photo identification, and they’re also needed to perform facial verification.
  • Level 3: After completing the first two levels, users have to read the disclaimer on OKEx’s mobile app or web page to complete the third level of ID verification.
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Understanding Electricity Bill Verification

Verify electricity bill

Businesses should never undermine the importance of utility bill verification. Electricity bill verification is the first and foremost step in an exhaustive identity verification process, especially for companies dealing with financial data. The threat of identity theft is ever prevalent in the industry, and the only way to keep customers and businesses safe is with the verification of customer documents. Utility bill verification is directly related to identity verification and it should be handled with utmost care.

Businesses of today now have to comply with tons of rules that ensure safety and security for all. When businesses comply with these rules, they prevent fraudsters’ access to a firm’s internal systems. To make sure customers are who they claim to be, a valid ID and address proof are needed. Water or electricity bill verification can easily fulfill the demand for proof of address verification.

Facilitating Identity Verification Through Utility Bills

Even in developed countries, how to handle financial information easily is scarce knowledge. A huge number of people living in rural areas don’t have access to important financial institutions such as banks and FinTech services. 

Before a customer signs up with a bank or a financial institution, they need to perform a series of checks. Formally, these checks are known as Know Your Customer Verification (KYC). As most people don’t have access to the right set of documents, they end up being rejected by the banks. Most banks and financial institutions ask for two documents before onboarding a customer:

  • Government-issued ID document
  • Proof of address document 

There are rare cases where businesses require additional documents to verify a customer’s identity. In those cases, the business has its own set of rules and regulations that a customer needs to follow. 

In most cases, banks need only two documents. In 80% of areas, utility bill verification is the most logical step for proof of address verification. Electricity bill authentication does so much more than provide access to a customer’s address data, it also helps businesses in understanding a customer’s paying habits and behaviors. As most people have access to an electricity bill, it’s the most convenient way to verify their address proof. This is why more businesses should focus on verifying electricity bill.

 Besides, businesses can use electricity bills to prevent risks, and it also helps in strengthening relationships with customers. This shows customers that a company cares about providing a certain degree of security to the customer’s personal information. With increasing pressure and complicated compliance from regulatory bodies, businesses need to build compliance solutions that are as secure as possible. Online electricity bill verification provides essential help for businesses and customers.

Methodology for Electricity Bill Verification

While using electricity bills for verifying a customer’s residency sounds easy, it requires a lot of effort. Instead of relying on manual resources for the verification of customer data, businesses should choose technologies. DIRO electricity bill verification API can enhance your verification process. Here are some of the basic things that a business can verify using an electricity bill.

1. Identity Verification

An electricity bill can also be used to prove a person’s identity as it mentions their legal name. So, businesses of every type can be sure that the customers are who they claim to be, and not someone who stole ID documents.

2. Residential Address

An electricity bill is the best way to verify a customer’s address data. A utility bill is a primary source of verifying a customer’s residency. Businesses can use utility bill verification to gain insights about the customer and prevent fraudsters from accessing a business’s services. Plus, in case of fraud, businesses can track down the fraudster and safeguard themselves from any penalties by showing the needed data.

3. Payment History and Habits

Another benefit of using an electricity bill for customer verification is to gather a customer’s attitude towards their payments and habits. If a customer has tons of due utility bill payments, it shows that a customer doesn’t handle their finances well. So, businesses, especially those offering loans and credit cards should use utility bill verification.

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What is Open Banking, and How Will it Impact You?

impact of open banking

Open banking is pretty simple yet completely innovative, it lets you share your bank data with other companies with limited problems. Open banking APIs or the overall process is designed in a way that provides more security and reliability even while using basic financial services like Venmo or Robinhood. With the widespread adoption of open banking, you as a customer will be able to experience the best technologies without having to compromise for cheaper and less secure options. 

In the US financial market, Open Banking is just taking baby steps. But the UK market is leading the world in open banking-based financial products and services. For both banks and customers, open banking can open up new avenues and create opportunities for you and your money. Here’s everything you need to know about open banking and how it can affect your financial lifestyle.

What is Open Banking?

Open banking, also known as “open bank data.” is a financial practice that offers third-party financial service providers open access to consumers’ banking, transaction, and open financial data from banks and non-bank financial institutions, using application programming interfaces (APIs). Open banking will allow the networking of accounts and data across institutions to be used by consumers, financial institutions, and third-party service providers. Open banking is pushing innovation which can lead to the transformation of the banking industry. 

Here are the key factors for remembering open banking:

  • Open banking is a banking system that allows access and control of consumer banking and financial accounts by leveraging third-party applications. 
  • Open banking has the power to reshape the current level of competition in the banking industry and improve consumer experience tenfolds. 
  • Open banking can enhance the potential for both promising gains and financial risks as customer data is shared more widely and excessively. 

What’s New in Open Banking?

On 9th July 2021, the White House issued a statement in the favor of open banking. President Joe Biden issued an executive order which included a provision encouraging the Consumer Financial Protection Bureau (CFPB) to issue rules that allow customers to download their bank data and offer it to competitors. 

The CFPB is tasked to create regulations related to sharing and consumer financial account data online. Joe Biden’s encouragement to Open banking provides CFPB with the required push to boost the task that CFPB was already doing. 

In October, CFPB issued an advanced notice of proposed rulemaking, related to building regulations around consumer data sharing. CFPB, which had been focusing on the issue for several years, has collected customer feedback on customer data collection. New rules could still take years to implement. 

Years ago, the only way to keep track of the comings and goings of your money was through a monthly mailed bank statement and physical checkbooks. This process has now improved as customers can log into a mobile banking app or website to check on their finances and conduct all kinds of financial activities in one place. For the experience to work well, you need to hand over your keys to the digital portal, your bank account which then allows your app to grab the data for you. It’s also known as screen scraping, and it provides all the information available in your bank account to other companies. And obviously, it’s one of the least secure options available. 

Over the years, several banks have been accused of blocking companies from collecting data when you wish to share it with them. FinTech companies have often complained that banks and financial institutions are anti-competitive, while banks state that they’re just trying to protect their customers and their data from parties that can be a threat. 

Recently, the situation has changed and FinTechs and Banks have made arrangements for better data sharing among themselves. But there is still confusion if consumers are sharing enough data to support the open banking models.

What Will be The New Opportunities with Open Banking?

Open banking is meant to share customer data in a safer and more secure way compared to just handing over your login credentials to a third-party app, including other bank apps. All the data sharing happens behind the screen so you won’t notice it whenever you log into the bank app or conduct any normal financial activity.

The customer doesn’t have to do anything different, it’s just a newer and faster model of data sharing. Customers still have an app on the phone, the only thing that’s different is the level of security you get and you can be sure that your data is kept safe.

The ability to easily share your financial data with other companies is expected to boost innovation throughout all financial industries. It could also help more people get loans by verifying transaction history instead of checking credit scores. Open banking can also improve the mortgage application process, and reduce the time taken for approval of mortgages.

The widespread adoption of open banking can make huge changes in financial services. Open banking requires financial institutions to spend more money and rethink new ways of securing assets and customers’ data.

How Will Open Banking Affect Customers?

In the end, open banking is designed to make financial activities simpler for you to switch lenders and use tons of FinTech apps. Whether it’s access to a cheaper type of credit, managing personal finance, or accessing better direct payments. There are tons of things that customers can do to make their money more automated and all of it revolves around customer data.

Here are some key points that open banking will improve:

  • Increasing access to financial services
  • Saving time from opening an account or taking out a loan
  • Offering better products and services