Category: Identity

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Identity

About Digital ID Verification Service

what is digital identity verification

As more and more online activities are growing, keeping our online identity, private data, and ID verification has grown vital. Unfortunately, not all banks and financial institutions know everything there is to know about Digital identity verification.

Digital ID verification is crucial in all kinds of online business operations. Knowing who your customer is before the onboarding process can minimize the risks of financial crime. There are a lot of things that are to be known about Digital ID verification that most people don’t.

What Is Digital Identity Verification?

The digital era has given birth to online identities and electronic documents. Same as physical documents, these online identities require online identity verification methods. An online document can be almost anything, a government-issued ID, online driver’s license, student records, bank account holder information, or more. The use of technology to make sure these electronic documents are authentic is known as online user identity verification. 

There are countless identity verification solutions out there but the best online identity verification methods verify electronic documents to verify identity.

Things to Know About Digital ID Verification Service

1. Implement Facial Recognition Wherever Possible

Technology is an ever-evolving factor, it’s growing at an incredible speed and the smartphone in our pocket is a technology that can offer multiple benefits. It provides a facial recognition technology that wouldn’t have been even possible a few years ago.

Facial recognition technology is already being applied to catch criminals, log in to campus and so much more. Governments and other organizations are making use of facial recognition software. The technology uses a lot of sophisticated algorithms which scan your face and identify your facial biometrics.

While there is a long debate on the regulation of the technology, the simplification, and usefulness of facial recognition technology state that you’ll be seeing more of the technology in the future.

The first thing that you need to know about digital ID verification is that modern digital identity verification is not as secure as you would want it to be. If banks and financial institutions could apply special-grade facial recognition in their KYC compliance process, the risk of financial fraud would drop by a lot. The use of facial recognition can make identity verification solutions more effective and less capital-consuming.

2. Digital ID Verification is Crucial to Mitigate Identity Theft

In this digital world, identities are one of the most common targets for criminals. If you want to reduce fraud fight identity fraud and combat identity theft, websites and companies are using real-time ID verification to make sure that customers are who they really are. Simply put, identity verification is growing at an alarming pace as identity theft is the favorite crime for cyber attackers.

The good news is that digital identity verification solutions that are available online can allow banks, financial institutions, governments, and other organizations to fight identity theft. One of the ways to fight ID theft is by verifying documents and DIRO document verification service can help you verify original documents whenever you want. 

The second thing that you should know about digital Identity verification is that verifying a physical person in the verification process is the ideal way to fight identity theft. 

3. Acquiring a Bank Account Will be Easier With Document Verification Technology

Opening a personal and business account is a tough thing to do, KYC compliance can be a painful process for customers. KYC compliance requirements take an average of 24 days to complete. That whole process is frustrating enough, and to make matters worse, some banks don’t even share your KYC information between internal departments, which results in repeated requests for the same documents over and over again.

Although, things seem to be changing for the customers as smart KYC systems are slowly growing. DIRO document verification technology helps improve the overall KYC and AML compliance process by verifying original documents in under 60 seconds. 

The third thing you need to know about digital identity verification is that it is more than just convenience. Document verification solutions like DIRO could save organizations a lot of money. 

4. Digital ID Verification Reduces the Risk of Human Error

Long before technological advancements made things smoother, document verification and identity verification were done manually. Making mistakes is human nature and it is the very thing that makes us human. Even the smallest mistake can become the reason for a data breach that can cost organizations hundreds of millions of dollars. It doesn’t matter if the data breach is malicious or accidental, data breaches have exposed over 4 billion personal records in the last year itself. 

Technology can provide you with an ideal solution to document and identity verification services. Technology can help FinTechs reduce costs for manual KYC work, and it also keeps digital IDs safe from data breaches. If you secure your data then you should employ every digital identification protection process that you possibly can.

The fourth thing that you should know about digital ID verification is that a lot of services include “ID verification experts” which is a term referred to as low-paid off-shore employees. These experts have the responsibility of viewing and verifying your identity documents. While these people, in general, are trustworthy, there can be a bad apple every once in a while. So the manual process of sharing identity documents can lead to a huge data breach. DIRO document verification technology can help organizations by making sure they verify original documents.

5. The Government Is Pushing For Secure Digital Identities

The launch of the European General Data Protection Regulation (GDPR) took the world by storm. What you should know is that GDPR is the gold standard when it comes to digital data and identity protection. Companies that don’t comply with the GDPR regulations can have to pay fines that can run a company aground. A social media giant like Facebook is currently paying a fine of $2.23 billion. 

This is a great regulation for all the organizations that are concerned about getting their identity stolen due to malpractice by organizations. The last thing that you should know about digital ID verification is that regulations like GDPR make sure that organizations stay in line.

Digital Identity Verification Best Practices for Financial Institutions and FinTechs

Online account opening, transactions, and similar activities have increased tremendously in the last decade. Not just convenience, online banking also provides a platform that fraudsters can manipulate. Verifying digital identities is a crucial step in preventing fraud in online banking. 

Digital identity verification has to be part of the entire customer journey, from onboarding new customers to returning customers and approving high-risk transactions. 

KYC and identity fraud prevention solutions in the customer onboarding process aren’t as great as for customers with a limited digital footprint and with thin files.

To ensure fraud is controlled, there are some digital identity verification best practices financial institutions and FinTechs need to use.

Avoid Friction Filled ID Verification Methods

To verify “grey applicants,” some organizations apply additional verification measures such as knowledge-based authentication (KBA). A lot of other organizations push the application for a manual review. These processes are full of friction, expensive, and time-consuming.

KBA almost always offers a poor customer experience and is easily manipulated. KBA is no longer considered a secure customer verification method, as attackers can quickly find answers to the questions.

Many FinTechs have found that a 100% KBA score is the primary indicator of fraud.

If the application is pushed to manual review, applicants wait for hours, days, or weeks. If it takes this long for a customer to be approved, they will likely abandon the process. 

A great approach to solving these challenges is to build seamless workflows that offer enhanced ID verification software with accuracy and a great customer experience. 

Solutions like DIRO’s document verification solution provide financial institutions a way to verify banking information, address documents, and other KYB information more quickly and securely.

A combination of DIRO and human effort provides a cost-effective and scalable solution for onboarding customers and businesses. It cuts down on onboarding times dramatically while enhancing security.

Not all document verification solutions can meet the demands of financial institutions. Legacy document verification solutions only focus on ensuring the authenticity of the physical ID of document templates.

This can be an excellent first step. But, fraudulent documents and stolen IDs must be verified to ensure they haven’t been tampered with. DIRO verifies document data directly from the issuing source, preventing the use of fake and stolen documents during onboarding.

Best Practices for Digital Identity Verification

Establishing digital identity verification best practices is vital to optimizing your company’s verification process. Here are the best practices we recommend businesses to follow:

  1. Multiple Verification Methods

A single solution like KYC and KBA isn’t enough to keep fraudsters at bay. Two-step verification is the basic standard across all industries. To increase security and reliability, using multiple digital ID verification methods enhances verification accuracy. 

  1. Stay Up-To-Date With Regulations

Staying updated with regulations is the best way to keep up with digital identity verification. These include KYC and AML requirements. Stay up to current laws and ensure the organization complies to avoid loss and legal penalties. 

Third-party verification solutions such as DIRO document verification help enhance the digital ID verification process and comply with regulations.

  1. Verify Users

Customer verification needs to be part of every step of the customer journey. Not just onboarding but continuous monitoring and transaction monitoring should be implemented.

Fraudsters build perfect synthetic identities to trick the onboarding processes. This is why financial institutions and FinTechs must implement continuous onboarding to monitor customers.

Factors to Consider While Choosing Digital ID Verification Providers

Before finalizing any third-party digital document verification solution providers, there are some factors businesses need to keep in mind. Such as:

  1. Security

Choose a provider with robust security to protect personal information while preventing fraudulent activities. 

  1. Reliability

Legit customers being mistakenly flagged as fraudulent can be incredibly harmful to businesses. Choose a provider that ensures you can verify documents with 100% accuracy and reliability. 

  1. Compliance

Improper compliance and misidentifying regulations are dangerous for businesses. Whatever third-party provider you choose, ensure they comply with all the latest laws, such as KYC, AML, and local regulations, to prevent fraud. 

  1. User Experience

While your primary goal is to avoid fraud and detect fraudsters, providing them with a great user experience is essential. Customers abandon the onboarding process when the process is clunky and cumbersome. 

Choose a provider that can offer a user-friendly solution.

  1. Integration

Find a document verification solution provider that can integrate seamlessly into your current process. Choosing a provider with an easy integration system will reduce the cost of implementation and also improve efficiency.

  1. Scalability

You need a solution that can grow alongside your business. Choose a provider that offers scalability. Make sure that your provider can meet current and future business needs. 

  1. Reputation

Choosing a third-party solution with an excellent reputation and a proven track record can do wonders for your business. Having a solution that offers accuracy and reliability during verification by your side is crucial. 

How DIRO’s Award-Winning Tech Can Improve Digital Document Verification?

Banks, FinTechs, and governments need to adopt newer technology. The award-winning digital document verification technology can help organizations cut costs, smoothen the onboarding process, and improve the overall KYC process. Using the technology, you can make sure to improve customer experience all the while making sure that financial crime is reduced by a lot.

Understanding what is digital identity verification is the first step in making sure banks and all other financial entities keep up with their KYC compliance. DIRO’s innovative technology captures the documents from their original web source to verify whether a document is fabricated or not.

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Blockchain Identity

Identity Verification In Crypto

identity verification in crypto industry

Cryptocurrency exchanges serve as both magnets for fraudsters and subjects of regulatory scrutiny. To navigate this landscape effectively, it’s crucial to enhance crypto KYC (Know Your Customer) and identity verification tools, striking a balance between fraud prevention and regulatory compliance.

What Exactly is Crypto KYC?

Crypto KYC, or Know Your Customer, represents a legal obligation for centralized exchanges to authenticate user identities. The primary aim is to prevent illicit activities such as money laundering, tax evasion, and illegal funding through cryptocurrencies.

Given the involvement of monetary transactions and pseudonymous digital assets, crypto exchanges are prime targets for fraud and criminal activities. As a result, governments have enforced increasingly stringent KYC and identity verification rules.

However, these requirements are often met with reluctance by both exchanges and crypto enthusiasts. According to a 2019 Coinfirm report, 69% of crypto businesses lacked comprehensive and transparent KYC processes.

Crypto KYC Process in Action

The procedure for crypto KYC is analogous to that in traditional financial institutions, guided by regulations set by government authorities in alignment with the exchange’s geographical location.

Key elements of the cryptocurrency KYC process include:

While these checks can be carried out manually, automation through specialized KYC software is more common. Such software provides a risk-based approach and incorporates identity verification tools. 

In light of anti-money laundering (AML) requirements, combining KYC with AML checks, encompassing politically exposed person (PEP) screenings, sanction checks, and adverse media scans, further strengthens compliance efforts.

The Advantages of Employing Crypto 

KYC Integrating some form of KYC during user onboarding offers significant benefits to crypto exchanges and platforms. These advantages include:

  • Enhanced Compliance

Many jurisdictions mandate crypto KYC as a legal prerequisite within the FinTech sector. Neglecting proper KYC procedures can lead to fines or regulatory issues related to anti-money laundering and countering the financing of terrorism (AML/CFT) laws. 

  • Reduced Fraud

Robust KYC protocols act as a deterrent against various forms of fraud. Gaining comprehensive insights into customers enables monitoring and potential restriction of high-risk individuals. 

  • Fostered Trust

Implementing robust KYC measures instills confidence in customers, demonstrating the exchange’s commitment to adhering to legal standards and safeguarding their interests. 

  • Ecosystem Protection

Crypto KYC plays a pivotal role in safeguarding the financial ecosystem against money laundering, terrorist financing, and other fraudulent activities. 

  • Preserved Reputation

By showcasing diligent steps taken to secure customer assets and accounts, the exchange’s reputation is fortified and protected. 

  • Advancing The Crypto Vision

A robust KYC process can alleviate reservations that potential investors may have about engaging in cryptocurrency, thereby promoting broader participation and mutual benefits. 

Challenges Encountered in Crypto KYC Despite well-intentioned efforts, crypto exchanges face significant challenges in implementing effective KYC procedures.

Here are four key obstacles:

  1. Variety of Fake Id Types

Fraudsters exploit diverse tactics, including synthetic IDs and deepfake technology, to bypass KYC procedures and gain access to crypto exchanges. 

  1. Balancing Friction And Security

Users seek swift access to volatile markets, necessitating a delicate balance between seamless onboarding and stringent security measures to avoid customer churn. 

  1. Clash With Crypto Ideals

While crypto enthusiasts envision the technology as innovative and exempt from conventional financial regulations, regulatory bodies impose distinct standards. Exchanges may need to incentivize users to complete KYC by offering special deals. 

  1. Risk of Compliance Fines

Inadequate KYC checks expose exchanges to substantial fines. Failure to meet requirements can have serious financial implications. Regulatory scrutiny extends beyond crypto exchanges to encompass various crypto-related entities. 

In a notable example, a crypto tumbler faced a $60M fine in 2020 for non-compliance with AML standards.

Effective Tools and Features for Crypto KYC

Automated processes are standard in crypto exchanges’ KYC checks, necessitating the incorporation of the following tools and features within their KYC software:

1. ID Selfie and Video Verification

Modern identity verification vendors offer seamless integration of document verification into crypto KYC procedures. However, it’s important to note that these tools introduce a degree of friction to the user experience.

Additionally, concerns about falsification arise, as fraudsters can manipulate IDs or use stolen credentials. These checks also carry a significant cost, with automated document verification estimated at an average expense of $2 per check.

2. Digital Footprint Analysis 

Digital footprint analysis serves as a preliminary KYC check or an extra layer of security for crypto KYC. It involves uncovering hidden digital and social signals to gain deeper insights into users. Data points include email addresses, IP addresses, phone numbers, browser types, and device specifications. Notable aspects of this analysis include:

3. IP Lookup

Identifies high-risk IPs, potentially associated with harmful activity, suspicious data centers, or VPNs. 

4. Email and Phone Lookup

Flags free email providers and virtual SIM cards, aiding in risk assessment.

5. BIN Lookup

Helps establish card-issuing banks or detect invalid details, contributing to user profiling. By integrating this information and subjecting it to risk assessment rules, a clearer understanding of user risk is achieved during the crypto KYC process.

6. Device Fingerprinting

Device fingerprinting capitalizes on the unique amalgamation of hardware and software attributes within users’ devices. This distinct fingerprint can serve as a key identifier, aiding in identifying connections between accounts. 

The technology also helps identify and exclude bad actors relying on emulators and virtual machines, which are considered high-risk.

7. Blockchain ID Validation

Blockchain technology presents a novel approach to ID verification, offering potential advantages in terms of anonymity, affordability, and efficiency.

For example, HSBC’s successful experiment with blockchain-based KYC in the UAE demonstrates its potential. However, challenges remain, including limited adoption of blockchain KYC and the need for explicit regulatory approval.

8. Leveraging Digital Footprint

Analysis in Crypto KYC SEON’s track record with crypto exchanges highlights the effectiveness of digital footprint analysis in facilitating KYC checks and reducing chargebacks resulting from fraudulent credit card transactions.

Key advantages include:

  • Seamless experience: Real-time data collection via API minimizes friction for users.
  • Cost savings: Digital footprint analysis acts as a pre-filter, blocking low-quality users before engaging in more resource-intensive KYC checks.
  • Enhanced intelligence: The analysis complements manual reviews, allowing for a more comprehensive risk assessment. Users with incomplete digital footprints or obscured online presence can be subject to closer monitoring.

You can explore this approach by entering an email address or phone number below, discovering the depth of insight a digital footprint can provide about a potential legitimate customer.

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Identity

Why Do Digital Business Operations Need Strong Identity Verification Solutions?

why digital business needs identity verification

The impact of the Covid-19 pandemic has forced businesses all over the globe to reinvent their business operations. With more and more customer interactions happening online, the risk of digital financial fraud and identity theft is rising as well. For businesses to keep up with the digitization of basic work operations, and enhanced risk of fraud, digital identity verification solutions are necessary. Digital identity verification services rely on online document verification technologies and DIRO’s online document verification service can help businesses from online fraud.

KYC Identity Proofing

To fight fraud and accomplish reliable and efficient identity verification, you need the help of the best identity & online document verification solutions. Although incorporating digitization into business operations can make sure that your business can support online customer onboarding and improve other online working methods.

Digitization can also increase your business’s exposure to fraud and financial crime online. Comprehensive digital identity and document verification solutions are vital to make sure that companies can provide customers with a secure digital experience and survive in online fraud markets.

Among the largest banks in the United States, digital banking onboarding has grown from 60% to 72%. With increasing numbers of consumers moving towards digital banking platforms, businesses need to keep up with the increased number of documents they need to verify. Online business verification solutions such as DIRO can verify customer documents instantly with 100% proof of authentication. Utilizing this technology, banks, and financial institutions can improve KYC compliance while reducing friction.

Paving the Way Towards a Smart Economy

As the shift towards digital businesses continues, it is also moving us closer to having a smart economy. Being a part of a smart economy can help organizations to scale their operations globally and improve overall productivity. 

This expected growth relies on the implementation of Digital technologies such as AI, Blockchain, and data analytics. By using digital identity verification solutions, these digital technologies will be even more reliable, efficient, and secure.

Businesses need to provide frictionless transactions to keep customers happy. Online identity verification and online document verification solutions can help financial institutions to provide a fully digital experience for new and existing customers. 

Digital technologies have allowed financial information providers to verify customer identities and verify documents online with a click of a button. By combining these technologies with government and private databases and digital payment aggregators, small and big organizations can create a complete digital experience for customers. While the impact of the pandemic was sudden, the switch to digital ID verification can be done efficiently using these technologies.

Reinventing the Digital ID Verification Process

Ever since the pandemic hit the world, some businesses grew at an exponential pace, while other businesses have failed to cope with the pressure. Instead of trying to get your business back to what it was before the pandemic can be tougher than adopting new digital methods. By choosing a new digital document and identity verification method, businesses can improve their speed, agility, and security. By doing all this, your business will be better prepared for online customer onboarding and following KYC/AML compliance.

Secure and internet-friendly solutions tend to appeal to a wide range of audiences. With the rise of the digital age, more and more customers are facing the risk of financial fraud and identity theft, by employing the right digital identity and online document verification solutions organizations can build brand value. Businesses that embrace online and remote customer onboarding solutions using digital identity verification technologies can close the gaps in their fraud prevention strategy.

Strengthen Your Digital Identity Verification With DIRO

Secure digital identity verification solutions can keep your customers invested in your product and services. Digital identity verification and online document verification solutions can help you scale your business operation.

DIRO’s online document verification technology can help you verify original documents online in real time. This can help banks, financial institutions, and businesses to verify documents instantly and improve the customer onboarding process. The technology can also help you verify identities using online documents such as driver’s licenses, proof of address, insurance information, student records and so much more.

Using the technology, organizations can verify documents and provide proof of authenticity which can be used as original documents as well. DIRO places original verified information on the blockchain and makes the documents immutable.

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Identity

ID Verification for Wealth Management Companies

ID verification for Wealth Management Companies

In today’s fast-paced digital world, where financial transactions occur across borders and online platforms, the need for robust identity verification has become paramount. Wealth management companies, tasked with safeguarding the assets and interests of their clients, face increasing challenges in combating fraud, money laundering, and identity theft.

In this blog, we will explore the importance of identity verification for wealth management companies and how it contributes to maintaining trust, complying with regulations, and mitigating risks.

Why Wealth Management Companies Should Do Identity Verification

1. Safeguarding Against Fraud and Identity Theft

Wealth management companies handle vast amounts of sensitive client information, including personal identification details, financial records, and investment portfolios. By implementing effective identity verification processes, these firms can ensure that the individuals they engage with are who they claim to be, minimizing the risk of fraud and identity theft.

By verifying the identity of clients, wealth management companies can significantly reduce the chances of unauthorized access to accounts and protect their clients’ assets from falling into the wrong hands.

2. Upholding Trust and Reputation

Trust is the cornerstone of any successful wealth management firm. Clients entrust their financial well-being to these companies, relying on their expertise to manage their wealth effectively. By prioritizing identity verification, wealth management companies demonstrate their commitment to due diligence and protecting the interests of their clients.

This instills confidence and peace of mind in clients, fostering long-term relationships built on trust. Maintaining a strong reputation in the industry is crucial for attracting new clients and retaining existing ones, and identity verification plays a pivotal role in this endeavor.

3. Compliance with Regulatory Requirements

Wealth management companies operate in a highly regulated environment, with stringent anti-money laundering (AML) and know-your-customer (KYC) regulations in place. These regulations aim to prevent illicit financial activities, such as money laundering, terrorist financing, and tax evasion. Identity verification serves as a fundamental component of compliance with these regulations, ensuring that wealth management firms have a clear understanding of their clients’ identities, backgrounds, and financial activities. 

Failure to comply with AML and KYC requirements can result in severe legal consequences, financial penalties, and damage to a firm’s reputation.

4. Mitigating Risks and Enhancing Due Diligence

Wealth management companies deal with a range of risks, including market volatility, investment fraud, and reputational risks associated with clients’ activities. By implementing robust identity verification measures, these firms can mitigate the risk of onboarding clients with dubious backgrounds or questionable intentions.

Thorough due diligence conducted during the identity verification process allows wealth management companies to assess the legitimacy of clients’ funds, understand their risk appetite, and identify any potential conflicts of interest. This proactive approach helps to protect the company, its clients, and the broader financial ecosystem from undue risks.

5. Leveraging Technological Solutions

Advancements in technology have revolutionized identity verification processes. Wealth management companies can now leverage various tools and technologies, such as biometrics, artificial intelligence, and data analytics, to enhance the efficiency and effectiveness of their identity verification procedures.

Biometric authentication, for example, offers a high level of accuracy and security by verifying individuals based on unique physical attributes like fingerprints, facial recognition, or iris scans. These technological solutions not only streamline the verification process but also provide real-time monitoring capabilities to identify and address suspicious activities promptly.

Conclusion

Identity verification is crucial for wealth management companies to protect their clients, maintain trust, comply with regulations, and mitigate risks. By implementing robust verification processes and leveraging technological advancements, these firms can safeguard against fraud and identity theft, uphold their reputation, and enhance due diligence.

In an increasingly digital and interconnected world, identity verification remains a vital tool for wealth management companies to navigate the complexities of the financial landscape while ensuring the safety and security of their client’s assets.

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Identity

Importance of ID Verification for Buy Now Pay Later Providers

Buy Now Pay Later companies

The Buy Now Pay Later (BNPL) sector has seen tremendous growth in the last couple of years. Especially because it is giving customers an option to pay for things later that they buy right now. But the service providers and the sector itself have faced some criticism from consumer interest groups and Financial Conduct Authority (FCA).

There are huge concerns that consumers could build up large debts by spending more than they can afford to pay back. There’s also a worry that fraudsters could target companies that offer these services to do some fraud.

With the help of stolen identity data, fraudsters can open up accounts and make purchases with no intention of paying back. Moreover, if an organization doesn’t have enough security measures in place, fraudsters can easily rack up huge debts.

With ID theft cases on the rise, customers who have done no harm may be liable to pay amounts that they haven’t used. Having a dark spot on their resume also impacts a user’s ability to secure a loan or mortgage in the future. Even if their identities were stolen, they didn’t go into debt themselves.

FCA’s Review of the BNPL Industry

With this growing concern, FCA evaluated the unsecured credit market in 2022 and is now coming up with regulations that will protect customers and businesses from fraud. 

Unregulated providers will have to comply with regulations set by FCA to continue working. For Buy Now Pay Later startups, protecting themselves and their customers is now one of the biggest concerns. 

That’s not the only thing that BNPL providers have to protect, they also have to protect their reputation. In a new and growing sector, winning the trust of customers is crucial for growth.

To minimize the risk of ID fraud, many companies have to review their operations and make changes to comply with the strict requirements of AML and KYC. This will also mean making greater use of ID verification services. Businesses also need to carry out sophisticated checks every time a user chooses to use the services.

ID verification checks also help Buy Now Pay Later companies to successfully verify customers who may be spending more than they should or customers who may have trouble paying back.

BNPL companies should also look forward to protecting customers, verifying affordability, and other factors.

What BNPL Companies Need to Know About ID Verification?

BNPL companies can use ID verification services to check if their customers are who they claim to be. Know your customer checks have to validate a customer’s personal information.

While onboarding a new customer, BNPL companies should conduct KYC checks. The same level of due diligence must be applied when a customer is making a high-value purchase or making changes in their delivery address. 

In these cases, a customer may be asked to provide valid ID proof or to enter a unique code sent to the customer’s email ID. 

Why Identity Verification for BNPL Services is Important?

ID fraud makes up around 61% of all fraud cases reported to the UK’s National Fraud Database. ID fraud cases have grown by 32% in the last 5 years. Online banks and sellers are common targets for fraudsters. BNPL companies are also increasingly being targeted by fraudsters.

Common attacks include phishing attacks to obtain users’ log-in details, creating new accounts with stolen payment cards, and account takeover fraud.

This in turn destroys trust in Buy Now Pay Later companies and hurts the growth of the industry. To be able to establish trust in the industry, businesses need to verify ID verification services.

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Identity

Identity Identification vs Identity Verification

Identity Identification vs Identity Verification

Fraudsters love to come up with new methods to commit fraud, launder money, or steal money. A growing number of fraudsters also impersonate real customers for getting access to their accounts.

As more and more transactions happen online today, businesses are facing a number of threats such as card fraud, phishing attacks, and electronic transfer fraud. This constant wave of fraud impacts business growth, and impacts the level of trust customers have in businesses.

To fight against fraud, Identity verification and identity identification services need to be implemented. Moreover, these services help businesses comply with regulatory guidelines. But, there are some key differences between identity verification and identity identification.

In this blog, we’ll cover identity verification vs identity identification. Let’s go over them and what they mean for businesses.

What is Identity Identification?

Identity identification is the process of checking if the person actually is who they claim to be. It’s the act of identifying individuals by checking their photographs, and personal information in ID documents.

This can be as simple and quick as showing an ID badge when visiting a government office, or showing identity documents when buying something age-restricted.

In online environments, the identity identification process is a bit different. Customers are asked to prove their identity by entering personal information alongside their payment details. All this information helps organizations verify if the information presented is correct or not.

For low-value transactions or organizations that are comfortable with a higher level of risk, this is enough due diligence. But, with the level of ID theft fraud growing every year, normal identification methods aren’t enough. More sophisticated methods of verifying identity should be in place to deter fraudsters. 

To ensure a higher level of security and to comply with ID regulations, it’s not enough to make decisions using user-submitted information. In simple words, it means that the information provided by customers needs to be verified against another source. This will help organizations understand if a real person is submitting the information, or if a fraudster trying to trick the organization.

What is Identity Verification?

Digital identity verification services help organizations to verify identity information available in the ID documents that are submitted by customers. This data is compared from an issuing source, like the DMV. Comparing information available from a third party, or verified data sets can reduce the risk of identity theft taking place.

In this increasingly digital environment, organizations may need to verify a customer’s identity almost every day. Especially when it comes to onboarding new customers. Verifying a customer’s identity is crucial when they want to open a new account, make a high-value transaction, or access age restricted-services. Identity verification is often used by organizations that have stricter security standards. Banking and financial industries have higher security standards. 

With more than 1.2 billion personally identifiable information records available on the dark web, it’s a major risk to allow customers to onboard without verifying their information. Onboarding people without verifying their identities can lead to huge losses for banks, can put other customers at risk of exposure, and break the existing trust value of an organization.

To minimize the risk of ID fraud and money laundering, most identity verification solutions require users to verify their ID documents in additional ways.

In doing so, the level of security increases in line with the number of checks performed. Every security check needs to be done with a particular target in mind. This is one of the best ways to reduce the risks of fraud and build a certain level of trust in the industry.

Customer ID identification and ID verification methods should have the perfect balance between stringent, and easy-to-follow. Ensuring perfect fraud prevention and customer experience.

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Identity

How Identity Proofing Prevents Fraud?

digital identity proofing

Building trust online requires proof in today’s time. After the pandemic, it has become harder for businesses operating in the growing digital world needs to ensure that a customer is a real person. This is also known as “identity verification or Know your Customer” for businesses in regulated industries.

There are several technologies that involve verifying name, date of birth and address information to reputable data sources such as credit references. But, all of these steps are worthless if identity proofing is not done beforehand.

What is Identity Proofing?

Identity proofing is the process of making sure that the person who’s signing up is actually real. This is one of the most important parts of an identity verification journey. If a business is unable to verify the identity of a customer, any verification step afterward is in vain.

Not having a proper due diligence process for vetting your customers can lead to financial and reputational losses.

Document Verification in Identity Proofing

During physical customer onboarding, businesses can rely on physical identity data to verify if a customer is real or not. In physical settings, companies can check for ID documents.

After Covid, we’ve moved to a digital onboarding process. Businesses have to go through a digital identity verification process. So, what is the approach businesses can take to verify the identities of customers?

Knowledge-Based Authentication

A lot of new technologies have come to the market to accommodate this. Knowledge-based authentication questions are one method of identity proofing. KBA is a set of questions that only a real person would know. Common questions include:

  • Amount of money spent on mortgage
  • Color of the first car
  • Name of the first pet
  • Your favorite teacher

There are legitimate questions, but a spouse can also answer them. Bad actors try to guess answers to these questions. In case there has been a major data breach, fraudsters tend to use this data to answer questions. But knowledge-based questions aren’t really a secure method of identity proofing.

Businesses need to use solutions that replicate face-to-face interactions. There need to be solutions that can be legitimate, and secure.

Step-by-Step Process to Digital Identity Proofing

1. Document Verification

To verify identity, a customer is asked to provide copies of their government-issued ID documents. Robust document verification solutions such as DIRO can verify the legitimacy of the document by cross-referencing information from the issuing sources.

2. Face Match

In the next step, businesses need to verify that the person presenting the documents is legit. The right way to do this is to match the face on the document with the person who presented the document.

Some companies ask the customer to verify themselves by submitting a selfie. Face-matching is an important part of identity proofing.

3. Liveness Check

The problem with face match is that a fraudster can submit the selfie of the original person that they can download online. So Liveness check is crucial to make sure it’s a legit person submitting the application, not a fake person. 

Liveness check is the process where a person has to record a video and say a code in the video. This prevents the use of any impersonation tools or the use of fake photos.

4. Digital Identity Data Layering

All the Identity verification experts that no one size fits all digital ID proofing works for all businesses. With any system, there are outliers and exceptions. Having a multi-layered approach to digital identity verification is wise.

Relying on trusted third-party data is a crucial part of the identity-proofing process. Taking a data-centric approach to ID verification makes it easier for businesses.

5. Secure and Smooth Customer Experience

A great customer onboarding experience is crucial for both businesses and customers. Customers who have a poor onboarding experience tend to never use the services.

For businesses to scale up, you need to provide a secure yet smooth customer onboarding experience. Fraudsters, tend to find the path of least resistance, and by avoiding detection and prevention steps between bad actors.

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Identity

Basic Mistakes in ID Verification Process

flaws in manual id verification process

Now that the financial industry is on the wave of digitization, the lives of consumers are changing. With the rise of digital banking, and cloud-based financial services, the number of data breaches also grew. 2016 reached a record of 35 breaches every second. 64% of these data breaches were successful, and they stole users’ personal information like social security numbers, banking information, date of birth, and even medical records. 

The threat of Identity fraud is at an all-time high and it causes major financial losses. The biggest identity theft scam of recent times included Alberto Companioni and Patricia Perez-Gonzalez. Together, they ran a 2-year long credit card and ID theft scheme all across the United States. This scheme resulted in a loss of about $2 million in fraud.

In April 2016, 48 people were accused of setting up fraudulent bank accounts, and withdrawing over $500,000 in stolen cash at Atlantic City Casinos.”

Based on these two situations, and countless others it’s safe to assume that the situation of ID theft is becoming more serious. More and more people are becoming the target of ID theft and how it can harm them if they’re not careful. The numbers revolving around Identity theft are rising, and fraudsters are using newer technologies to trick financial institutions.

Financial institutions have to protect themselves and their customers from these situations. This is why it’s essential to follow through on identity verification methods.

Why are Manual ID Checks Failing?

Advising your customers to follow basic safety practices to protect their identities is useful, but it’s not enough. Let’s say a customer faces an ID theft issue, by the time they face this problem, it’s too late. The fraud has happened already, and the customer has already lost the money. Customers have to sit through the time-consuming processes of reporting. Customers who face a lot of trouble end up switching banks or companies for better security.

To fight this problem of Identity theft with a high success rate, the problem needs to be stopped at its root cause. Banks of all kinds rely on employees to manually verify customer identities, and then they conduct background checks using the ID data. 

The first step of the manual ID verification process isn’t effective in fraud prevention. As there’s a human element involved, it is highly susceptible to human error.

Flaws of Manual ID Verification Processes

Fraudsters of today love the technologies. They leverage endless technologies to their benefit. The manual ID verification process can’t find the flaw in fraudster-generated information. The manual ID verification process is flawed in this digitally fueled environment. Here are the 6 main weaknesses of the manual ID verification process:

1. Prone to Error

Every state has its type of ID proof, and every government tends to make some changes in the ID proof as well. These small changes and the number of ID proofs already make it challenging to find a fake document among 10 real ones. So, manually verifying identities is already a tough challenge. 

On top of that, changing rules and regulations have a lot of states reissuing their ID documents in 2017. It’s almost impossible for bank employees to keep up with all the latest changes. This makes it easier for fraudsters to pass a fake document as the original.

2. Inconvenient

As banks are working around the clock to offer more and more services digitally, the manual ID verification process is becoming inconvenient. New operations and new technologies are taking time to be fully integrated into the processes.

3. Susceptible to Fraud

As branch employees gather personal information directly from the consumers during the ID verification process. It opens them up to situations where branch employees can exploit this data for their gain.

4. Time-Consuming

The current method of manual onboarding makes customers frustrated. We live in an age where customers demand instant results, and they end up dropping the whole process. Having to wait for the information to be entered into the system, and then waiting for the information to be verified gets annoying.

5. Inconsistent

Banks cannot implement a manual ID verification process across all branches at the same level. The overhead cost of documentation and filing the paperwork is exhausting. Plus, it’s hard to keep track of old information, as employees have to shuffle through a deck of information. 

6. Outdated

Most important of all, the manual ID verification process is outdated. Digital driver’s licenses are a new technology that can change the need for manual verification. In manual ID verification, there’s no way to verify if the information is outdated or up-to-date.

Conclusion: Manual ID Verification Process

Financial institutions with an inadequate identity verification process may have to suffer hefty losses. Identity theft and data breaches can happen frequently if a bank isn’t careful about who they onboard. Most importantly, banks with lacking processes can end up paying huge fines for non-compliance with KYC and KYB laws. All in all, the need for technological advancement in the identity verification process is crucial for banks.

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Identity

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.

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Identity

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 physical 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.