How to Perfectly Ace Address Verification During KYB & KYC Process?

Customer address verification is vital for opening accounts, signing up for new services, and more, but verifying customer addresses isn’t as easy as it seems. The new automated method offers an up-to-date source for address verification and digital methods for address verification are perfect for businesses to reduce fraud. 

The biggest reason for identity fraud is the use of synthetic identity, where a fraudster uses a combination of fake and real information to create a brand new identity, which is one of the reasons why verifying an address is crucial for businesses to mitigate fraud. 

Also, using proof of address as a form of ID verification means that your business will comply with AMLD5 and protect it from other fraudulent risks.

What’s the Need for Proving Address?

To avoid risks of fraud, proving customers’ addresses is vital for companies like financial institutions, eCommerce platforms, online marketplaces, and gambling sites. Businesses that have to prove customer identities to offer their services need to verify customer addresses. 

High-value eCommerce transactions also need proof of address verification, so that expensive purchases such as cars, technical equipment go to the correct addresses. If a fraudster can use the potential to use stolen card details to buy something and send it to a different address, they will. However, businesses that use robust address verification solutions can mitigate the risks of fraud. 

The Need for Regulations

Businesses, financial institutions, eCommerce marketplaces, and so on have to follow KYC and AML regulations to reduce the risk of fraud. If you follow KYC, KYC, and AML regulations, you reduce the threat and risk of fraud to your company. Using strong ID and document verification software and tools can assist businesses in mitigating fraud, legal complications and establish trust in our customer base. 

Proof of address is a basic requirement for complying with KYC & KYB and AML compliance. But that’s not the case with all countries, Hong Kong doesn’t require proof of address verification to comply with KYC, KYB, and AML compliance. The reason for that is simple, customers often change addresses and their documents can be easily forged.

Top Ways to Verify Addresses

The most commonly used methods of proof of address verification across the globe are:

  1. Driving License

A driving license is the most commonly used document type for proof of address verification. Although, using a driving license is not an efficient solution. Many people had their driving license issued years ago and chances are that they have changed their home since the issuing of the license. Another issue is that a driving license can be easily forged and thousands of fake licenses are used every day.

  1. Passport

Passports usually show addresses, but the data available on passports can also be outdated. With many customers currently living at a different address than what’s shown on their passport that was issued almost 10 years ago, the use of a passport isn’t ideal. Also on some passports, current addresses aren’t printed and a space is left for residents to write their addresses themselves.  

  1. Bank Statement 

Financial institutions, banks, eCommerce platforms, and so on have recently started using bank statements for proof of address verification. A recent bank statement can easily be used as proof of address. However, customers have security concerns regarding offering their bank statements. Financial services in Europe have seen almost 40% of customers abandon the customer onboarding process when they were asked for bank statements for address verification. Customers are hesitant to provide their sensitive data.

  1. Utility Bill

Utility bills have been used for proof of address verification for a long while. Earlier the process was strictly paper-based, but since the pandemic, it has gone digital. This is the strongest form of address verification as the document is recent and hard to mimic. Utility bills provide the most recent address of a consumer, while most people don’t care about changing addresses on driving licenses, they are likely to pay their utility bills every month.

DIRO Online Document Verification Software for Address Verification

Verifying proof of address can help businesses fight fraud. DIRO’s online document verification tool helps businesses in verifying the signs of fraud early on. DIRO’s online document verification service verifies document data directly from the web source thus eliminating the use of fake and forged documents. By using DIRO’s online document verification solution, businesses can verify proof of address documents without having to worry about the use of fake and forged documents.