With the digital age in full swing, many business transactions are occurring online. Financially focused businesses are finding it challenging to confirm customers who are not physically present when interacting with them. To avoid being complicit in fraud and money laundering, businesses must ensure that they only do business with legitimate individuals or companies. This has given rise to a new industry, identity verification solution providers, aimed at verifying customer and business identities in customer-not-present scenarios.
The identity verification industry is relatively young. It is a budding industry. Because of this, there are no industry standards to verify customer identities. This can create confusion for companies looking to harness these services to validate the individuals they interact with on a professional basis.
In this article, we will explain the most thorough way identity verification can be performed by a company. From there, we will examine why this type of process is most beneficial for companies looking to validate individual identities.
Defining Some Key Terms
Before we get into the process, it is important to explain the difference between identity verification and identification verification. Although the two terms sound extremely similar, they serve different purposes in the customer verification process.
Identity verification: Validating a person’s personally identifiable information (PII) against information within official databases. This starts with the full name, address, and date of birth of the onboarding customer but it can also include phone number, national ID number and more.
Identification verification: Verifying that the person’s government issued identification is authentic and is in the possession of the rightful owner.
Identity verification companies that use these two processes in conjunction provide more accurate identity results.
The ID Verification Process
Thorough Identity verification solution providers follow the following process:
- A customer captures an image of their identity document (passport, driver’s license or national ID) with their smart phone or web camera and it is forwarded into the ID verification system
- The identity document image is OCR scanned and checked for validity
- The identity information captured from the front of the document is crosschecked with the information embedded within the ID’s barcode for validity
- The information is then crosschecked for a match within official databases in the ID’s country of origin
- The customer is prompted to take a biometric scan (selfie, fingerprint scan, iris scan, retinal scan, etc.)
- The biometric scan will be matched to the known identify the customer
- The customer is deemed as legitimate or fake
Why this Process Matters
ID verification providers have a duty to check a person’s identity, verify that it is real and that they match their identification during the verification process. Identity verification and identification verification must occur in conjunction with one another. Unfortunately, not all Identity verification solution providers perform all these steps in their verification process. Because the industry is so new, there is no standardization in the identity verification process. This means many companies can provide services without providing the most thorough identification. This can have negative implications for the customers of these identity verification solution providers.
Many identity verification companies will verify that an identity document is legitimate, without crosschecking the information on the document with information from official databases in the identity document’s country of origin. Then, they will follow up with a biometric comparison of the user and the photo on the ID. This is doing a disservice to these company’s clients because it could be allowing them to do business with individuals who have manufactured fake ID’s with stolen or fake identity data. This is known as synthetic identity fraud. To date, the best way to stop synthetic identity fraud is to crosscheck PII information with PII information in official data sources.
Find an Identity Verification Solution Provider You Can Trust
IDMERIT believes it is imperative to follow rigorous standards when identifying individuals. Simply verifying a customer’s identity document is not enough. Steps must be taken to analyze the information on an identity document for validity as well. Both identity verification and identification verification must take place in a well thought out solution. Otherwise, synthetic fraud can pass through an identity verification system undetected and cause harm for clients in the long run.
IDMERIT adheres to the thorough identity verification process described in this blog. This means IDMERIT provides services that meet the most rigorous KYC and AML regulation standards. By doing this, the company can ensure that it has done its due diligence to fight fraud and mitigate risk. IDMERIT follows strict ID verification standards to provide the most valuable service to its customers.