Identity verification

Identity verification by Fully-Verified

In today’s world, functioning online is considered a norm for businesses, institutions, and individuals. Companies and institutions worldwide that reshaped their services to function online. Due to strict regulations regarding KYC (Know Your Customer) procedures, online identity verification has become a new standard for businesses and institutions globally.

Online identity verification - what is it?

Identity verification is a process that allows to confirm one’s identity and confirm the validity of details provided by a person. The process is usually based on data authentication of one’s identity document, such as a passport, national identity card, or driving license. Digital identity verification is carried out entirely online with the use of technology, AI, and machine learning solutions.

For businesses operating online, the identity verification process is one of the most critical steps of customer digital onboarding. It minimizes the risk of fraudulent activity, such as identity theft, anti money laundering, or carrying out transactions on one’s behalf without authorization.

Eliminated risk

Eliminated risk of cybercrimes, financial crimes
(such as money laundering, terrorist financing),
and identity theft.

Compliance

Compliance with global regulations and policies. In this case, the lack of compliance can result in severe penalties, including fines and criminal liability.

Enhanced trust

Enhanced trust between users as well as between users and service providers.

Seamless onboarding

Faster, more efficient customer onboarding with no paperwork and drawn-out processes involved.

What industries need identity verification services?

Due to that change and a strong pull towards online services, the scope of sectors in need of digital verification solutions expanded.

An excellent example of platforms needing digital identity verification are cryptocurrency-related services, such as crypto wallets, crypto trading, and lending platforms. In recent years, regulators worldwide started to implement strict regulations, treating crypto platforms similarly to other financial services.

What is identity verification used for?

One of the primary uses for digital identity verification solutions is customer onboarding. Proper KYC checks performed at the beginning of a business relationship between service providers and customers ensure transparency, enhance safety, and minimize the risk of fraudulent activities.

Identity verification methods are also used to verify users’ age reliably. Whether opening a bank account, setting up a digital wallet or an account on a gaming/e-gambling platform, verifying users’ age is a must; due to growing legal requirements, such checks cannot be based on users’ declarations only.

What are the main regulations to follow?

The regulations regarding identity verification can differ depending on the sector and location. The directives, regulations, and frameworks oblige institutions and companies to carry out due diligence procedures during the onboarding process, including identity verification of clients.

The main regulations that set standards for the verification processes in Europe, the UK, and the USA are:

Anti-Money Laundering Directives (3rd/4th/5th/6th AMDL)
eIDAS (Electronic Identification, Authentication and Trust Services regulation)
The UK Bribery Act & The UK Modern Slavery Act
Financial Action Task Force (FATF) recommendations and standards
The Customer Identification Program (CIP)

How does online identity verification work?

There are various types of verification methods. Some of the most popular ones available now are video and photo-based identity verification solutions.

Using technologies that make the process smooth and quick for businesses and customers, digital identity verification solutions usually consist of similar steps. This structure ensures the highest level of security and minimizes the risk of fraudulent activity, such as money laundering, and other financial and cybercrimes.

Human supervision

Human supervision is another important factor during the verification process. In some cases, such as video identity verification, a specialist can be present during the process to carry out the steps. Verification can be checked by a specialist after it’s been completed, or direct contact with a person undergoing verification happens in real-time.

Document verification

This method is based on authenticating identity documents, such as passports, identity cards, and driving licenses. This process consists of confirming the document's authenticity and validating the user's personal details to verify their identity. Other tools, such as OCR, are used to verify documents properly.

Optical Character Recognition (OCR)

It is an automated data extraction solution. The software extracts data from handwritten and printed documents, scanned files, and photos and converts the text into a machine-readable form to be used for further digital data processing.

Liveness detection

Liveness detection refers to the use of technology that, based on biometrics and users’ movement recognition, identifies natural movements and confirms the presence of a real person during the verification process.

Database verification

Database verification compares data submitted by the user with publicly available information as well as private databases and lists. It includes databases such as PEP (Politically Exposed Persons) and Sanctions lists.

Face verification

Face verification allows to confirm the ownership of the document. With AI technologies, the software verifies that the person in the ID photograph is the same person using the document during the verification process.

Steps of digital identity verification

Depending on requirements, different types of identity verifications can be used. Some solutions might utilize one tool, while others might combine multiple tools and technologies. However, regardless of the type of identity verification, the steps taken during the process are usually quite similar.

Collecting user’s personal information

The first step of a proper identity verification process is the collection of user’s data. Usually, upon creating an account, the user is required to provide information such as:

first and last name,
date of birth,
identity document number,
personal identification number
other personal details

The personal information required can differ depending on the industry or sector in which a company operates.

Data authentication and user’s identity verification

Proper data authentication is one of the critical steps in any identity verification process. During that step, data from the user’s identity document is extracted. In the case of digital verification solutions, several technologies and software can be used, such as OCR which extracts data from photos of users’ identity documents to validate data and ensure that the document wasn’t altered, either digitally or manually.

Ownership confirmation & document validation

During this step, it is essential to eliminate the risk of identity theft and the possibility of performing transactions without the identity document’s rightful owner’s authorization. One of the most effective and quickest ways to confirm the ownership of the ID is a biometric check, such as Face Verification. That’s also when solutions such as liveness detection and human supervision come to play, eliminating the risk of fraudulent attempts.

It is also important to choose an identity verification method that excludes the risk of using a fraudulent or forged document. This is when security features checks and ID document comparisons with official government-issued templates are performed.