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.
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.
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.
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.
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:
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.
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.
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:
The personal information required can differ depending on the industry or sector in which a company operates.
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.
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.
Further steps can be performed to obtain and verify additional data depending on business needs.
Some examples of additional steps that can be performed are:
Fully-Verified was created as answer to its founders collectively losing over $150 000 to various types of fraud in their eCommerce businesses.