Ever since the beginning of humanity, people have been trying to use unethical, immoral and illegal means for personal gains and benefits. With technological advancement, these criminals have evolved their methods of criminal activities. Since the advent of the internet, many of these criminals have started getting involved in criminal activities online, such as identity theft, scams, etc. Although there are many types of frauds that occur online, the most common ones include credit card fraud, imposter scams, debt collection, and identity theft. Global law enforcement agencies have been setting barriers to prevent instances of crimes.
According to the Federal Trade Commission (FTC), 1.4 million cases of fraud were reported in 2018 and in 25% of the cases, people said they lost money. People reported losing about $1.48 billion to fraud cases in 2018. These scams have caused considerable damage to both individuals and businesses. To minimize the occurrences of frauds, financial regulatory authorities have introduced KYC compliances that are mandatory for banks and financial institutions to adhere to. However, businesses and individuals are also encouraged to follow these regulations for their own security, minimizing risk. This can help them prevent themselves from the threat of scammers and fraudsters, who have the tendency to negatively influence their business.
Why is KYC necessary?
KYC or Know Your Customer is a process businesses carry out to know their clients by extracting and verifying information about them. It is a time-taking process and customers nowadays don’t have the time or resources to deal with the government, consulate, and embassy offices for their KYC procedures. Therefore, the identity verification process has been seamlessly automated using artificial intelligence systems. These systems increase the accuracy and effectiveness of the identity verification process while reducing time and human efforts at the same time.
Different methods are used to verify identities for KYC compliances such as facial verification, document verification, address verification, 2-factor authentication, and consent verification.
A deep dive into Document Verification
Document verification is the process of identity verification of customers through the inspection of government-issued identity documents. Officially issued documents, such as ID cards, driving license, passport, credit/debit cards, bank statement or other federal documents are mostly used for the authentication process. The AI software checks the validity of personal data, including name, age, address, as well as document features such as stamps, watermarks, fonts, carrier materials, and others.
There are four basic steps in the document verification process. First, the customer displays the identity document in front of the device’s camera. Then the relevant information is extracted by the software using Optical Character Resolution (OCR) technology. Next, the document is scrutinized with the help of artificial intelligence. Finally, the verification details are successfully sent to the client or stored in the back-office of the service provider.
If these steps are successful, the authentication process would be completed. However, if there is a problem, the verification process will fail. The authentication is either done by a webcam or a mobile phone’s camera. So it is important to ensure that the camera of the device is in working order. This is done to minimize the risk of identity theft and fraudulence.
Fraudulent transactions have hazardous consequences not only for banks and financial institutions but for businesses and individual customers as well. Losses as a result of identity theft are passed down to every level and the end-user is eventually affected, leading to a negative financial environment. Therefore, it is integral for businesses to contact reliable identity verification service providers to secure their transactions and to attain long term business sustainability.