How to Choose Between Document and Non-Document Verification: A Compliance Perspective

The stakes for getting identity verification right have never been higher. Fraud threats are on the rise, regulations are tightening, and customer expectations for a seamless experience are at an all-time high.

For compliance professionals — especially those working across industries — the decision between document and non-document verification isn’t just a technical one. It’s about protecting your business, building trust, and delivering the frictionless onboarding your customers expect.

Let’s walk through how to make the right choice with real data to guide your decisions.

Understanding Document Verification

Document verification is the process of confirming an individual’s identity using physical or digital documents, such as passports, driver’s licenses, or national IDs. This method is a cornerstone of compliance in sectors such as finance, fintech, and insurance, where regulatory requirements are stringent and the cost of non-compliance is high.

Why does document verification matter?

• The global document verification market is projected to grow from $4.24 billion in 2024 to $5.07 billion in 2025 at a CAGR of 19.8%.¹ Rising regulatory requirements, digital onboarding needs, and escalating identity fraud drive this surge.
• Identity theft remains a significant threat. In 2024, identity theft reports reached 1 million, making up 19% of all fraud reports, while overall fraud reports hit 2.6 million² — almost half of all consumer complaints.
• Regulatory penalties for non-compliance are steep. In 2019 alone, global fines for identity verification failures totaled $10 billion³, with 12 of the world’s top 50 banks penalized for Know Your Customer (KYC) lapses.

When is document verification the right choice?

• Regulatory requirements: If your industry or jurisdiction mandates KYC or Customer Due Diligence (CDD), document verification is often a non-negotiable requirement.
• High-risk transactions: For high-value or high-risk onboarding, document verification provides a robust audit trail.

Cross-border onboarding: For international customers, official documents are often the only reliable source of identity.

Exploring Non-Document Verification

Non-document verification uses alternative data sources, such as phone number checks, biometric authentication, or database lookups, to confirm identity. This approach is gaining traction due to its speed and user-friendliness.

When a Shift Toward Non-Document Verification Makes Sense

• Adoption of non-document verification is rapidly increasing as businesses look for ways to onboard more clients efficiently and with minimal friction. 
Companies are embracing these innovative solutions to speed up identity verification processes, improve customer experience, and stay competitive in a fast-paced digital environment.
• In the U.S., non-document verification is increasingly recognized for delivering high user pass rates, significantly lowering fraud risks, and dramatically accelerating onboarding times compared to traditional document-based methods, making it a preferred choice for many organizations.
• For customers, the pain of slow onboarding is real: 40% of U.K. consumers abandon the onboarding process if it takes too long, and 34%⁴ leave when asked to provide excessive information. The abandonment rate for financial applications jumped from 26% to 45%⁵ in just one year.
• Businesses using non-document verification report onboarding 35% more clients, with average processing times dropping from several minutes to as little as 4.5 seconds.⁶When is non-document verification the right choice?
• Low-risk scenarios: For low-value transactions or minimal regulatory risk, non-document methods streamline onboarding.
• Repeat customers: Returning users can be re-authenticated quickly with one-time passwords (OTPs) or biometrics.
• Digital-first experiences: For industries prioritizing seamless digital onboarding, non-document verification reduces friction and abandonment rates.

Key Factors to Consider

Choosing between document and non-document verification isn’t a one-size-fits-all decision. Here’s what compliance leaders should weigh:

• Regulatory landscape: Always review the latest compliance requirements for your industry and region. For example, AML and CFT regulations may specify acceptable verification methods.
• Risk appetite: Assess the risk profile of your customers and transactions. High-risk environments typically require document verification, while low-risk use cases may permit more flexible, non-document options.
• Customer experience: Document verification can slow down onboarding, with 40% of customers abandoning lengthy processes, and 55%⁷ more likely to apply if onboarding were 100%⁸ digital. Non-document methods provide a faster and smoother experience.
• Fraud prevention: Document verification is generally more secure, but sophisticated forgeries are on the rise. Non-document verification, especially with advanced biometrics, can add an extra layer of protection. Biometric verification is expected to account for 66.2%⁹ of the identity verification market by 2025.
• Operational efficiency: Consider the resources needed for manual document review versus automated, non-document checks. Automation can cut onboarding time by up to 75%.¹⁰

Real-World Scenarios

Real-world scenarios are where identity verification and document verification prove their value, helping compliance teams choose the right approach based on risk, regulations, and customer needs.

By understanding these practical examples, you can align your verification strategy with industry best practices to deliver a seamless, secure experience.

Best Practices for Compliance Teams

Staying ahead in compliance means more than just meeting regulations — it’s about adopting best practices that make identity verification and document verification both effective and efficient.

By staying informed, using a risk-based approach, embracing new technology, and educating your team, compliance professionals can help ensure robust protection and a seamless customer experience.

• Stay informed: Regulations evolve — regularly review resources like Shufti’s CFT compliance knowledge base to stay current.
• Adopt a risk-based approach: Tailor your verification strategy to the risk level of each customer or transaction.
• Leverage technology: Modern solutions combine document and non-document verification, allowing you to adapt dynamically.
• Educate your team: Ensure that compliance staff understand both methods and when to apply each.

Charting the Right Path Forward

At Shufti, we understand the daily challenge of balancing regulatory demands with the need to deliver a seamless, trustworthy experience for your customers. The data shows that a hybrid approach, or using both document and non-document verification as appropriate, offers the best balance of security, compliance, and user experience.

As the compliance landscape continues to evolve, organizations that proactively adapt their identity verification strategies are better positioned to build lasting trust and minimize risk. By integrating flexible solutions and staying attuned to both regulatory changes and customer expectations, compliance teams can confidently navigate complex requirements.