Biometric Authentication: Its Applications and Associated Constraints

Biometric Authentication: Applications and Constraints

Biometric authentication is considered as an advanced way of ensuring Know Your Customer (KYC). The purpose of controlled access is achieved through biometric scanning which verifies a person’s identity based on the physical characteristics. The biometric data for each individual is different. This data is already stored in the biometric security system which identifies and verifies the identities. Today at the organizational level, 65% of authentications are based on biometrics. The global revenue generated from biometric verification was around $21.8 billion in 2018. The adoption of biometric techniques is increasing rapidly especially in the financial sectors and at Government level.
Biometric verification includes facial recognition, fingerprints, hand geometry verification, iris scanning, vocal verification, retina scanning, and signature dynamics. The biometric technology converts all the data into digital information and formats which are further processed under complex algorithms. These algorithms are based on Artificial intelligence (AI) and Machine learning (ML). The pre-stored data is matched against the data entered into the devices and is verified.

Importance of Biometrics In KYC

“KYC” refers to the personal information and details required by the regulated companies and the financial institutions in order to allow trusted individuals to enter into the system. To ensure the security policies of the company, customers are verified through biometrics. This helps the companies avoid the risks of online payment scams, money laundering activities, and credit card fraud. The biometric verification of customers has resulted in an efficient and accurate authentication system. Also, this reduces the time which facilitates both customers and organization.
Biometric innovation facilitates banks in performing their verification processes without letting them wait in the queues, answer queries, and filling large forms. This would help quick verification and secure record keeping. This secure implementation of KYC management process will protect the system from identity theft and money laundering as well as shape the system with the Government regulations accordingly.

Industrial adoption of Biometrics

Multiple industries are using biometric technology as it fits in their usability.

  • Reduce Time Theft:

Businesses are using the biometric attendance of employees to reduce time theft and increase productivity. This would help in a proper time track of when the employee is entering and leaving the workplace.

  • Medical Industry:

There is a 105 increase in the use of biometrics in the medical industry. Medical Industry is using it for the authentication of patients to help doctors find out the medical record of the relevant patient. Also, for the identification of blood donors, biometric verification is in use.

  • School Management:

Schools are using it for the maintenance of records and attendance of the students and teachers. The automated record keeping will help efficient management.

  • Travel Industry:

The travel industry is using biometric with a record of 11% increase. To verify the tourists and travelers, biometric authentication helps in quick processing and avoiding restricted candidates to travel.

  • Finance Industry:

Similarly, at the Government level and in financial institutions and banks, biometric verification plays a key role in the authentication of customers. To ensure KYC compliance of the customers, it is necessary to perform their biometric. 46% of top-ranking biometric mobile applications were banking apps.

  • IT Industry:

In the IT industry, mobiles have embedded biometric technology through which they unlock their phones in order to keep their information and data save. Mobile applications are developed that need online biometric verification to help businesses authenticate their end-users. The biometric study shows that the use of biometrics in mobile apps will increase from 5% in 2018 to 70% in 2022.

Biometric Verification in Mobile Phones

Biometric verification in mobile phones is getting common nowadays. It is estimated that by the end of 2019, 100% of the mobile shipments would include mobile phones with biometric technology. Also, the wearables and tablets will also be empowered by biometric verification by the end of 2020. The verification through fingerprint, face and iris scanning are the most common password features of the devices today.
Online verification and authentication are done in order to perform any transaction or to purchase something from an online store. The online marketplace is inserting the biometric technology in their system to allow the transaction and purchasing through mobile applications. Also, the banking applications (mobile wallet apps) use biometric verification of their customers if they want to open an online bank account or to perform a transaction.

Biometric Authentication Risks

Businesses consider biometric technology the top-notch solution of identity verification and authentication. Unfortunately, that is not the case. The physical characteristics through which verification is done are unique for each individual. Any negligence in record and data keeping can result in heavy risks and reputational damage to businesses. Below are the major security risks associated with the adoption of biometric technology:

  • Privacy Breach:

In case the server storing the data gathered from biometric devices get hacked, all the sensitive information of individuals will be lost which can result in the malicious activities done by the hackers and blackmailing of individuals. The blame would definitely be on the organization. For this to handle, biometric verification must be done under secure boundaries.

  • Error in Device:

Any error in the device can lead to the incorrect status of accepting and rejecting an individual. This could be due to the failure in capturing the features of individuals properly.

  • User Acceptance:

Biometric verification in some cases is hard for the customers to perform. The customers who do not want to share their personal information with any third parties do not agree on their authentication on the basis of biometrics.

  • Identification copy:

In case, any fraudster copy your biometric record maybe fingerprint or some other feature, he could easily get all the access to the stuff you are the owner of. This loss can never be recovered in any way. Therefore, it is necessary to take serious security measures while stepping into the use of biometric technology.


Biometric authentication is revolutionalizing globally as it helps the verification of the individuals in less time efficiently. Industries are innovating themselves with the use of biometric technology. The security risks associated with this technology should be mitigated in order to prevent any loss that could result in heavy fines and loss.

Secure the Fintech Future with RegTech

Secure the Fintech Future with RegTech

Financial Technology (Fintech) refers to the use of technological advancements in the financial industry. Today, Fintech has entered into the phase of rapid development in the landscape of information technology and the financial market. This revolution is changing the ways how people use, transfer, save and manage their money. According to KPMG, in 2018, the global Fintech market size reached $111.8 billion. This represents a 120% increase as compared to 2017 ($50 billion). This increase shows how much industries are influenced by the services and adoption of RegTech.
This Fintech emerging era requires a parallel involvement of regulations under which certain financial services are provided. These regulatory solutions are called “RegTech”. It is essential for the financial institutions to integrate the regulatory technology into their internal system to reduce the compliance cost. Both Fintech and Regtech are playing a potential role in reconceptualizing the nature of the financial system. In the first quarter of 2017, digital transformations resulted in 34 deals totalling $238 million. This represents a 102% increase in the yearly growth rate. These digital transformations ensure the integration of Regtech associated with their system to avoid heavy risks, fines, and reputational damage.

The intersection of Fintech and RegTech

Fintech & Regtech together provide a fertile platform that replaces inefficient traditional financial systems with efficient online financial systems. This intersection is making new ways for the authorities to monitor and regulate business development. The identification and verification of identities are essential for the financial institutions and online marketplace. It ensures that the activities happening in the system do not involve any bad actors. Regtech plays a crucial role in introducing regulations regarding Know Your Customer (KYC) and Anti-Money Laundering (AML) compliance. The businesses perform their activities under these regulations given by Regtech.
A PWC survey shows that 88% of traditional financial institutions are planning to collaborate with Fintech companies to transform their ways of payments, money transfers, and transactions in the next 3 to 5 years. Therefore, with the developed economies, the IT industry and financial institutions need to transform their system with a blend of Fintech and Regtech. This will help them in:

  1. Providing services under regulatory compliances
  2. Understanding how the data of public is collected and processed
  3. Taking an even approach to fulfil the compliance requirements in multiple markets
  4. Developing standard auditing information reports
  5. Sharing the data with third-parties in a secure manner
  6. Ethical contracts in sharing sensitive information
  7. Transforming the way through which data is stored

With the passing time changings are prosed in the Regtech. These amendments in the regulatory compliances are in the response of criminal activities happening as a result of new technology. As with every passing day, where technology is getting strong, attackers are also finding new ways and technologies to exploit the loopholes in the system. To make Fintech safer from fraudulent behaviours, it is important to implement the Regtech proposed regulations accordingly. It is essential for the Fintech and Regtech solutions to be transparent in order to perform financial actions in a trusted environment. This compilation together gives results in a hard time for bad actors.

Importance of KYC & AML Compliance

It is important for financial institutions and the online marketplace to implement KYC and AML checks in their system. The transactions and money flow in the system need to be monitored continuously. This will reduce the risks of online payment scams and malicious activities from happening in the system. Each participant of the onboarding system needs to be identified and verified under the regulation of KYC. Along with this, the transparency of data flow needs to be taken into consideration. For any financial institution, it is necessary to adopt the technological ways that help them achieve the goal of transparency.
The Fintech industry facilitates the financial institutions and customers by sharing the data among third parties. A centralized database keeps a record of fraudsters that help the financial industry to verify the identity. In case any malicious personality is spotted, the transaction is reported immediately to prevent heavy risks. A standard way is defined by Regtech for storing and using the data. This makes it easy to monitor cross-border transactions and mitigating the gap between multiple monitoring ways used by different institutions. Also, the clarity in data flow and maintenance by multiple institutions help in easy monitoring and management.

Adoption of Regtech

Regulators are harnessing technology incredibly from the past 10 years. The digitization in the industries has influenced the regulators which shows a considerable demand for technological advancements in multiple industries. Innovations are based on machine learning, artificial intelligence and many such algorithms that come up with their own pros and cons towards the industrial and community level.
Streamline identity verification is the goal of online financial institutions in the onboarding process. Also, this is the demand of Regtech to ensure KYC and AML compliances in the system. Where on one side, the Fintech industry is introducing new technologies in the financial market, on the other side it is compulsory for the regulators to adopt significant regulations.

Influence of Fintech and Regtech

Regtech facilitates both the regulators and industries. Industries can mitigate the risks of online identity fraud and other fraudulent activities effectively. Not only this, the empowerment of regulatory capital and advisory firms is fulfilled. Regtech provides new opportunities and facilities for the Fintech startups that are contributing to the betterment of industries. The compliance risks are expected to be $120 billion in the next 5 years. To mitigate these risks, Fintech should ensure the deployment of secure systems.
Regulators are facilitating themselves with the adoption of Regtech by using new monitoring ways that need less human power and consumes less time. The investigation is done by the automated system based on advanced technologies to mitigate the online risks of breaches. Companies like Apple, Google, etc. are gathering a large amount of data which results in more revenue generation. These companies operate on loyalty schemes instead of traditional financial institutions and provide new forms of financial services. These evolutionary services require further Regtech evolutions.


With the advancements in technologies, Regtech is updated accordingly. The industries that lie under the hood of the Fintech innovations need to comply with the Regtech to ensure a reliable and secure system. Fintech is revolutionizing speedily and so regulations. The success is only possible when in the system, these both work side by side.

Looking for Online Fraud Prevention: Here Is What You Can Do

Looking for Online Fraud Prevention: Here Is What You Can Do

In an increasingly digital world, it is extremely important for online businesses to identify fraudulent activities happening in their system. In an online marketplace, a large number of transactions take place every second. Among those, 67% of fraudulent transactions remain undetected which results in heavy loss. According to the end 2018 record, online fraud has reached a loss of $6.4 billion. Fraudsters are always in search of the vulnerabilities in the system, they exploit the entry points and perform malicious activities. Online businesses if on the side focus on the better user experience in customer onboarding, on the other hand, they lack the security measures need for Online Fraud Prevention. It is a crucial need for banks, financial institutions, and online marketplace to reduce the risks of online payment scams and introduce high-level security in their system.
xOnline frauds are of different types. The purpose and intention behind each fraud could be the same only the way is different. Some common types are:
Identity Theft: Cybercriminals attack the system to get the personal information of the people and use them maliciously be assuming it to be someone else’ identity.
Credit Card Fraud: Fraudsters make a purchase into the weak website, enter all the essential information and fool the system using the credit card they have stolen.
Email Phishing Fraud: The fraudster sends an email to the victim (could be a bank employee) which appears to be an official email from some financial authority. This email contains the link which redirects the other person onto a login page of the bank appearing to be exactly the same as their official website. Once the employee enters all login credentials, the scammer gets all the personal information and uses the account for malicious activities.

Industries Affected by Online Fraud

63% of industries have experienced fraudulent online losses. With industrial digital transformation in both front-end and back-end operations, there is a need to take high-security measures against online fraud prevention. 75% of online businesses want a secure online system. For this to achieve, online businesses require solutions that enable trust within and out of the organization. Some of the major industries who faced online fraud are:

Online Retail Industry

In 2019, e-commerce sales are expected to account for 13.7% of retail sales worldwide. E-commerce sales are estimated to be increased by more than 240% which is $4.48 trillion by 2021. If on one side, this massive amount shows the demand for e-commerce on the other side, there is a record of 6% online frauds in the retail industry. The transactions happening in bulk are the great opportunities for the fraudsters to enter into the system. In the retail industry, the highest fraud is inventory fraud and due to a fake credit card. It is necessary for the online retail industry to secure its system in order to prevent online fraud.

Gambling Industry

Today, the gambling industry is generating a huge revenue which was $44 billion in 2016 and is expected to be $81 billion by 2022. The gambling industry is a very tempting platform for money launderers and cybercriminals. A recent report shows an $82 billion loss in the gambling industry due to Card Not Present (CNP) attacks. Also, 3.5% of all online payments that take place are fraudulent. The gambling industry needs to implement AML and KYC based checks back in their system to prevent cyberattacks and money laundering activities.

Healthcare Industry

The healthcare industry holds sensitive information regarding patients and hospitals. This information needs to be stored in a secured database in order to prevent data loss due to Online Fraud Prevention. In 2018, a report shows a $2 billion loss due to online fraudulent activities. This loss merely is not only associated o the bill healthcare industry paid but also the lives of several people were affected. The data of patients which includes insurance details, medical history, and personal information is stolen. Fraudsters use it to do money laundering, track their insurance details and blackmail them. For the healthcare industry, it is important to secure their data with significant security measures in order to prevent their system and patients from the heavy risks.

Online Fraud Protection

Online businesses should adopt serious security measures to mitigate the risks of online fraud. For this, identity verification and authentication are compulsory. Each identity entering into the system should be verified under certain AML and KYC regulatory compliances. The banking industry and financial institutions can prevent their system from cyberattacks using KYC compliance. This will reduce the risks of credit card fraud and online payment scams. Biometric verification (fingerprints, iris scanning, facial recognition, etc.) can help in customer verification. There are multiple other ways to verify and authenticate users. Below is a chart that shows the percentage of verification methods adopted by multiple online industries:
Online Fraud detection and prevention methods businesses

Regulation Governing online Fraud Prevention


General Data Protection Regulation (GDPR) is the EU’s most vital regulation for privacy protection. GDPR presents certain rules regarding how the data of people should be gathered, used, manage and protect. For any online business that holds any sensitive information are obligated towards the regulations defined in GDPR.


BaFin is the financial regulatory authority for Germany. On the basis of European supervisory standards, BaFin takes risk-oriented security approaches that are appropriate for industries and online businesses. It ensures reliability in the financial market and introduce policies accordingly.


PSD2 in the EU forms regulations that support forms of payment institutions, introduce interaction methods and facilitate open banking. Under these regulations, online businesses map their systems and provide their customers with several services.


EU’s regulation that defines policies for trust services and electronic verification of customers. These services help in the identification and verification of individuals online and through electronic documents. Banks and financial institutions can implement ceratin functionalities based on the regulation of eIDAS in order to prevent online payment fraud.


For any online business, along with better user experience, the implementation of security measures is equally important. The cost businesses pay with vulnerable systems not only affect the economy but also result in inevitable damage to business reputation. Adoption of secure technological solutions can lessen the risks of heavy fines and business fall. Also, this helps to fulfill the previous loss by encountering them in the future.

AML Screening

AML Screening – How it might infiltrate Your Business

Money launderers are a very clever lot. They are constantly looking for loopholes to exploit. They can sneak into your business as well, which is why it is essential that you understand how they operate. Banks and financial institutes are their primary target but other businesses are on their hit list too. One effective method in this regard is to implement AML screening.


It is the physical placement of money, for instance, in a bank, casino, local or international shop or bureau de change (currency exchange). Here are a few ways money launderers operate;

  • Smuggling Currency – Physical movement of currency or financial instrument such as bonds across the border
  • An Accomplice Bank – A banker that knowingly accepts deposits from smugglers and criminals
  • Currency exchanges – Where there is liberalization of the foreign exchange market, there is room for laundering money
  • Securities broker – The securities brokers who would put investment into different tranches to divide it to thwart any suspicions
  • Blending funds – Criminals might open front companies to fool the authorities. Then, they start mixing the dirty money with the clean one. It’s akin to hiding cash within cash
  • Asset Purchases – The most obvious form of laundering money is to purchase big assets. Once the transaction takes place, tracing back the source of income can be a challenge


The launderers try to hide the money under different layers. There are two major ways they do it;

  • Converting dirty money into financial instruments. Banker’s drafts and money orders are readily used for this
  • Buy and sell. In this case, the criminal buys a large asset with illegal money then sells it, locally or internationally. After this buy-sell cycle, tracing the asset back to the criminal’s source of income becomes difficult.


This is the phase where laundered money is brought into the economy, usually through the banking system. It is different from layering because here usually an informant tells the law enforcement agencies about it;

  • Property Dealing – Buying property from illegal money is a common form of laundering money. Usually, this is done through a shell company.
  • Shell Companies and Fake Loans – The culprits create a fake company and then give a loan to themselves. This loan amount is the laundered money
  • Foreign Banks as Accomplices – If a foreign bank is an accomplice in laundering money it would be difficult for law enforcement to investigate and act since such banks are protected by international laws.
  • Bogus invoices from import/export – Money launderers also use import and export as a way to enter black money into the system. They would exaggerate a bill to justify the payment by creating fake invoices or inflating the value of funds received from exports.

How to Keep Your Business Safe

Compliance measures such as Know Your Customer (KYC) and Anti Money Laundering (AML) are extremely helpful in keeping your business safe. Since in the majority of money laundering cases, some form of banking service is involved, AML screening and KYC compliance are mandatory for banks and financial institutes.
Compliance is not that difficult especially when you are using professional AML screening solutions. When a bank gets defamed for helping in laundering money it is not necessarily the entire bank that is responsible. It could be just an individual acting in their individual capacity.
By integrating third-party services such as Shufti Pro, the banks can put in highly effective AML screening and KYC checks. This not only protects your business from money launderers but ensures compliance as well.

Loan Fraud Detection

What is Loan Fraud and How to Detect it?

Loan fraud simply means when someone uses your identity to illegally obtain a loan. The crime has many variations. In the US, for example, mortgage fraud is the most common. Catching loan thieves can be challenging. The fraud can go unnoticed for quite some time, and gradually the debt starts piling up in your name. Here we share a brief guide on loan fraud and its detection.

What is Loan Fraud Detection?

Simply put, when someone provides false information on their loan application, it is loan fraud. This can be during the time of filling in the application or when receiving the loan. In many cases, the banks suffer a loss for providing loan to someone who is not entitled.
Interestingly, the bank (or someone at the bank) can also perpetrate loan fraud by producing a fraudulent loan application. Here, the borrower suffers financial loss.
Banks are not the only institutes that get sucked into the vortex of loan fraudsters. Loan agencies are also on their hit list. In fact, these agencies are easier targets since they normally do not require detailed information from the borrower. So, loan thieves can steal information relatively easier and get a quick loan.
Payday loans are the most frequently sought after loans. They are small in quantity and are easy to acquire. Sometimes the loan thieves could apply for much larger items such as a car, business loan or a house.

How to Detect Loan Fraud?

Loan Fraud Detection can be tricky. Loan thieves frequently change banks or states, making it difficult to spot patterns or a business trail. However, there are red flags that the banks can look out for;

  • Multiple Businesses Under One Person’s Name

It’s a red flag when a person owns several businesses in under one name, especially when there isn’t much income to back up that claim. This scheme is prevalent among money launderers.

  • No Physical Location or Address of Business

A business without a physical address should draw suspicion. Although, in this age of the internet, it is not that uncommon to have solely an online business. This should trigger further investigation though. So if it seems to be a physical business, questions about the number of employees, the nature of the business or even a mail drop address make sense.

  • A Startup Idea is not a Running Business

Startup initiatives are mushrooming. However, a new business usually carries a lot of risks. Banks and loan institutes need to be very careful in lending money to these. It makes logical sense to inquire about the financial and operational performance of the company before signing a loan agreement.

  • Lack of References

It is normal to ask for references from a person or a business seeking a loan. A lack of convincing reference(s) is not a good sign. Some might consider it a burden, but a person or business with a credible network carries Loan Fraud Detection.

  • Inflated Earnings

Normally, businesses would inflate their earnings in order to score a bigger loan from banks. To spot this in time, a detailed evaluation of the business is necessary. Yes, it can be challenging. The lender might have to hire a seasoned financial analyst to help with accepting or rejecting a loan application. Cases of companies ‘cooking’ their books to impress investors and analysts are not uncommon.

  • Lack of Financial Audits

It is wise not to rely on someone’s word alone, especially if it’s a company whose financials have not been audited by an independent auditing firm. An audit can be requested in cases where the bank is unsure about lending the money.
Screening customers before lending them credit is a standard fraud detection process. Banks do not have to do everything manually, they can use verification services that first verify the identity of the loan applicants and then assess the financial risk attached to those applicants by screening them through anti-money laundering databases and financial watchdog lists with real time Loan Fraud Detection.

Digital Kyc

6 Digital Solutions for Banks to Help with KYC

Digital KYC: For banks, streamlining the customer onboarding is essential. The manual way of entering client information into the system is redundant and time-consuming. In this age of ‘do it now’, banks need a tech-based approach for onboarding customers.

Also, technology alone can’t solve these problems. Its implementation needs to be strategic, logical and customer oriented. For example, banks need to comply with regulations such as know your customer (KYC), and the customers want swift and easy interaction with the banking system. AI-based digital solutions can help both the banks and the customers.

Read How Digital KYC Solutions Work in 60 Seconds

Problems Banks Currently Face in Onboarding

According to a KPMG report, a tier 1 bank could easily be spending about $100 million annually on onboarding clients. Despite spending this much, this manual process is error-prone, slow, risky (due to lack of regulatory compliance) and does not enhance the client experience. 

The majority of the problems associated with client onboarding are related to the outmoded manual onboarding. For example;

  1. Manual form filling and questioning are time-consuming.
  2. There is an ever-increasing demand for transparency by the regulators. Keeping up with these demands is arduous.
  3. The process is complicated and slow from the customer’s perspective.

The solution to such problems should consider three main factors; the business side, regulatory compliance, and modern technology. Coordination among these three pillars will exhibit the benefits of digital KYC. 

Here are 6 Digital Solutions to help with KYC

  • Face Verification

Simply put, the user takes a selfie with their smartphone or with a webcam. The software (digital KYC solution provider) ascertains the physical presence of the individual. AI-based methods can differentiate between a picture and a live face using 3D depth perception and color texture. This prevents spoofing attacks. Contemporary solution providers use microexpressions for verification as well.

  • Document Verification

With the camera of a smartphone or computer, the software scans documents for verification. Normally this includes verifying government-issued ID cards, passports, or driver’s license. Smart solutions determine the authenticity of documents and ensure that they are not tampered with. They also check for the format to assure that the document is original. For example, besides checking the apparent format of the passport it checks the machine readable zone (MRZ), which is usually located at the bottom of the identity page.

  •  Address Verification  

Verifying the physical address is a crucial part of the customer’s identity. It acts as a solid deterrence against identity theft. By ‘reading’ the government-issued documents such as ID cards, digital KYC solutions authenticate that the document is genuine, and the address mentioned on it is not forged or tampered with. The best services offer hybrid solutions; first, the document is verified by the machine, then, a trained person ensures that the verification is error free. See how Shufti Pro performs all this in just 60 seconds.  

  • Two Factor Authentication

The combination of phone and internet is used in the two-factor authentication. The user simply enters their phone number into the app or software, then, a code is sent to their phone. The user is then requested to enter that code into the web interface to authenticate.

  • Anti Money Laundering (AML) Screening 

Banks not only have to ‘know their customers’ but they also have to perform due diligence before they doing any form of business with them. They need to screen them to ensure that they are not listed on the anti-money laundering watch list. This service is also available to banks in a digital form. The best solutions out there update their database every few minutes, so that when they screen, it cross-checks with the most recent data. 

  • Knowing Customers through Customized Documents

Smart digital solutions are capable of reading handwritten notes and custom documents. This is achieved through optical character recognition, which is powered by AI and machine learning. Digital KYC verification is an impetus for comprehensive due diligence. 

Despite the various benefits, tech-based solutions alone are not enough. The integration needs to make business sense for banks. KYC – digital or manual – needs to be in compliance with the regulations. The majority of banks spend huge sums of money on compliance but still, come short on many fronts. Third party services are a cost-effective and feasible option; compliance is met and customers get fast and easy communication with the banks.

Id Verification Services

What are the Different Types and Solutions of ID Verification?

Customer identification is not an option for some businesses, it’s a must. Ignoring due diligence could get them in legal trouble. This article looks at the types and solutions of ID verification. It also looks at why customer due diligence is critical for financial institutions, and what they should look for while evaluating ID verification services.

Types of ID Verifications

Different companies require different types of ID verifications. The ‘type’ depends on the nature of the business. For example, banks have more security checks and layers, as opposed, say, a website, that simply wants to collect verified email addresses. 

Biometric is the most common form of identity verification. It verifies an individual through one or more unique biological traits. Fingerprints, retina and iris patterns, etc. are the classic methods of biometric verification. Add document verification to it and this combination fortifies the identity verification.

Drivers Licence, passport, a government-issued identity document, are the most common papers used in this process. Additionally, a document issued by a credible organization such as the credit bureau might also be used. 

For instance, if a business would like to; identify an individual online, verify their passport, and then match their live face with the picture on the passport, this can be done in no time. How? Let us show you. Shufti Pro offers a free demo. 

Who Regulates ID Verification Services?  

ID verification services help companies achieve anti-money laundering (AML) and know your customer (KYC) compliance. In the US, the Financial Crimes Enforcement Network Fincen is the main body regulating the compliance procedure. In the UK, the Office for Professional Body Anti-Money Laundering Supervision (OPBAS) – under the Financial Conduct Authority FCA –  checks the AML compliance.

Similarly, other countries have their own regulatory bodies that ensure that banks and financial institutes (FIs) follow due diligence. 

What about the Old Form of Verification?

The old style of identity verification, known as knowledge-based authentication (KBA) asks personal questions from the user to verify their identity. This process is still used as an alternative. However, this is not considered as safe; information about someone can be found easily through social media. 

In addition, KBA is slow. Answering questions about someone’s pet’s name or their first school can be irritating. People want instant access; one-touch should unlock phone, doors, start a car, give access to the bank account and on and on.

There are several ways verification solution providers help businesses. Since the majority of businesses operate online, they need services that can be integrated into their business through the internet. 

Integrating Verification Solutions

APIs are used extensively to connect business portals with verification solution providers. These are used for desktops and websites. Similarly, plug and play solutions are available for Android and iOS devices. And in case, a company does not have a team of developers then hosted verification solutions are also available. Check out different integration options at Shufti Pro.

The world demands faster services; faster browsing, faster package delivery, and of course faster verification. Solutions such as Shufti Pro that use artificial intelligence and machine learning verify customers in real time. This is especially helpful for businesses since they fear the loss of revenue from the friction that compliance processes create.

Electronic Identification

Global businesses face an additional challenge; they have to comply with regional as well as international regulations. This can get complicated. Not many identification services can truly call themselves global. Accurate compliance rests on exhaustive legal and technical work, integrated with the business process to ensure streamlined and compliant user experience.

Trustworthy services mitigate risk by taking the burden of customer verification from companies. It also helps reduce revenue losses due to ID fraud. Trust increases which creates an aura of safety around the business. People like to do business with companies they trust, which check all the safety boxes. 

Id Verification Services help increase customer retention and acquisition. They also assist with due diligence. What this means is that services check the customer’s identity across different lists to make sure that the person is not a financial risk to the company.   

Documents Verification

An entire universe of documents is used for verification. For instance, Shufti Pro verifies 3000+ different types of documents. Among other tools, we use optical character recognition (OCR) to read and verify documents. It reads documents – including handwritten notes – like a human.

Data Sources

A truly helpful verification solution should be robust in checking a customer’s identity across sanction lists and watch lists. These include, among others; the anti-money laundering list, anti-terrorism, and politically exposed person (PEP) lists. This highlights the growing need for customer identification. Shufti Pro checks a person’s name across 1000+ sanction lists plus 3000+ databases. Its own AML database updates every 15 minutes to ensure the most accurate compliance.  

Bear in mind that the quality and authenticity of the database the verification reliable. For high-risk transactions government, credit, and utility data sources serve the best. For low-risk processes or as a supplement, the solution providers might use consumer sources.

Customer Due Diligence

What is Customer Due Diligence CDD?

Customer due diligence is a process that helps achieve KYC and AML compliance. Background checks, customer identification, and verification are standard diligence procedures.

What is Enhanced Due Diligence EDD?

Sometimes a customer carries additional risk, and plain due diligence just doesn’t cut it. They might need constant monitoring. Some politically exposed individuals (PEPs) fall in this category.

A credible identity verification service should;

  1. Ascertain the identity and location of the potential customer.  This will not only help to know your customer but it will give you an insight into their business. A combination of biometric verification and document verification is effective in achieving that.
  2. Give you clear and concise reporting. If you have to sift through layers upon layers of useless information before you get to what you were looking for, then you might reconsider your decision. 
  3. Alert you if there is a high-risk profile that might need EDD. Also, check if it has the capability of frequent or consistent monitoring.

An aspect that lies in the periphery is third parties that also need to go through CDD. Your business might have partners and collaborators, which have access to your resources. It makes perfect sense to vet them as well. See if your service takes care of ‘know your customer’s customer’ or KYCC.

The difference between KYC and KYCC is minimal. Only the subject changes in KYCC, it’s your customer’s customer under verification check. Verifying; identity, location, the nature of the business, etc. remain the standard. All of these ensure that your partners are not mixing their dirty money in your business.   

To Conclude

Most businesses find it not only convenient but feasible to hire the services of a credible provider regarding compliance. It surely is a steep climb in keeping up with the latest regulatory changes regarding compliance. But, you should do your due diligence on your potential verification service. Find out who their existing clients are. This is generally a good sign of competent service. Check out Shufti Pro’s client portfolio For ID Verification Services.

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