Pursuant to the adoption of the Anti-Money Laundering and Anti-Terrorism Act by all countries, it became imperative for banks to fully verify customers’ ID. The mandate requires all financial institutions to apply due diligence in knowing their clients, up to the extent of assessing the potential risks posed by their financial transactions. The entire verification and assessment steps is known internationally, as the Know Your Client or KYC identification verification process.
Prior to granting a person approval to do business with a bank or any type of business organization in which payment, or receipt of money through banks is involved, and whether transacting offline or online, it is important for a financial or business entity to authenticate the genuineness of the credentials presented by a customer as proof of his or her identity and permanent address.
Through a series of streamlined verification protocols usually with the aid of a KYC software, a bank, a financial entity or a business enterprise can make certain that it is opening its portals only to individuals who engage in legal activities to ensure the safety and security of its business systems and operations.
As the Internet enabled people from all around the world to quickly send and receive payments for various purposes, KYC technologies likewise improved in order to streamline the verification processes when onboarding customers looking to use an online or e-commerce platform.
Notable Technologies Used in KYC identification Verification Process
Data provided by an online applicant through credentials presented as proof of identity and address, are extracted for verification by a technology known as Optical Character Recognition (OCR). The OCR helps the KYC system recognize and thereafter, convert into text all information constituting scanned documents, images and photos.
Once converted into readable text, the KYC system’s identity verification solution will check for any anomalies by cross-checking the information using the following methods:
Database Method – This manner of checking significantly reduces the time and effort to manually review information as it makes uses of both offline and online databases with which to compare or cross-check data.
Online Verification – This method of ID verification is more rigid as it uses biometrics, artificial intelligence, computer vision in addition to human review. Applicants registering online are required to furnish not only ID credentials but also a picture of themselves holding at least one of the IDs being submitted.
Credit Bureau-Based Verification – This method authenticates information through major credit bureaus. Credit bureaus are companies that store large amounts of personal and credit-related information to determine the credit worthiness of individuals. However, this method has limitations as the bureaus’ files do not include people who have no credit history.
Yet despite these technological advancements, cyber criminals have also devised ways with which to circumvent the security features, usually by using malwares or phishing information from customers whose identities have already been authenticated.
The Two-Factor ID Verification Method
Additionally, a new ID authentication method known as the Two-Factor Verification System is now in use by most online businesses to ensure that the customer logging in is the bonafide owner of the account. A customer will receive a one-time password in his registered communication device, which he will use to authenticate the legitimacy of the login activity.
Here’s an example:
The website JAA Lifestyle for one, which offers income-earning opportunities to people who spend most of their time online, strictly complies with the KYC verification requirement. This online platform offers a decent stream of regular income to qualified members just by watching at least 60 ads per day. To ensure the legitimacy of all member login activities at the JAA lifestyle Login page, the site employs the Two-Factor Verification method.
Additionally, existing members can grow their income by recruiting people so they can build their own network of ad viewers. However, know beforehand that the site requires all applicants to pay a KYC processing fee.