In today’s fast-paced world, cybercriminals have developed advanced methods of commiting financial crimes such as identity theft, money laundering, and terrorist financing. These financial threats harm the company’s reputation as inadequately identified customers can exploit the business services for criminal use. To protect their operations against risks, businesses should implement electronic identity verification solutions.
Electronic identity verification (e-IDV) is a process through which an individual’s identity is verified using automated systems. This provides an additional layer of security, which ensures that only legal individuals can access the company’s operations, helping businesses verify customers’ identities in a streamlined manner. According to a report, the electronic identity verification market is expected to grow to over $83 billion by 2028.
Different Ways to Verify Identities Digitally
Businesses can undertake various e-IDV types to verify the customer’s identity and ensure robust security. Electronic identity checks allow businesses to collect additional details and risk signals that are hard to collect through manual verification methods. These e-IDV types are as follows:
- Government Identity Verification
Government identity verification prompts customers to click a photo of their official passport, government-issued ID, bank statements, and driver’s license and upload it on the verification system then it scans the ID information electronically and checks whether the information is legitimate or counterfeit.
- Biometric Verification and Liveness Detection
In biometric verification, the customer’s identities are verified through fingerprint scanning and facial recognition. Customers are asked to take a photo or video of themselves, which is compared with the image on the official ID card. The system prompts the customers to perform certain actions, such as eye blinking and head tilting, to authenticate that the customer is a real entity. This method efficiently rules out deepfakes and spoofs.
- SSN Checks
Customer’s social security numbers help businesses prevent identity fraud. They are asked to input their legal details on the business portals through which the electronic IDV system verifies their SSNs, names, and passports.
- Multi-Factor Authentication
Multi-factor authentication (MFA) uses multiple methods that prompt users to submit additional information, such as answering a specific question, a code sent to their email, a password, or a fingerprint scan. MFA reduces security risks and minimizes any potential damage from unauthorized users, making it impossible for scammers to access the customer’s sensitive information.
- One-Time Passcode (OTP) Verification
This e-IDV system verifies the customer’s identity by transmitting a single-use passcode via email or SMS. This is a secure PIN code that is valid for only one session. The customers can verify their identity by entering this passcode to access a business server.
- Database Methods
Database verification method collects customer’s information from various social media apps, offline databases, and other sources. The identity is verified by cross-matching this information from these sources.
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How Does Electronic IDV Ensure Data Protection against Fraudulent Risks?
Electronic IDV is essential for businesses prioritizing compliance with KYC, AML, and counter-financing terrorism regulations. By embracing automation, businesses can streamline their verification and onboarding process, preventing identity theft and financial crimes.
- Robust Security
Electronic IDV incorporates multi-factor authentication, which can improve the company’s security by adding additional verification layers. It is a trustworthy authentication process as it protects the company’s operations against unauthorized access and ensures compliance with industry-specific laws.
- Regulatory Complaince
Know-your-customer and anti-money laundering regulations are crucial for business activities. Companies that use e-IDV services comply with these regulations. Electronic IDV ensures that companies verify the customer’s identity before providing access to them. It also regulates that they monitor all transactions against malicious activities that may cause money laundering or terrorist financing.
- Combats Risks associated with Manual Verification Measures
Electronic IDV ensures confidentiality and data protection. It uses a technology that electronically compares a person’s data with authorized information available in various databases. A customer’s electronic IDV reduces the risk of human mistakes when confirming a person’s identity.
- Fraud Prevention
User’s electronic IDV reduces identity theft and fraud risks because it ensures that the customer’s information is authentic and coming from a real person, not a counterfeit. This service is legitimate and backed by KYC and AML compliance. It reduces the risk of accepting transactions that may contain money laundering actions. Electronic IDV protects the customer’s sensitive information by using artificial intelligence and machine learning algorithms which also detect fraudulent actions.
Summing It Up
Electronic identity verification (e-IDV) is an essential verification service for many businesses. It provides security against financial crimes and ensures the confidentiality of customers’ sensitive information by complying with legal regulations. Electronic IDV provides a better customer experience by streamlining the onboarding process and increasing conversion and acquisition rates. This ultimately boosts their revenue and ensures robust identity security. Businesses can boost their reputation by incorporating electronic verification services in their operations as it improves the overall decision-making speed.
