Identity verification service

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An identity verification service is used by businesses to ensure that users or customers provide information that is associated with the identity of a real person. The service may verify the authenticity of physical identity documents such as a drivers license, passport, or a nationally issued identity document through documentary verification. Additionally, also involve the verification of identity information (fields) against independent and authoritative sources, such as a credit bureau or proprietary government data.

Background[edit]

Identity verification services were developed to help companies comply with Anti-Money Laundering (AML) and Know Your Customer (KYC) rules, identity verification is now a vital component to the transaction ecosystems of eCommerce companies, financial institutions, online gaming, and even social media. Through adopting digital fraud prevention methods, businesses can achieve AML and KYC compliance while addressing the risks associated with fraud.[1]

In financial industries, verifying identity is often required by regulation known as Know Your Customer or Customer Identification Program. In the US, one of the many bodies regulating these procedures is the Financial Crimes Enforcement Network (FinCEN). The Financial Actions Task Force (FATF) is a global anti-money laundering and terrorist financing watch dog organization.

A non-documentary identity verification requires the user or customer to provide personal identity data which is sent to the identity verification service. The service checks public and proprietary private databases for a match on the information provided. Optionally, knowledge-based authentication questions can be presented to the person providing the information to ensure that he or she is the owner of the identity. An identity "score" is calculated, and the identity of the user or customer is either given the "verified" status, or not, based on the score.

Customers of various businesses, such as retail merchants, government entities or financial institutions, are often required to present an identification to complete a transaction. For instance, a merchant may require customer identification for various types of purchases (e.g., alcohol, lottery or tobacco purchases) or when certain types of payments (e.g., checks, credit cards) are presented to pay for transactions. Financial institutions usually require customers to present a form of identification to complete a withdrawal or deposit transaction, cash a check, or open a new account. Government entities may require identification for access into secure areas or other purposes. Other businesses may also require identification from customers.

An additional method to service Identity Verification that is gaining industry prominence is Artificial Intelligence, or more commonly referred to as Artificial-Intelligence-based Identity verification. In this efficient process using machine learning, ID verification is performed through a webcam. The results are available in real time and are more accurate compared to the untrained eye.[2]

Application[edit]

Identity verification service are used both online and in person to verify identities. These services are used in the financial service industry, e-commerce platforms, social networking sites, Internet forums, dating sites, and wikis to curb sockpuppetry, underage signups, spamming and illegal activities like harassment, Identity fraud, and money laundering. For example, in banking, identity verification may be required in order to open a bank account.

Industries that use identity verification services include financial services, digital businesses, travel and leisure, sharing economy businesses, telecom, FinTech, gaming and entertainment.[3]

As cryptocurrency exchanges have become more popular, there is increasing call for regulation. In December, 2020 the Financial Crimes Enforcement Network (FinCEN) has proposed rules to require banks and money service businesses (“MSBs”) such as crypto wallets to submit reports, keep records, and verify the identity of users who perform transactions with convertible virtual currency.[4][5]

See also[edit]

References[edit]

  1. ^ "Risk Management – Fighting Fraud with Digital Verification Tools". www.rmmagazine.com. Retrieved 2018-09-10.
  2. ^ "How to use AI to fight identity fraud | TechBeacon". TechBeacon. Retrieved 2018-08-08.
  3. ^ "The case for digital IDs" (PDF). TechUK. 1 February 2019. Retrieved 18 April 2019.
  4. ^ "Requirements for Certain Transactions Involving Convertible Virtual Currency or Digital Assets". Federal Register. 2020-12-23. Retrieved 2021-02-09.
  5. ^ PYMNTS (2021-02-04). "Crypto Regulations Show Need For ID Verification". www.pymnts.com. Retrieved 2021-02-09.