Combating Financial Crimes through KYC Offering Digital Address Verification Solutions

Identity Verification

Financial crimes are often very difficult to identify and combat. Even before the pandemic, many institutions were struggling with the increase in online frauds, scams, identity theft, etc. The evolution of technologies is giving rise to online money crimes that are plaguing the industries on a global scale. Sometimes, they fail to have decent systems and processes in place to fight this growing outbreak. Wherefore, innovative identity verification solutions providing online address verification have pledged to prevent online crimes.

The annual money laundering accounts for nearly 2% to 5% of global GDP, according to the United Nations Office of Drugs and Crime report. It proves that financial crimes are increasing day by day at an alarming rate which is unsettling for businesses and regulatory authorities alike. That being the case, regulatory authorities have set forth stiff regulations and compliance to fight against online crimes, thus, bringing enhanced KYC and AML compliance in the spotlight for financial institutions. Every financial institution either banks or insurance firms is liable to follow digital KYC processes at the time of onboarding new customers. KYC, however, is a comprehensive identity verification system that includes address verification, which is otherwise known as proof of address or POA.

Enhanced KYC is an integral part of customer due diligence procedures. It is performed by businesses to identify and verify the real identity of customers. Followed by in-depth background checks to meet AML (Anti-money laundering) compliance in order to reduce any risks involved. KYC is not only restricted to verifying customers rather it can be performed to eliminate B2B frauds through KYB (Know your business) and business address verification.

What is digital address verification in KYC and how it works?

Address verification enables businesses to carry out their processes without any risk of fraudsters. Just like KYC verifies the identity of the customers, that they are who they claim to be. Similarly, address verification ensures the real address of the customers where they actually reside. It also makes sure that the address data is correct, updated, and exists. The customer is asked to upload a photo holding an Id verification such as a utility bill, driving license, ID cards, passports, and a bank statement.
The address information is analyzed through OCR technology (Optical character recognition) and the results are shown on the screen whether verified or rejected. Fraudsters oftentimes use both real and fake information to get into the system, known as synthetic identity theft. The reason why address verification is a significant part of the KYC process as it helps in matching the address of individuals with the address given on their documents.

Address verification for the eCommerce industry

If you own an eCommerce platform that accepts online payments then you need to be very cautious. E-commerce fraud is becoming increasingly popular and is of massive concern to online merchants around the world. According to Experian, 63% of online businesses faced losses due to online fraud in 2018. Another Survey by Juniper Research says that online retailers may lose an estimated $130 billion because of digital card-not-present (CNP) fraud, through 2018 and 2023. Undoubtedly, online shopping is becoming more popular and practical for customers, but not without risks. The real question is how would you ensure that customers are who they say they are, prevent payment frauds and whether the address they are providing exists and not just an empty house for fraudulent activities?
Let’s look at an example: The fraudsters hire a third party to ship products for them, that were initially bought with a stolen credit card and gives a fake address of an unusual location. After the shipment has been made, the third party never receives the payment as promised and was a victim of shipping fraud. Now, where did we go wrong? Lack of id verification along with complete KYC.
Furthermore, online address verification can save you many disappointments that come with customer care. The digital address verification system enhances the customer experience both during onboarding and making a purchase. It not only saves time but also reduces drop-offs during check out.
There are many address verification service providers available in the market All you have to do is to look at the right place and find the right solution to fit your needs. Verifying addresses help prevent chargebacks. Processing chargeback can be heavy on the online retailers as they not only lose the money for the fraudulent transaction but also the products sold to the wrong person. Thus, online KYC along with address verification is in place to fight this menace.














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