Document Verification Solution – A Measure to Mitigate Financial Crimes
The digitization of the world has, on the one hand, revolutionized everyday affairs. On the other hand, it has led to harmful consequences because the avenues of opportunities opened by cyberspace have also led to a surge in associated crimes. Hacking, phishing, identity theft and fraud are some of those crimes. Most financial crimes like fraud are conducted through identity theft and document forgery. Therefore, it has become highly significant for financial institutes to perform adequate KYC identity verification by adopting a document verification solution. This mitigates the possibility of crimes such as money laundering and terror financing. This saves banks and other financial organizations from becoming a medium of illicit monetary flows.
Significance of Document Verification System
Financial organizations such as banks and cryptocurrency exchanges resort to document verification solutions for verifying their customers’ documents. This is mandatory for anti-money laundering and countering the financing of terrorism compliance. The document verification system is a procedure for document authentication of individuals and acts as proof of document ownership. It is a measure to ensure security and KYC/AML compliance. The documents include all the identity proofs such as passports, financial statements, utility bills, licenses, and others. Their verification is necessary to confirm the applicant’s identity and ownership by the bank. Identity verification through document verification is crucial to fraud deterrence and eliminates the opportunities for fraudsters who engage in cybercrimes.
Document verification solution comprises two methods for KYC identity verification, i.e., manual and online. There are usually four steps that constitute the traditional manual document verification process, as enlisted below:
- Document collection
- Data extraction
- Document validation
- Manual verification
The manual procedure is less efficient for banks because it consumes more effort and time. One of the significant issues with the manual process is that it is susceptible to human error and lags much behind in fraud detection.It also results in a bank’s high cost of resources and personnel. Hence, the digital document verification solution has become the most widely adopted method. It is more efficient and convenient for financial institutes and their customers.
Online Document Verification Services
Online document verification is the most up-to-the-mark method to ensure transparent and regulated identity verification, specifically for financial institutions such as banks. It aids in faster customer onboarding, meeting regulatory requirements, preventing fraud, and mitigating unlawful economic activities. Due to the rapid proliferation of information communication technologies, artificial intelligence and machine learning, financial organizations have significantly shifted to automated procedures. Various software specially designed for this purpose provide online document verification services. Many Software as a Service, or simply SaaS companies, offer services specially tailored for banks and other financial institutes to verify their customers’ government-issued identity documents. This process is much faster and more precise than manual document verification, making it easier for banks to detect illegitimate IDs and prevent fraud, illegal transactions, and money laundering.
Significance of a Documentation Digital Services Provider
Financial orgnizations, especially banks, can benefit from digital document verification providers to enhance their AML/KYC compliance procedures. This enables them to enhance security against the potential threat of various financial crimes. Different SaaS solution providers offer document verification services, ensuring guaranteed AML/KYC compliance to banks. Moreover, it is time and cost-efficient and possesses no vulnerability to human error. It would not be wrong to suggest that accessing services from a digital documents verification provider has become necessary for banks. It significantly helps banks to provide a secure environment to their customers through digital and safer document verification, along with protecting them from financial criminals.
Digital Document Verification & Authentication – Two Sides of the Same Coin
Although document verification and authentication are interrelated, they vary slightly in their process. Banks verify their customer’s documents to ensure ownership rights during KYC customer onboarding. Meanwhile, document authentication deals with the confirmation that the individual involved in a financial transaction is the actual owner of those documents and not an imposter. The organization can easily detect if someone pretends to be their existing customer and attempts to use those documents instead of the owner. Hence, it proves to be an immense advantage for banks and other financial institutions in AML/KYC compliance.
OCR – AI-based Best Document Authentication Tool
Various AI-backed document authentication tools are devised to avoid the above-mentioned circumstances. Optical Character Recognition (OCR) is one of them. OCR is fintech’s best document authentication software solution because it automates the data extraction process of customer’s government-issued identity documents using artificial intelligence. It authenticates the documents by reading their machine-detectable segments. The organization accesses elements like the document’s barcode, expiry date, image and birthday through OCR software. Banks can heavily rely upon automated data extraction tools like OCR. This leads to a secured customer onboarding and, eventually, ensures customer retention.
To Conclude
The above discussion clearly elaborates the significance of a document verification solution for financial organizations like banks. It is essential for efficient KYC compliance. Moreover, digital document verification identifies risk-posing individuals involved in financial crimes, leading to mitigating money laundering.
