Sunday 16 June 2024

Should Document Verification be used to verify identities online?


With improvements in technology and innovation, the instances of fraudulent practices are rising. Fraud is ever-evolving and there is a dire need of coming up with newer methods to prevent and obstruct it. Identity theft is a rising problem for individuals, businesses and even governments. According to the Federal Trade Commission, in 2018, 1.4 million fraud reports were processed, creating losses of more than $1.48 billion worldwide.

Due to the significant amount of losses, global regulatory authorities have introduced strict regulatory compliances to detect, monitor and prevent all sorts of scams and fraudulent practices. They have introduced KYC/AML compliance to stop all sorts of financial frauds. Banks and financial institutions are bound to follow and adhere to the KYC/AML compliance. Although there are many types of frauds that occur online, the most common ones include credit card fraud, imposter scams, debt collection, and identity theft.

Whilst it is not mandatory for businesses to adhere to the KYC compliance in their processes, however, they can use it to verify the identity of their customers, minimizing risk. This can help them prevent themselves from the threat of scammers and fraudsters, who have the tendency to negatively influence their business. There are many ways to verify identities online, but the commonly used are:

  • Facial Identity Verification
  • Document Verification
  • Address Verification
  • 2 Factor Authentication
  • Consent Verification

Document Verification, an important component of KYC?

Documentation verification is the process of authenticating the identity of an individual by the use of the original government provided documents, sent by the individual. Officially issued documents, such as ID, driving license, passport, credit/debit cards, bank statement or other federal documents are mostly used for the verification process. The process checks the validity of personal data, including name, age, address, as well as document features such as stamps, watermarks, fonts, carrier materials, and others.

Digital Document Verification Process

Traditionally, customers were asked to physically provide documents in order to get them verified. However, the process has now been automated using digital software, increasing accuracy and precision, while reducing time. The process works by the display of the customer ID document in front of the webcam or selfie cam for the scanning process. The software acquires the required customer identity information using Optical Character Recognition (OCR) technology. The document is analyzed in detail using artificial intelligence or in some cases, a combination of human and artificial intelligence. The verification details are then provided to the client using API or back-office.

If there is any sort of ambiguity detected in the document by either the artificial intelligence  (AI) systems or the human intelligence team, the verification process is disapproved. The AI system can seamlessly detect errors in forged documents, counterfeit documents, stolen documents, duplicate documents and compromised documents. Even if a minor error is missed

Pros and Cons of Document Verification



Documentation verification is easy to use since it is as simple as taking a picture of an identity document. This can be done by taking a new picture using a webcam or uploading an existing picture.

Quick turn-around

As soon as the documents are provided, the results can be seen within a few seconds rather than waiting for someone to physically verify the authenticity.


Not completely reliable

Although AI technology hardly makes any mistakes, there is still a minor chance of error that exists. With continuous technological improvements, fraudsters are also coming up with newer ways to by-pass the security barriers. Hence there needs to be a consistent improvement in the verification systems as well.

Identity information not confirmed

The AI systems only check the documents for their authenticity itself, however important identity information, such as the person’s full name, address, and date of birth, are not completely verified. This leads to an increase in the chances of a fraudster by-passing identity verification that uses only document verification as a means of authenticating.

It is essential for individuals as well as businesses to carry out proper due diligence of their potential and existing clients in order to secure themselves from the risk of identity theft and fraudulence. Digital document verification is offered by various identity verification service providers. The market leaders include Shufti Pro, Onfido, OneSpan, Jumio, etc.