Identity theft, a term coined back in 1964, is a kind of fraud that takes place when fraudsters steal another person’s Personally Identifiable Information (PII) to commit fraud. This information can include the individual’s full name, middle name, ID card number, credit card number, or other sensitive information. By deceiving bank employees, the information can be used to commit countless crimes, including insurance scams, account takeovers, data breaches, and much more. Overcoming this challenge is a task that financial institutions place at the top of the priority list. With the introduction of identity document verification, identity theft can be detected in a matter of seconds. Wondering how? Here’s what happens.
AI-powered Document Authentication
Suppose you want to open a bank account. You reach the bank and fill in a registration form. After providing personal information, you then line up in a queue and wait to get your documents verified. Although this manual document validation process is still implemented by banks, it is time-consuming, error-prone, and frustrating. What makes matters worse, is that identity thieves are aware of the weaknesses of this process and thus, use it to their advantage. Since fake documents are difficult to spot by the naked eye, artificially intelligent solutions were brought in.
Identity proofing through automated software not only allows companies to verify customers remotely but also enables them to weed out criminals before they infiltrate the system.
Listed below are three types of fake documents that identity thieves use to gain monetary benefits. Remarkably, all three of them are easily spotted through an automated identity document verification process.
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- Illegitimate Documents
These documents are completely false, as they lack the necessary details of a valid ID document. An example includes an ID card with a missing hologram or rainbow print.
- False Documents
False documents do not lack any necessary details but are in fact stolen documents. Identity thieves are known to steal documents to bypass security and verification checks.
- Modified Documents
These are altered versions of an original identity document, created to deceive the verification process and to bypass Know Your Customer (KYC) procedures. These documents are modified by criminals in such a way that the alterations become undetectable by manual procedures. Using AI-based solutions, however, tampered documents are easily detected.
Identity Document Verification in Action
Documentation verification solutions test various features of an identity document to verify the customer’s identity. Some of these document checks include:
- Identification VS Authentication
AI-powered identity document solutions not only identify the identity of the document holder with high levels of accuracy but also authenticate the document by ensuring that the customer is actually who they claim to be. Both of these terms are considered as a two-step process during KYC checks.
- Format Checks
Identity document solutions filter out false documents by carrying format checks. During this validation checking process, the pattern and format of the provided document are analyzed.
- Authenticating MRZ code
The machine-readable zone code, also known as the MRZ code, is evaluated during the identity document verification process, to ensure that the document has not been tampered with. Once the customer has been verified, the document is authenticated by deciding the MRZ code and matching the information against the data provided by the customer.
- Folded/Crumpled Edges
Paper-based documents are prone to wear and tear over the years. This might affect the authenticity of the identity document. AI-powered solutions check the validity of the document by detecting folded and crumpled edges.
Benefits of Using AI for Document Verification
Numerous studies have revealed that for customers, speed and convenience are two important features they look for while investing in new technologies. Manual verification procedures are deemed insufficient in today’s day and age, particularly because they lack efficiency in terms of time and accuracy. Using AI-powered document verification, banks are able to detect identity thieves, money launderers, and even established criminal organizations – that too within 30 seconds.
The value added by the automated identity document verification process is not only confined to this. In fact, the process provides an edge to users in terms of:
- Fraud detection
- Risk prevention
- Regulatory compliance
- Ability to avoid hefty fines, fraud losses, and lawsuits due to non-compliance.
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