Address Verification — Fraud Prevention Measure for the Finance Sector
Since adopting digital platforms, the finance sector has faced increased fraud attempts and chargebacks. Criminals exploit these institutions to get their hands on credit cards, bank details, and other information. They later use accounts of legitimate customers to conceal their criminal activities, such as money laundering, terrorism financing, and much more.
Digital industries collaborating with financial service providers, such as e-commerce, require efficient address verification solutions. These IDV services ensure that credit/debit cards, bills, and other documents reach the concerned customers. This ensures a better user experience, and online verification of addresses also deters financial fraud. This blog entails how AI-powered identification solutions prevent criminal risks and ensure secure financial dealings.
Digital Address Verification System — An Overview of its Applications
AI-powered IDV solutions are helping the finance sector streamline its operations while helping its affiliate businesses ensure secure services. They help interact with legitimate customers while detecting fraud in less time. Criminals commit identity theft to use fake information and avail financial benefits. Similarly, fraudulent location details also lead banks to failed deliveries of confidential documents. This requires financial institutions to provide online address verification services.
Banks were using manual customer verification methods to cross-check information and validate addresses. These techniques are prone to human errors that leave enough space for criminals to open accounts as imposters. Furthermore, outdated identity validation strategies add to inefficient verifying addresses exposing financial institutions to serious repercussions.
Working Mechanism of Online Address Verification Tools
Online address verification solutions enable financial institutions to locate customers and validate their identity proof before opening an account. Transactions, once made, are hard to revert. This is why criminals use wrong information and transfer funds that exceed the threshold limit. Banks must incorporate verifying address services to prevent fraud attempts and better deal with transactional crimes. AI-powered IDV solutions guide customers through simple steps to authenticate their location, which includes:
- Customers fill in the information required to verify an address.
- The system then asks for supporting documents, including utility bills, insurance papers, credit/debit card invoices, etc.
- After uploading pictures of this evidence, the end-user is asked to submit a real-time selfie to ensure their presence during onboarding.
- The OCR tools extract the required information for verifying an address, cross-checking location, and analysing geo-tagging to validate identity-proof claims.
What are the Documents Required to Validate Addresses?
The finance sector deals with the most confidential information and a huge cash flow, making it an attraction for criminals. With advanced tools at their disposal, exploiting banks and availing illegitimate benefits has become easier. Document forgeries or tampering with the information helps fraudsters escape address verification and pose as authentic entities.
Financial institutions must integrate robust IDV solutions to validate customers’ identities and prevent fraud risks. For this, they can use the following government-issued documents to verify the address and presence of customers while opening an account:
- ID cards
- Drivers licenses
- Passports
- Utility bills
- Rental/Ownership agreements
- Insurance papers
- Bank statements
- Credit/Debit card invoices
The AI-powered verifying address tools use OCR technology to extract information that reduces data discrepancies. Similarly, machine learning critically analyzes papers, tampering, and forgeries within the information. This way, banks can validate addresses efficiently while preventing the onboarding of fraudsters and financial crimes.
What are the Advantages of Integrating Online Address Verification Solutions?
Since the finance sector is bringing in technological transformations to provide customers with more convenient, quick, and secure digital banking options. While upgrading their operations, these institutions face an upsurge in fraud risks. They use fake information to bypass address verification and conceal their true identities.
Financial institutions come under direct scrutiny of legal authorities such as FATF to prevent the flow of illicit funds through them. While creating synthetic identities, fraudsters use fake location details to trick banks’ identification mechanisms. To cut down criminal activities, AI-powered address verification systems provide the following benefits:
- By integrating geo-tagging, banks can prevent failed or incorrect deliveries of confidential documents.
- Financial institutions can uphold their integrity by providing customers with seamless onboarding.
- Online address verification services also help deter card-not-present fraud by analyzing customers’ real-time locations.
- Incorporating digital address verification enables banks and other financial firms to stay put with FATF’s requirements. They also deter spoof attacks and ensure legitimate users are making a transaction.
Final Thoughts
Fraudsters from across the globe are vesting strategies to exploit finical systems. Using document forgeries and fake information, they dodge online address verification to register as imposters. With more scams coming their way, financial firms need to incorporate adequate IDV solutions. With AI-powered tools, banks can identify fraud attempts while preventing monetary crimes. This way, address verification services enable secure financial dealing and ensure a secure environment.
