Sanction Scanner: Six Identity Verification Methods

Identity is a person’s most essential and most used asset. Identity Verification is to prove that the identity of the person they claim to have is matched with their truth. It measures whether a person is really behind the identity he claims to be.


Six Identity Verification Methods 

Identity verification has various methods and systems. This process may consist of different approaches. Know Your Customer (KYC), and Anti-Money Laundering (AML) rules drive identity verification techniques worldwide. However, each country has its regulations and organizations to impose these rules. For example, the Financial Crimes Enforcement Network (FCEN) is one of the various agencies responsible for regulating identity verification methods in the United States. These techniques commonly fall into one of the following six categories;

  • Knowledge-based authentication
  • Two-factor authentication
  • Credit bureau-based authentication
  • Database methods
  • Online verification
  • Biometric verification


1) Knowledge-Based Authentication

Knowledge-based authentication (KBA) verifies a person’s identity by requiring a response to security questions. These questions are generally designed to be simple for that person to answer but difficult for anyone to answer. Like “How many pets do you have?” or “Who was your favorite teacher?”. Additional safeguards for KBA include a requirement to answer the questions within a limited time. The most significant benefit of KBA is that it’s the easiest verification method for users to understand. Its most significant disadvantage is that it’s getting increasingly easy to discover the answers via social networking and other more traditional forms of social engineering.


2) Two-Factor Authentication

Two-factor or Multi-Factor Authentication requires your customer to enter a code sent to their email or mobile phone. Because the verification method is common, the process is very recognizable and simple for consumers to understand and apply. Using with 2FA or MFA, you can easily verify a consumer’s email address and phone number. This can be important if you need to make sure your customer did not type in their data incorrectly.

Two-factor or multi-factor authentication generally requires users to provide a form of personal identification, also known as a token, in addition to the usual username and password before they can access an account. The token should be something users have memorized, or in their possession, such as a code they have received from the authentication agency. The need for a token creates a powerful deterrence for fraudulent activity. Two-factor authentication is especially useful for creating accounts and resetting passwords. However, this method typically requires users to have their mobile phones with them during the authentication process.


3)Credit Bureau-Based Authentication 

A credit bureau-based authentication method relies on data from one or more of the credit bureaus. These companies store a massive amount of credit information on consumers, including name, address, and social security number. Credit-based authentication uses a score to create a definite match without compromising the user’s experience. However, it may not match thin credit files, such as young people and recent immigrants.


4)Database Methods 

Database ID methods use data from a variety of sources to verify someone’s identity card. Database methods are generally used to assess the level of risk a user poses because they significantly reduce the need for manual reviews. The most significant disadvantage of these methods is that they don’t ensure that the person providing the information is the person conducting the transaction, mostly due to the proliferation of false online identities.


5)Online Verification 

Online verification uses techniques to determine if a government-issued id relates to the users, including artificial intelligence, computer vision, and human review. This verification method typically requires users to give a picture of themselves holding an ID, thus ensuring the person on the ID is the same person holding the ID. Online verification is very secure, but some users find submitting an image of their face and ID inconvenient or intrusive.


6)Biometric Verification 

Biometrics can be used to identify and authenticate people based on physical characteristics. Biometric techniques are; facial recognition, voice recognition, iris, and retina scanning and fingerprinting. These methods offer a high level of convenience to customers (after initial setup has occurred) as no passwords need to be remembered, no questions need to be answered, etc.

However, biometrics has some flaws. Biometrics can be stolen. Think about it, your pictures all over social media. Your voice can be recorded unknowingly. Databases can be hacked to retrieve fingerprints. And once these types of assets are in the hands of a bad person, it can be even easier to defraud some institutions.


Where It Is Necessary To Verify Identity? 

Identity verification services are used both online and in-person to verify national identity card. These services are used in financial services, e-commerce platforms, social networking websites, and forums to curb illegal actives such as money laundering and identity fraud. For example, in a bank, you need to verify your identity to open a bank account. This process is required and provides complete security in the following cases and situations:

  • Finance sector: Especially banks are using identity verification a lot. For example, opening new accounts needs identity verification. Financial procedures of any kind or online sales and purchases also need identity verification.
  • Telecommunications and insurance industries
  • Apps and platforms
  • Government and administration


November 202, Published on Sanctions Scanner

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