Proof of Address Document: Why Are They Required for ID Verification?
Proof of address verification is a vital part of onboarding a new customer, preventing financial fraud, and for simply approving a mortgage or a loan. Apart from an ID document, a proof of address document is essential. In most instances, banks, financial institutions, credit unions and others need documents other than ID documents. Proof of address documents are usually required while opening a new bank account or money transfer using traditional methods Proof of address confirms that the address provided by the consumer is the residential address and it ties the user to a particular location.
Proof of address documents are vital in preventing fraud, but the type of document required, the situation they are needed in differ from organization, industry type and regulatory obligations.
Why Do Companies Need Proof of Address Verification?
It’s common practice to use proof of address documents during KYC and AML regulation compliance. To minimize the risk of fraud during customer onboarding and throughout the business customer relationship, to comply with Know Your Customer Directive and Anti-Money Laundering Directives, businesses conduct a series of tests and checks to confirm the address. It also helps in determining if the person is who they actually claim to be. Another benefit of proof of address verification is that it helps in separating customers residing in high risk countries, who normally won’t be allowed to open a new bank account or conduct specific financial activities.
A lot of major and minor banks, lenders, financial institutions and other businesses don’t allow users living in the high risk areas to open a bank account. By using proof of address verification, businesses can easily spot those from high risk countries. Companies can also have restrictions on users living in specific geographical areas. This particular restriction could be caused due to regulation compliance or due to a company’s internal policies. To successfully comply with KYC regulation,businesses also need to confirm if a customer’s proof of address is up to date.
When is Proof of Address Verification Necessary?
Old methods of verifying customer identity weren’t as secure, and by leveraging technologies fraudsters found a way to trick banks. To reduce the risk of financial fraud, businesses came up with a more secure method of verifying customer identities. In the US, the Federal Trade Commission received more than 2 million reports of fraud from consumers in a span of just 1 year. Over $3.3 billion were lost to financial fraud in 2020 by customers and financial institutions.
During the Covid-19 pandemic,the online shopping industry grew significantly both in terms of user base and revenue. That’s why fraudsters globally targeted the online shopping industry, it was the most common category of fraud as reported by consumers. eCommerce businesses have started to use proof of address verification for customers to make sure the chain of financial fraud can be stopped. Other industries like online gaming, online gambling sites, lenders, mortgage providers, insurers, credit unions, banks, brokerage firms, crypto wallets and others should use the greatest level of due diligence to eliminate as much fraud as possible.
Proof of Address Verification: Supported Documents
Proof of address verification revolves around common documents, and most of the time these documents are easily available. The most important aspect of gathering and providing proof of address documents to the businesses is to make sure that the documents are up to date. Any document older than 3 months isn’t accepted as viable proof of address documents.
There are multiple ways of giving area proof, including a proof of residency letter (Affidavit of Residence). In any case, the most well-known method for demonstrating the area is by giving archives that show the location, the dates of administration, and the individual’s name on the record. Every association has various prerequisites for adequate reports, however normal models include:
- Service bill
- Charge bill
- Bank articulation
- Charge card bill
- Occupancy understanding
- Business letter
Issues with evidence of address archives
Evidence of address process enhancements have been slow, particularly contrasted with all the innovative advancement of verification of personality. Here is a portion of the known evidence of address issues.
1. No evidence of address format
Consider the number of various sorts of administrations that could offer residency proof. Increase that by every one of the different associations, and the various styles, arrangements, and data, and the issue of deciding the realness and precision of a residency archive rapidly turns out to be clear. Contingent upon the utilization case, there may be a huge number of conceivably OK records and practically no likeness or core values to put together choices with respect to.
2. Poor Onboarding Experience
Another client needs to join and begin utilizing the assistance rapidly. They would rather not begin going through records to track down an archive, send it in, check it appropriately and afterward hang tight for acknowledgment. One study found half of use drop-offs were because of requesting that clients produce personality documentation.
Some portion of the issue is the absence of principles previously examined, which makes disarray for the client, as they have various choices. Past that, there’s the issue of managing paper-based archives in an advanced climate. Associations expect clients to become archive scanners and any lighting or situation issue dials back the cycle and prompts further client disturbance.
3. Document Management Expenses
Other than the conceivable huge blunders and slow cycles, expenses to deal with manual checks can add up rapidly. While handling a couple dozen applications each month is feasible, handling hundreds or thousands of utilizations turns into a huge and wasteful errand. There are likewise contemplations for record-keeping, reverifies and other reports taking care of expenses.
New Proof of Address Verification Process
Luckily, new advancements empower confirmation of address processes that accelerate onboarding, robotize address checks and assist with conveying better consistency and extortion counteraction results. Likewise with other effective character check processes, it’s not one enchantment innovation, but rather the blend of various advances in savvy work processes that makes the most convincing confirmation of address abilities.
1. Address confirmation
One standard interaction in character confirmation is the utilization of address check. Clients present their location data, which is then coordinated against information base records of credit departments, service organizations, government offices and different information sources.
Address approval guarantees the location data has the right various leveled arrangements for additional examination. Assuming the client has lived at that location for some time, address confirmation would then be able to give a match or no-match signal.
Note, the achievement of this sort of match depends on state-of-the-art address data in those information bases being questioned.
Having a location confirmation is a generous advance for character affirmation. In situations where character reports have been fashioned or controlled, mistaken location information would create a no match signal. Then again, a location that coordinates with a realized personality associates the individual to a genuine area, particularly in case the individual has lived there for a generous period.
Versatile organization administrator (MNO) information, accessible with GlobalGateway MobileID, is considered to have probably the most solid location data since purchasers are bound to keep their cell phone charging data precise than they are other charging sources.
2. IP address confirmation
Any web structure fill contains various concealed metadata focuses. Specifically, the IP address can give one more remarkable area information point that can aid confirmation of address checks.
An IP address is the extraordinary number of the gadget that the client is utilizing to associate with the web. The actual area of that gadget would then not really be settled by looking into the IP address. That area data would then be able to be questioned against the location given to decide whether there’s a match.
While an IP address can give a layer of area information, it’s fundamental to comprehend that this data isn’t really 100% exact. Clients may be on a broad organization, which moves clients to a non-neighborhood gadget, or they might be utilizing a VPN, which veils their real area.
3. Geolocation confirmation
One more layer of area information is geolocation. If utilizing geolocation data from GPS or MNOs, the information is hard to produce or adjust and offers a nearness sign, which is for the most part exact to inside 125 meters.
Geolocation can offer a solid sign to comprehend the exact area. Contingent upon the utilization case, this pick in data helps stop possible fraudsters, or out-of-region candidates from truly turning into a client.
Proof Address Best Practices
Each association that requires confirmation of address needs to analyze its legitimate prerequisites, hazard procedure and functional contemplations. Getting what is best for both your clients and your association requires figuring out what advancements are fitting and how to incorporate them into an all encompassing arrangement.
Maybe, because of your administrative prerequisites, you do require a report. All things considered, gathering the report to fulfill necessities is guaranteed, yet the genuine location check utilizes one of the advancements referenced previously. Utilizing this methodology would probably meet prerequisites, accelerate the check, and give extra area investigation and misrepresentation counteraction measures.
Or on the other hand, maybe you really want to incorporate age checks with area information to guarantee that your age-confined items or administrations meet nearby objective prerequisites. All things considered, an archive confirmation check to examine age and personality, alongside a geolocation check to decide the specific area, could be the right arrangement.
Redo how you check locations to build character confirmation while conveying a superior record opening experience for your clients.
