An identity verification service is used by businesses to ensure that users or customers provide information that is associated with the identity of a real person. The service may verify the authenticity of physical identity documents such as a drivers license, passport, or a nationally issued identity document through documentary verification. Additionally, also involve the verification of identity information (fields) against independent and authoritative sources, such as a credit bureau or proprietary government data.

Background

Identity verification services were developed to help companies comply with

Anti-Money Laundering Money laundering is the process of concealing the origin of money, obtained from illicit activities such as drug trafficking, corruption, embezzlement or gambling, by converting it into a legitimate source. It is a crime in many jurisdictio ...

(AML) and Know Your Customer (KYC) rules, identity verification is now a vital component to the transaction ecosystems of eCommerce companies, financial institutions, online gaming, and even social media. Through adopting digital fraud prevention methods, businesses can achieve AML and KYC compliance while addressing the risks associated with fraud. In financial industries, verifying identity is often required by regulations known as Know Your Customer or

Customer Identification Program A Customer Identification Program (CIP) is a United States requirement, where financial institutions need to verify the identity of individuals wishing to conduct financial transactions with them and is a provision of the USA Patriot Act. More co ...

. In the US, one of the many bodies regulating these procedures is the

Financial Crimes Enforcement Network The Financial Crimes Enforcement Network (FinCEN) is a bureau of the United States Department of the Treasury that collects and analyzes information about financial transactions in order to combat domestic and international money laundering, terr ...

(FinCEN). The Financial Actions Task Force (FATF) is a global anti-money laundering and terrorist financing watchdog organization. A non-documentary identity verification requires the user or customer to provide personal identity data which is sent to the identity verification service. The service checks public and proprietary private databases for a match on the information provided. Optionally,

knowledge-based authentication Knowledge-based authentication, commonly referred to as KBA, is a method of authentication which seeks to prove the identity of someone accessing a service such as a financial institution or website. As the name suggests, KBA requires the knowledge ...

questions can be presented to the person providing the information to ensure that he or she is the owner of the identity. An identity "score" is calculated, and the identity of the user or customer is either given the "verified" status or not, based on the score. Customers of various businesses, such as retail merchants, government entities, or financial institutions, are often required to present an identification to complete a transaction. For instance, a merchant may require customer identification for various types of purchases (e.g., alcohol, lottery, or tobacco purchases) or when certain types of payments (e.g., checks, credit cards) are presented to pay for transactions. Financial institutions usually require customers to present a form of identification to complete a withdrawal or deposit transaction, cash a check, or open a new account. Government entities may require identification for access into secure areas or other purposes. Other businesses may also require identification from customers. An additional method to service Identity Verification that is gaining industry prominence is

artificial intelligence Artificial intelligence (AI) is intelligence—perceiving, synthesizing, and inferring information—demonstrated by machines, as opposed to intelligence displayed by animals and humans. Example tasks in which this is done include speech re ...

, more commonly referred to as artificial intelligence–based identity verification. ID verification is performed through a webcam, and the results are available in real time and are more accurate than the untrained eye. However, there have been concerns about Eurocentric bias in artificial intelligence and how that could affect the accuracy of results.

Application

Industries that use identity verification services include financial services, digital businesses, travel and leisure, sharing economy businesses, telecom, FinTech, gaming and entertainment. Identity verification services exist both online and in-person to verify identities. These services are used in the financial service industry, e-commerce platforms, social networking sites, Internet forums, dating sites, and wikis to curb

sockpuppetry A sock puppet is defined as a person whose actions are controlled by another. It is a reference to the manipulation of a simple hand puppet made from a sock, and is often used to refer to alternative online identities or user accounts used f ...

, underage signups, spamming and illegal activities like harassment, Identity fraud, and money laundering. For example, in banking, identity verification may be required in order to open a bank account. There is an increasing call for regulation with the rise in popularity of

cryptocurrency A cryptocurrency, crypto-currency, or crypto is a digital currency designed to work as a medium of exchange through a computer network that is not reliant on any central authority, such as a government or bank, to uphold or maintain it. It i ...

exchanges. In December 2020 the U.S. government's

(FinCEN) has proposed rules to require banks and

money service businesses A money services business (MSB) is a legal term used by financial regulators to describe businesses that transmit or convert money. The definition was created to encompass more than just banks which normally provide these services to include non-ba ...

(“MSBs”) such as cryptocurrency wallets to submit reports, keep records, and verify the identity of users who perform transactions with convertible virtual currency.

References

{{DEFAULTSORT:Online Identity Identity management systems Internet privacy

Background

Application

See also

References