The document verification process is essential for document control, compliance, and risk management. Despite its importance, many businesses do not have an effective verification system in place. Neglecting the document verification process reduces safety, exposes businesses to misuse of service, financial crimes, and erodes user experience. More importantly, failing to implement adequate compliance measures may result in regulatory penalties.
This article discusses the most important aspects of document verification that you should be aware of in order to improve the effectiveness of your compliance program.
Digital vs. Manual Verification Processes
The document validation process works by checking the authenticity of documents. It is used to verify the identity of the person submitting the document. KYC specialists can perform document verification both in person and online.
In the past, manual document verification was carried out in person, but as more businesses started transferring their services online, document verification software became more common. The increase in digital services has sparked the growth of the compliance software market. Third-party services enable banks and other organisations to quickly verify their client’s identities and give them access to their services.
While some prefer to rely on human input, both in-person and online document verification are safe and trustworthy methods to verify someone’s identity. These methods serve as regulatory tools to prevent money laundering and identity theft.
How Does Document Verification Work?
The online document verification process varies depending on the industry and the types of documents involved, but it generally follows four key steps:
Document Collection
The first step is collecting the document, typically by asking the user to capture and upload one or more photos of it. The uploaded document is then pre-processed and analyzed to ensure it meets the required criteria. Checks include confirming that the photo is of the correct document, ensuring the image quality is sufficient, verifying the entire document is visible, and looking for signs of tampering. Documents that don’t meet these requirements are rejected, while those that do proceed to the next step.
Data Extraction
Once the document is uploaded, the information within it must be extracted using methods like optical character recognition (OCR) and pattern recognition. The extracted data is then compared with the information provided by the user. For example, if a user uploads a utility bill as proof of address, the address on the document is compared with the address provided by the user. Discrepancies may indicate input errors or potential fraud.
Document Validation
The third step is to validate the authenticity of the document through various checks, which can number in the hundreds depending on the document type. Common checks include:
Document Completion: Ensuring all required pages are uploaded.
Edge Detection and Cropping: Checking for any signs of tampering along the document’s edges.
Special Feature Identification: Looking for watermarks, holograms, stamps, foils, fonts, textures, and other features designed to prevent forgery.
Colourspace Analysis: Analysing the photo’s colour, lighting, and shadows to detect signs of forgery or tampering.
This step may also include verification against an issuing database.
Manual Verification
If a document is flagged as suspect, businesses can either reject it or move it to a manual review process. During manual review, a human expert examines the document to reduce false negatives. This may involve collecting additional or alternate documents to verify the information.
This structured approach helps ensure the authenticity and validity of documents while minimising the risk of fraud.
Document verification is typically performed during the onboarding process. For example, during the in person verification, the KYC specialist or a trained bank employee thoroughly examines identity documents presented by the clients. They check the expiration date, ensure that the document is authentic and not forged, and compare the data provided on the document against various databases. Usually, this process is time consuming for both the bank and its clients.
Meanwhile, an online document verification process results in a much faster onboarding. The typical procedure requires a client to upload a photo of their document and take a selfie. The KYC software uses artificial intelligence and machine learning for data extraction, which is then used to verify documents and the client’s identity online without requiring human intervention. It examines the document’s authenticity, ensuring that the document is not forged. Then, Optical Character Recognition (OCR) technology auto-fills the document data and compares it against various registries, such as lost and stolen documents and population registries, minimising the chance of fraudulent documents passing for real ones. Machine learning technology speeds up the process from days to minutes. For example, Ondato IDV service, onboards new clients in under 60 seconds.
Since the digital identity verification (IDV) process is a part of a broader customer IDV procedure, it can be performed in three most common verification methods:
- Photo-based IDV. This type of verification requires a customer to take a photo of themselves and their document during the onboarding process.
- Video-based IDV. Client documents can be verified via a virtual call with a compliance specialist.
- Manual verification. Clients can also submit copies of their documents for approval, and this method is most commonly used for documents such as proof of address.
What’s the Difference Between Document Verification and Digital Identity Verification
Document verification and digital identity verification may sound similar and are often used interchangeably, but they are two different procedures.
Document verification is an important part of the digital IDV process. During the process, a client submits a set of documents, such as a passport or driver’s license, which has to be verified by a company’s compliance specialist or KYC software. Document verification aims to ensure that a client’s documents are legitimate and not forged or stolen.
However, businesses such as financial institutions must establish a full-scale IDV procedure to ensure that a client is the rightful owner of the document. Identity verification falls under the broader procedure called customer due diligence.
During this process, important additional checks, such as proof of address, PEP, and others, are carried out. Most importantly, identity verification involves biometric checks, which means that the client’s biometric data matches the photo provided on the document. Regulators typically require IDV, as document verification is insufficient to ensure adequate fraud prevention.
How Does Ondato’s Online Document Verification Work?
Document verification is a complex process that involves several different checks. There are several important steps that should be included in identity verification processes.
MRZ Check
Machine Readable Zone (MRZ) is an area of an identity document that holds the document holder’s personal data. During the MRZ check, our system firstly decrypts the zone, then checks and crosschecks the checksums against the data printed on the document (Visual inspection zone).
Document Spoofing Prevention Checks
Ondato uses a deep learning engine for various checks, such as pixel distortion analysis, copy-replace detection, META detail analysis of identification media, and so on. This helps algorithms to detect any alterations made to the document and inspect for met description anomalies.
Additionally, Ondato has defined the natural and required colour gradient percentage for each (international) document type. This helps the mechanisms detect if the media has the required color proportions.
Another important element of our document checks is the image depth analysis. Inspecting the depth of every media file received during identification helps to understand if an object in the media is 3D or 2D.
Document Liveness Analysis
The system checks if the presented document is legit by analysing several factors:
- Replay detection (presentation attack) – system analyses if the document is presented as an original, not a replay from other device screens.
- Physical alteration – system analyses if the document was altered in any way physically (i.e., glued image on top, altered digits etc.).
- Reprint detection – system analyses if the document was printed on other material or if any unusual presence that is different than the original model needs to be.
- Pixel distortion analysis – system analyses the received images for “broken “or duplicated pixels in order to detect digital manipulations of the document. This check also includes image META information analysis.
Country and State Check
The applicants’ documents are checked using the OCR method to ensure that they are not prohibited and are issued by recognised nations or states in accordance with the rules set by the company.
Benefits of Using Online Document Verification
The importance of document verification cannot be overstated. Let’s discuss its main benefits.
- Protection against identity fraud. Ensuring that a client is the rightful owner of a document can efficiently prevent identity fraud and prevent financial loss.
- Remote onboarding. Remote onboarding is only safe when businesses take adequate precautions. Document verification is one of the best measures to deter fraudsters, and illegitimate users businesses can take.
- Compliance with KYC and AML requirements. Document verification is part of regulatory compliance requirements. It assists in financial crime and fraud prevention.
- Age verification solution. Implementing document verification helps age-restricted service providers to confirm the age of their users. Paired with AI-based age checks, document verification is a simple and very effective way to deter from adult-only services and entertainment. For example, when a client provides theri selfie, Ondato’s Age verification tool can determine their age group with 95% confidence.
- Reduced inaccuracies and saved resources. Manual verification is prone to human error. Implementing digital document verification requires much fewer labor resources, saving money and time.
Last Thoughts
Document verification is a great tool to have in your arsenal when you need to prove your client’s identity or authenticity. It can be used in many different industries, from banking to healthcare, making it one of the most efficient methods to ensure that your clients documents are authentic.
While document verification can be performed manually, using a tool like Ondato serves as a much more reliable and secure alternative for both your company and your clients.
FAQ
1. Visual Inspection: Examine the document for signs of tampering or forgery, such as altered text, inconsistent fonts, or unusual formatting.
2. Cross-Referencing: Check the information against other known data sources, such as official records or databases.
3. Validation Tools: Use specialised tools or software to verify security features like watermarks, holograms, barcodes, and digital signatures.
4. Contacting Issuing Authorities: Reach out to the organisation or institution that issued the document to confirm its legitimacy.
5. Expert Analysis: In some cases, involve forensic experts who can analyse the document for authenticity.
1. Personal Identification: Passports, driver's licenses, national ID cards, and birth certificates.
2. Financial Records: Bank statements, tax returns, pay stubs, and financial statements.
3. Educational Certificates: Diplomas, degrees, transcripts, and certificates of completion.
4. Professional Licenses: Medical licenses, legal bar memberships, and other professional certifications.
5. Legal Documents: Contracts, deeds, wills, and powers of attorney.
6. Utility Bills: Used for residency and address verification.
These documents are verified to ensure they are legitimate and to prevent fraud or identity theft.
1. Choose a Verification Service: Select a trusted online verification service that supports the type of document you need to verify. Examples include government portals, financial institutions, or third-party verification services.
2. Upload Documents: Scan or photograph the documents and upload them to the service's website or app.
3. Enter Required Information: Provide any additional information the service requires to cross-reference the documents.
4. Automated Checks: The service will perform automated checks using its database and algorithms to verify the authenticity.
5. Receive Results: Wait for the service to process the information and provide the verification results.
