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KYC Best PracticesAML06 May 2024

Electronic Identity Verification (eIDV) for AML Compliance

Emmanuel Agwu

Electronic identity verification (eIDV) plays a crucial role in the ability of organisations to achieve anti-money laundering (AML) compliance. It is especially important for businesses that operate in regulated industries that are subject to Know Your Customer (KYC) laws. The nature of business relationships today is such that businesses meet customers online; therefore, there is a need to be able to verify these customers to avoid falling victim to facilitating criminal activities. 

 

eIDV helps businesses onboard customers remotely without compromising compliance. It also contributes to the overall customer experience while protecting the business and helping it achieve its compliance requirements. 

What is Electronic Identity Verification (eIDV)?

Electronic Identity Verification (eIDV) is simply the process of virtually verifying the identity of customers through digital or electronic means. The process could be performed using a smartphone or computer and requires the customer to provide their ID information and possibly take selfies for biometric authentication and liveness detection. eIDV is a crucial part of KYC and AML compliance to prevent money laundering, especially in today’s digital world.  

 

The eIDV operates similarly to manual KYC activities but simply digitises the process. For example, manual KYC requires a customer to provide their ID document which is then analysed through observation or manual scans. eIDV on the other hand, simply requests that they scan the identity document and take a liveness test, after which a comparison is made using an intelligent algorithm. Additionally, electronic identity verification allows the business to collect and very extra information like a fingerprint, IP address, and other biometric information that can help make a more informed decision. 

 

Another superior benefit is its ability to automate the entire KYC process. This way, businesses can onboard more customers and automatically perform risk assessments without compromising their compliance requirements. 

 

Recommended: How to Prevent Digital Identity Fraud in Africa

What are the Benefits of Electronic Identity Verification (eIDV)?

Some of the key benefits of electronic identity verification (eIDV) include: 

1. Low Human Error

Manually checking customer documents is very susceptible to human errors over time, especially from tired employees. However, technology can work around the clock and not make the same errors.

2. Quicker Customer Onboarding

The manual process of collecting, analysing, and verifying information will take hours or days. However, the right technology can perform all of these in seconds, overcoming the time bottlenecks.

3. Easy Scaling and Automation

Using eIDV can help businesses scale easily with lower costs. More often than not, there is no need for new hires or larger compliance teams. Human reviews can only be used under specific conditions or situations, while the rest of the process is automated.  

4. Better Conversion Rates

Conversion rates speak to how many customers are onboarded per time. eIDV process increases this rate as it can accurately verify customer identity and successfully onboard them in seconds.

5. High Security

The fewer the number of humans that customer information goes through during verification, the lesser the risk of a data breach. eIDV automation means that customer data is simply verified and stored and can only be assessed when necessary.

How to Electronically Verify Customer Identity

There are several means through which a business can verify its customer identity. Commonly available methods include: 

1. Document Verification 

Document verification refers to the process of verifying a customer's identity by requesting the customer’s valid ID that shows their biodata information. The document can then be scanned with Optical Character Recognition (OCR) technology which validates the Machine Readable Zone (MZR) information for correctness. This way, the organisation can tell whether the ID provided is legit. 

2. Government Verification

Government verification also verifies the customer's identity through government-issued IDs. However, it does this by extracting the customer information on the ID and verifying it against government or trusted databases. This way, the organisation can tell whether the document is legitimate or not. Government verification is generally a more reliable way of verifying customer identities during electronic identity verification. Also, it requires key government-issued IDs like Passport, driver’s licenses, ID cards, etc.  

3. Enhanced Document Verification

Smile ID’s enhanced document verification combines document verification and government verification for a more robust customer electronic verification process. This way, organisations can both validate the ID provided by the customer as well as verify the credentials from trusted government databases.  

4. Biometric Verification

Biometric verification is an extra layer of protection that can be integrated into either verification process. Essentially, it requires that a user take several pictures of themselves, which are then compared to the picture on the ID they provided for a match. It also involves a liveness test where the customer is asked to perform specific activities before the camera to ascertain it's not a deep fake. 

 

Book a free demo to learn more today about these individual eIDV types.

Performing eIDV for AML Compliance with Smile ID

Electronic identity verification simply refers to the process of verifying and onboarding customers digitally. Depending on their unique needs, the process often looks different for businesses. 

 

Smile ID suite of eDIV solutions makes it easier for businesses to customise their identity verification flow for the optimal customer experience without compromising compliance. 

 

Smile ID solutions provide comprehensive KYC coverage in 54 countries across Africa. Our APIs and SDKs are designed for easy integration with and interaction with your existing infrastructure. 

 

Ready to get started? Book a free demo today to learn more.

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