Using Address Verification in your KYC and KYB Process

The growth, development and overall success of a business is dependent on numerous factors. One of these factors includes accurate verification of customer details. Identity verification is an essential part of the KYC (Know Your Customer) process, through which customer information is authenticated by matching it with official documents. A subset of identity verification includes the process of address validation which assists in authentication whether the address given by the customer actually exists.

Increasing global crime rates have motivated organizations to develop robust mechanisms for identifying and verifying their customer base. From financial institutions to e-commerce platforms, the value of validating addresses before any activity or transaction is carried out has been recognized. Without verification of customer details, the probability of criminal activities occurring within a business can be substantially increased.

The Process of Address Verification

The process of customer address validation can be divided into the three following steps:

1. Customers are asked to upload an image of them holding their ID document to match them against the document they are holding
2. To add an extra layer of security, a secondary document containing their business or residential address is also required to verify information
3. If the address provided actually exists, the software will verify it and display it on the screen. In case the addresses is not verified, the transaction is denied

The software that acts as the address checker, makes the following checks in the address verification process:

• The full name of the customer is extracted and verified
• Photoshopped or forged address details are detected
• Both, business and residential, addresses are verified to check format accuracy
• Address details older than 3 months are not accepted
• Document must be fully visible, without any folded edges
• Document format and type is also verified

Reliable Documents for Address Verification

The accurate format and style of the submitted document depends on the type of document that is being verified. For this purpose, take a look at the generally acceptable and valid types of documents that are used by companies for customer address verification:

1. Government-issued ID cards
2. Passport
3. Utility bill
4. Bank statement
5. Insurance agreement
6. CPR smart
7. Employer’s letter
8. Tax bill
9. Rent agreement
10. Driver’s license

How is Address Verification Done Through These Documents?

1.      Driver’s License

Most driver’s licenses include information like the holder’s full name, their address and date of birth. However, the date of issuance might not be current. Usually, individuals have their licences made when they first start driving. Therefore, the address given on the license might not be valid anymore as the individual might have moved, forgotten or never bothered to update their address. Such information, along with fake or fraudulent licenses can be easily detected by AI-powered address verification solutions.

2.      Passport

Passports typically contain address details as well. However, these too can be out of date, with many individuals residing at a different address than what is written on their passport. Additionally, the passport might even have been issued 10 years ago. With the help of address verification software, such information can be easily identified.

3.      Bank Statement

Latest bank statements can also qualify for address verification, as it contains all the necessary information that is required from customers. This way, the statement can be considered as a proof of their address. With the help of OCR technology, data can be easily extracted and analysed for accurate authentication.

4.      Utility Bill

Utility bills provide the strongest proof of address, as they contain the most recent address of an individual. While people might not be keeping their driver’s licenses or passports up-to-date, it is not likely that they would be paying bills every month for a place they no longer reside in. Therefore, by submitting a utility bill, address verification can be completed within minutes.

Key Takeaways

• From financial institutions to e-commerce platforms, the value of validating addresses before any activity or transaction is carried out has been recognized
• Address verification software streamlines the verification process by weeding out fake or forged documents
• The documents provided are checked for authenticity after the type, format and style has been validated