In a world where customers may live hundreds of miles away, being able to conduct electronic identification verification has become a critical capability for businesses dealing with AML obligations. It allows companies to accurately confirm the identities of clients in an efficient and secure manner.
In this blog post, we discuss the importance of electronic identification verification, how to implement it correctly, common pitfalls to avoid, and when to use it.
What is electronic identity verification?
Electronic identity verification (EIV) is when you verify an individual’s identity remotely or non face-to-face. These identity checks are required as part of your customer due diligence process and are an important factor in confirming your client is who they say they are.
There are two key components of electronic identity verification:
- confirmation of identity information via electronic source(s); and
- matching the person you are dealing with remotely to the identity they are claiming.
Note: EIV is only applicable for clients you have identified as low or medium risk. Using EIV on high risk clients should be the minimum level of verification that is applied. Further information and/or verification will be required depending on your client and the reasons they have been identified as high risk.
How do you electronically verify identities?
When electronically verifying identities, you must verify your customers name and date of birth:
- Verify the customer’s name from either:
– A single independent electronic source that can verify an individual’s identity to a high level of confidence such as use of biometric information; or
– At least two independent and reliable matching electronic sources. - Verify the customer’s date of birth from at least one reliable and independent electronic source.
If using biometric information this should include measurements of a person’s physical characteristics. This information can then be used for comparison and automated recognition.
If using matching electronic sources this should include the verification of a person’s name and date of birth from one source, and only the verification of the person’s name from another source.
Ensure your two electronic sources match each other, and are independent and reliable.
What electronic sources can you use?
The primary electronic sources used to verify name and date of birth in New Zealand should be databases maintained by Governments or subject to legislation, for example the New Zealand Transport Agency (NZTA), Department of Internal Affairs (DIA), or Land Information New Zealand (LINZ).
The secondary electronic sources used to verify a person’s name in New Zealand could include Credit Bureaus, Companies Office, LINZ or the NZTA.
When running your checks you need to consider whether the electronic source(s) you use sufficiently link your customer to their claimed identity. If it doesn’t, you must carry out additional methods to supplement it. For example, you could phone your customer on a number that has been verified by a reliable and independent source, or take further steps to ensure the authenticity of any identification document electronically provided by the customer.
Getting verification right can be a time-consuming process but following the correct procedures, and using the right AML outsourced provider to help get faster, more accurate results can be a cost-effective solution. At tic company we use our advanced technology to run thousands of identity checks against approved sources to provide instant, accurate results, and are on hand to provide expert advice if you need it.
Electronic sources and pitfalls to avoid
Not all electronic sources are valid forms of verification. The Explanatory Note: Electronic Identity Verification Guideline (Amended Identity Verification Code of Practice) advises not to use the following as they do not meet the requirements of the Code:
- Biographical information provided by the person that you are dealing with online.
- A selfie photo or video received from the person you are dealing with online.
- An uploaded image of the person’s identity document(s).
- An email, app, or internet platform through which you have received information or copies of identity documents.
Another pitfall when carrying out electronic identity verification is relying on outdated or inaccurate data sources. It is crucial to use updated and reliable data sources to verify the identity of individuals accurately. Failing to do this could result in unintentional breaches in compliance, and put your business at risk.
Recording your electronic identification verification processes
As part of your compliance programme you will need to outline whether or not you use EIV as part of your AML obligations. You should record the following:
- When you will be using EIV, for example, will you use it on all clients, as a backup, or only when you are unable to meet your client in person.
- Whether or not you are using an outsourcing company to help with your EIV, and if you are, advise details of the provider, any products/technology being used, and how you are using the technology.
- The sources being used to electronically identify clients.
- Whether you are using a single independent source (and why you believe this is adequate), or two (or more) reliable and independent matching sources, and how you have assessed reliability and independence.
- How you will capture and record the information submitted by your customer and the results of the EIV.
- How you check your records to confirm that a prospective customer’s details have not previously been used.
- What processes you use to review and escalate unsuccessful EIV results.
Don’t forget, if your processes change for any reason or legislative requirements are updated, amend the details in your compliance programme to reflect these changes.
Summary
In conclusion, electronic identity verification is a crucial component of completing customer due diligence, allowing for the remote verification of client identities. By utilising reliable data sources and adhering to legislative guidelines, you can ensure the accuracy and security of this process.
For assistance with implementing these protocols, contact our team for expert help, or book a demo to view how our advanced software can help automate your EIV requirements.
Want to read more on AML identification?
AML ID verification – get the complete rundown on all forms of AML ID verification, best practices, and key requirements.
