Document verification is a critical process government agencies, businesses and organizations employ to authenticate or confirm the legitimacy of a document presented by an individual during the customer onboarding process. It systematically examines submitted documents to ensure their authenticity, accuracy, and consistency.
The process of customer onboarding may seem simple, however, if the document verification process is not done accurately, it can lead to bigger issues such as the risk of onboarding a fraudster. With the recent rise in internet fraud and technology, fraudulent individuals can take advantage of AI and other technologies to produce fake documents to imitate the original copy such as school certificates, and other professional certificates.
However, following this guideline on how to verify documents that will be explained in this article will help businesses and government agencies mitigate fraud drastically, if not eliminate it while complying with regulatory requirements.
This blog post will delve into the intricacies of document verification, exploring how it's done, its importance, and real-world examples.
What is Document Verification?
Document verification, also known as document validation is a comprehensive procedure used to confirm the authenticity and legitimacy of presented documents. It is an important step in customer onboarding and serves as a cornerstone for establishing trust and mitigating risks associated with fraudulent activities. By doing document verification, businesses, government agencies and other institutions can perform their due KYC verification process.
Before seeing how to verify documents, let us look at more reasons the document verification process is important.
Why is the Document Verification Process Important?
Why is it important for businesses to validate the authenticity of documents? Here are 7 reasons why you should verify the documents of an intending employee during your customer onboarding process:
1. Fraud Prevention:
Arguably, fraud prevention is the first important reason why you need to verify the documents of an intending employee as a business. Generative AI has been implicated in aiding fraud. Also, fake ID markets are just a Google search away coupled with the fact that document fraud rose by a whopping 79% in 2022, when AI usage was not in use as it is now. By ensuring that documents are authentic, organizations can prevent fraudulent activities that could lead to financial losses.
2. Regulatory Compliance:
Many industries are required to adhere to strict regulations regarding document and identity verification such as AML and KYC regulations. Proper document verification helps organizations comply with these laws.
3. Trust Building:
Establishing a robust document verification process enhances customer trust and confidence in the organization.
What are the Different Types of Document Verification Methods?
There are several ways documents can be verified. Let us look at the most important and common ways of verifying documents:
1. Manual Document Verification:
This involves a human expert physically checking the documents such as passports or IDs for physical signs of tampering like holograms, microtext or watermarks and the overall consistency that distinguishes fake from original documents.
Physical verification of documents also includes manually checking the information on the document and confirming the details against external databases or records.
2. Digital Verification of Document
Digital or online document verification includes several methods such as:
I. Optical Character Recognition (OCR):
The extraction of text from the scanned documents for further analysis and verification.
II. Image Analysis:
This involves using algorithms to analyze document images for security features, inconsistencies or signs of forgery. Digitized verification companies are often experts in this process.
III. Biometric Verification:
This document verification process involves comparing biometric data (fingerprints, facial recognition) to the document photo for identity verification).
IV. NFC Verification:
This is using Near-Field Communication technology to read embedded data in documents for authentication.
V. Machine Learning:
Employing AI to identify patterns and anomalies in documents, improving accuracy over time..
Read: What are Machine Readable Zones in Documents?
Understanding the Process of Document Verification: How is Document Verification Done?
The document verification process typically encompasses the following steps:
1. Document Collection:
The initial stage involves gathering the necessary documents from the individual or entity. Common documents include government-issued identification cards, passports, utility bills, bank statements, and proof of address.
2. Data Extraction:
The relevant information, such as names, dates of birth, addresses, and identification numbers, is extracted from the submitted documents.
3. Document Analysis:
Next, the documents are examined meticulously to verify their authenticity and consistency. This may involve checking for signs of tampering, forgery, or discrepancies.
4. Data Validation:
The extracted data is compared against reliable databases or internal records to confirm its accuracy. This step helps identify potential inconsistencies or fraudulent information.
5. Risk Assessment:
Based on the verification results, a risk assessment is performed to determine the level of risk associated with the individual or entity. This evaluation helps in deciding the next course of action.
An Example of Document-Based Verification
A common example of document-based verification is the process of opening a bank account. Financial institutions require customers to submit identification documents, proof of address, and other relevant paperwork. These documents are then subjected to a rigorous verification process to prevent identity theft and money laundering.
What are the Challenges with Manual Document Verification?
Manual document verification comes with lots of challenges: human error and bias, efficiency and scalability, security risks and delayed processing resulting in negative customer experience.
Human judgment is subjective leading to inconsistent decisions. Extended periods of manual verification can lead to fatigue ultimately increasing the likelihood of errors. Also, skilled forgers can create highly convincing documents that may bypass human detection.
Moreover, manually verifying documents can be time-consuming especially when you have to deal with large volumes of documents. It requires a dedicated workforce to handle the workload which is often scarce.
In addition to this are the security risks. Manually handling sensitive documents can increase the risk of data breaches and loss. Physical documents can also be easily tampered with, altered or replaced.
All of these mentioned challenges can lead to delays in document verification and frustrate customers.
What Happens When You Don't Verify Your Employee’s Documents and Credentials?
Failing to verify your employees' documents and credentials can lead to a host of problems for your organization. Here are some potential consequences:
I. Legal and Compliance Issues:
Operating without conducting appropriate customer due diligence can expose your company to legal and regulatory penalties. Hiring workers with fake credentials can result in your company being implicated in criminal activities.
II. Financial Losses:
An employee with falsified documents may engage in fraudulent activities, leading to financial losses. Addressing the consequences of hiring unqualified or dishonest employees can be expensive. Moreover, negative publicity associated with employment verification failures can harm your company's image.
III. Operational Risks
Employees without the necessary qualifications or experience may struggle to perform their roles effectively. Hiring individuals with criminal backgrounds can increase the risk of workplace violence or data breaches.
How Youverify Can Help in Automating Your Document Verification Process with 99% Accuracy?
To address these challenges that come with manually verifying documents, Youverify specializes in ID document verification KYC (Know your Customer) service that provides a fast and secure way for businesses to verify the identity and documents of their customers. With our AI-powered flagship product, you can now quickly and easily verify your customers’ government-issued ID documents by scanning and authenticating across a global document verification network.
Don’t let fraudulent documents bypass you! This could be as dangerous as employing a terrorist or a fraud. Request a FREE demo from one of our experts today to see how your documents can be verified.
Conclusion
The document verification process is an important aspect of modern business and governance. By understanding how it works and its importance, organizations can enhance their security measures, protect sensitive information, and build trust with their customers.