Easier, more secure and more engaged: Embracing digital verification
13 July, 2020
How do you check whether a person is who they say they are when lockdown and travel restriction mean you can’t meet them or match their ID/passport photo to the person in front of you? Even proxy certification can be difficult when so many lawyers’ offices have also moved to remote working.
Many of you will have spent a lot of time in lockdown trying to solve these and other CDD conundrums. And even when you could get together with a client face-to-face, paper verification can be a needlessly cumbersome and time-consuming process.
Way forward
Digital verification could help to resolve these tricky questions. This might be a video call in which your client holds up their passport photo next to their face. This would ideally be backed up by electronic tools, which include location verification, background checks and artificial intelligence-enabled tests to gauge whether the ID is genuine.
The benefits include faster and more secure verification, be this initial onboarding or authorisation of transactions by an existing client. Just as importantly, this is a great way to cement engagement with your clients. For example, the video call could not only be used for verification, but also discuss other business opportunities. With travel restrictions still in force and face-to-face interaction limited by social distancing, this could be an invaluable opportunity to get to know clients and build an ongoing relationship.
Turning point
Given the advantages of digital verification, take-up here in the Channel Islands has been surprisingly slow up until now. Why might this be?
One possible reason that we sometimes hear from clients is concern over the reaction from regulators. Yet, regulators have been more than happy to sanction digital verification for some time. Recognition of the challenges posed by lockdown has strengthened their support, with the Financial Action Task Force and both the Jersey and Guernsey Financial Services Commissions now promoting the use of new tech-based options.
Some clients are also worried about the implementation costs or potential difficulties of getting to grips with the technology. Yet, the required tools are getting cheaper and easier to use all the time.
Ultimately, this is a competitive issue. As more of your peers move to tech-based CDD, you risk losing clients. They won’t want to go through all the palaver of paper verification when they know this can all be taken care of much faster and more easily elsewhere. So, the question is no longer should we move to digital verification, but what are the risks of carrying on as before?
Up to speed
How then can your business get up to speed? Our work with clients and regulators has highlighted some important do’s and don’ts to ensure that digital verification is suitably client-friendly, while strengthening fraud protection and ensuring compliance with CDD regulations:
Priority one: Clear and secure connection
When confirming the identity of a client over video link rather than face-to-face, the picture needs to be clear enough to be able to reliably match the person with the photo in their passport or other ID.
On some of the free/cheaper video meeting platforms, clarity and usability can sometimes come at the cost of security. So, make sure you’re using a platform that offers all three – you can’t compromise. Ensure cyber protection is up to date and run scans regularly.
Priority two: Check and check again
When carrying out verification via video link, ask your client to hold up the photo page of the ID at the front of the screen. Take time to authenticate including checking for signs of tampering. Cross-check where possible, including determining location and whether this tallies with known client information.
When dealing with existing clients who’ve already been through the initial onboarding checks, it’s important to make sure there is no possibility of impersonation. Steps could include asking the individual to video themselves reciting a certain phrase, which you can use as cross-check. You can also use geotagging to determine their location or biometric data such as fingerprints or voice recognition.
Priority three: Document the details
Make sure you record the date, time, location and passport or other ID number as appropriate. It’s also important to document who carried out the verification from your side and ensure you’ve managed any risks associated with them. As a further safeguard, it helps to record the video, having gained consent from the client.
Priority four: Make sure policies and procedures are in place
Digital verification could be a new departure for your business. It’s therefore important to provide clear guidance for your staff on the new procedures and full training on how to use the new tools. It’s also important to periodically assess the appropriateness of your processes and how effectively they are being used.
Priority five: Understand and monitor risks of electronic identification
Use of digital applications to electronically verify an individual’s identity can strengthen security through such safeguards as background checks, biometric checks and scanning for signs of forgery. Yet, there are still risks and the tools need to be used properly.
Make sure people using the digital application know how it works, the risks associated with the software and how to mitigate them. Make sure you have appropriate cyber security controls in place to prevent tampering with information.
So, there are quite a few essentials that need to be in place. But most are common sense and will soon become second nature if applied properly.
If you would like to discuss the implementation or operation of digital verification technologies, please do not hesitate to get in touch with us.
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