The Importance of Trusted User Identity Verification to Counter Fraud in the Financial Sector

Financial firms are richer targets for
money-driven criminal attacks than other institutions in the
regulated sector. Fraudsters often try to infiltrate their networks
to carry out illegal activities like money laundering and terrorism
financing.

Some try to steal valuable data like an
individual’s personal information and sell them on the black
market. With these security threats, government agencies remain
staunch in implementing laws and monitoring compliance with Know Your
Customer (KYC), Anti-Money Laundering (AML), and Counter-Terrorism
Financing (CTF) regulations.

Banking establishments are mandated to
deploy anti-fraud security measures to protect their clients’
valuable data and funds. However, conventional KYC processes like
personal security questions and credit checks are not sufficient in
identifying fraudulent individuals.

One of the most recommended ways to
counter fraud in the financial sector is to utilize multi-factor
authentication (MFA) methods in identity verification. MFA
deploys two or more layers of security checks to validate a user and
the identity documents they provide.

With MFA enabled, the system can
analyze and match a user’s selfie and provided identity documents
to verify if the individual is the legitimate identity and credential
owner. Moreover, this technology also scans if the uploaded document
is authentic or falsified.

Some individuals are legitimate and
match the photo on the document, but the ID itself might be fake.
Original government-issued credentials are often embedded with
security markings to distinguish them from fraudulent ones.

By implementing effective MFA
technology at customer onboarding, financial companies can block
criminals from creating an account for illicit activities. Likewise,
employing user
ID verification before authorizing transactions ensures that
the firms interact with the real account owner.

Deploying a multi-factor
authentication service can help financial firms mitigate fraud
for security, privacy, and regulatory compliance purposes. Numerous
vendors are already available in the market, and enterprises must
choose which provider best suits their preferences.

The importance of using a trusted identity proofing solution in the financial industry cannot be stressed enough. To know more about this matter, Ipsidy provides the infographic below.