How Forex Trading Companies Can Spot High-Risk Customers

by Gergo Varga
Identity verification is a top priority of an increasing number of online companies. From cybersecurity to fraud prevention via compliance, it’s more important than ever to be able to know exactly who you’re dealing with.
Let’s examine what identity verification (IDV) means for different businesses, why it’s important, and how to do it right, as well as compare IDV solutions to offer you a range of options.
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Identity verification software is designed to help companies understand who their users are in real life. As it’s easy to create fake identities online, it’s important to confirm that a person is who they say they are. It can also be a legal requirement to meet compliance, privacy, and anti-fraud regulations.
Still confused about what makes good identity verification software? This list of the best features might help:
Some of the software solutions below are excellent at verifying documents; others offer complementary insights to boost the IDV process; several will help you comply with regulations – but all of the tools we’ve selected are worth considering as standalone or in combination.
Disclaimer: Everything in this article was gleaned from online research and user reviews. We did not manually test the tools. However, we ensured the information was correct as of Q1 2023. Feel free to get in touch to request an update or correction.
SEON delivers end-to-end anti-fraud prevention and passive identity verification with unique social and digital signal intel. Boasting highly granular data and customizable rules, it primarily relies on:
All the data points are fed through risk rules, which are completely customizable by risk managers. However, it is not only used in fraud prevention. Many companies rely on SEON as a way to credit-check their users with alternative data, identify high-value customers, or filter out junk users before official KYC checks.
The key is that SEON’s tools allow you to verify user identities via highly reliable digital footprinting while also gaining a better understanding of who your users are – all via frictionless checks that do not slow down a customer’s journey. There is also an AML module that checks dozens of sources for suspicious individuals and PEPs.
Ondato offers photo and live video identity verification, with easy integration via a SaaS business model. On top of that, you can choose their facial biometrics modules, as well as e-signature and compliance management tools.
The company provides ID verification for companies in a variety of industries, including General Financing, Swedbank, and NFT Venture. Best of all, Ondato meets compliance requirements for financial institutions, so you can use it for KYC and AML in finance, for example.
ID.me is a US-based identity proofing and group affiliation verification vendor that also meets the federal standards for consumer authentication.
What this company does differently involves reaching out to consumers to promote the simplicity of proving their identity online as well as helping businesses provide marketing promotions and bonuses to verified eligible users. Under the hood, it checks to see whether the customer belongs to an eligible group and triggers an invitation to the promotion.
In fact, the ID.me mission statement stresses “No Identity Left Behind”, promising to enable this functionality to everyone, regardless of background or banked status.
This IDV company started its journey in 2016 when two friends, Domantas ?iuld? and Gediminas Ratkevi?ius, joined forces on a mission to make the online world safer.
Lithuania-based iDenfy is still a budding startup, numbering about 40 employees at the time of writing. However, it has gathered very positive reviews from customers and offers an impressive range of verification products to companies around the world.
These include advanced identity verification that can handle over 2,500 ID documents from 190+ countries, facial recognition, liveness detection, KYB, AML screening, NFC verification, as well as address and phone verification. Additionally, iDenfy offers proxy detection and fraud scoring capabilities that make use of the data points gathered in the above ways.
Vancouver-based Trulioo is a well-known solution for verifying identities as part of a KYC process. The company also supports business verification for all your due diligence needs.
Their core solutions include identity verification, ID document verification, business verification, and AML watchlist screening. The ID verification system can accept a whopping 4,200 types of official documents across 195 countries, and the GlobalGateway portal can verify 5 billion identities.
This is all available via low-code, custom, or API integration, and available via two monthly subscription plans.
Token of Trust was founded in 2019 after its co-founder almost fell victim to an online scam. Compelled to create a better way to protect his identity from fraudsters, he set out on a mission to improve how sensitive consumer information is handled online.
Today, the company offers government ID verification, electronic ID verification, document scanning, biometrics, and even age address or social verification.
Its tools are used to onboard, verify, and future-proof businesses, with a special focus on reducing ID fraud and improving compliance – all available via API, and even a WordPress plugin.
ACTICO offers identity verification tools with a focus on compliance, as well as underwriting risk and fraud prevention. It serves a number of renowned financial institutions such as Santander, ING, and Volkswagen Financial Services.
Its functions for KYC include risk classification, sanctions and PEP screening for AML, and KYC profiling, including information on the business relationship and beneficial owner. The company also offers full digital transformation services, as well as credit risk management.
Trusted by companies such as Revolut, Remitly, and Bitstamp, Onfido offers ID verification for digitization, customer acquisition, fraud, and compliance. It uses a combination of biometrics and document verification that covers 2,500 kinds of forms of IDs from 195 countries.
The biometrics analysis combines Liveness verification (video selfie verification), and all the data points are processed via machine learning, with possible manual review by human agents.
Onfido also offers customer authentication, so you can rely on their system to ensure the right users are logging into their accounts – which is why it’s a favorite of neobanks and challenger banks as well as crypto exchanges.
Leveraging 10 years of real-world production data and hundreds of domain-specific data points, Jumio prides itself on automating identity verification for companies such as Monzo, HSBC, and United, among others.
Their Jumio KYX platform is designed to offer the best customer experience when onboarding a new service. It can analyze 3,500 document types from more than 200 countries and offers bank-grade security and compliance features.
You can use it to verify identities but also to check addresses, calculate fraud risk, and even ping government watchlists for KYC and AML – making it an ideal tool for heavily regulated industries.
MemberCheck, founded in 2008, has always strived to help organizations meet their compliance obligations. A key selling point of their solution is to offer online ID verification.
The verification process includes biometric screening using facial recognition and liveness detection, as well as 2FA verification via SMS. The process is easy to integrate via RESTful APIs, and you can of course perform all the standard AML checks you might need such as PEP and sanctions checks.
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While it is possible to manually verify user information against open source databases, the process is lengthy and resource-heavy. Building a solution on-site is also possible, but expensive and a drain on your development team.
By integrating identity verification from a third-party vendor, you can:
This is why an increasing number of companies simply purchase identity verification from SaaS companies (Software as a Service), and either pay monthly, annually, or per verification fees.
Identity verification is now performed in one way or another by a growing number of companies. The reasons include:
Identity verification is an important part of the KYC or Know Your Customer process. It’s the method of establishing that the user is indeed who they say they are and takes part when they first join the service or platform. From there, they will be authenticated the next time they are seen.
While many vendors offer identity verification software, not all of them rely on the same tools to do it. Here are some common features to consider when choosing your identity verification provider:
Some vendors will allow customers to submit photos of official documents, such as passports, ID cards, residency permits, or driving licenses. They also require a selfie ID, usually, with a piece of paper showing the application date, this technology is also referred to as liveness detection.
The files are then authenticated through a network of third-party verification services. The process is often referred to as eKYC (electronic Know Your Customer) checks.
There are a few issues with this method: it is high-friction, which means it may frustrate users if the process doesn’t work perfectly. Moreover, some customers may be reticent to submit their personal documents to a company.
Finally, fraudsters can easily pass the process using stolen ID documents and photoshopped files. It’s also worth noting that deepfakes are increasingly affordable and easy to create, and are often used to fool liveness verification checks.
Biometrics are physical measurements that should be unique to each individual. This may include a fingerprint, face ID, or voice recognition, among others.
It is an increasingly popular method, which is seen as less intrusive than document verification. According to Statista, the biometric technologies market will reach $55.42B by 2027.
Unfortunately, biometrics identification can add friction to the user journey, and lead to high rates of false positives.
Behavioral biometrics are metrics related to user behavior patterns such as browsing habits, cursor movement, scrolling speed, and even copy and pasting of values.
A good example would be a system that detects whether a credit card’s CVV or CVC has been pasted into the field rather than typed. This is considered a red flag.
In 2020, for instance, a data leak exposed one of the biggest poker botnet rings ever identified after it played 60,000 sessions on 50 sites and earned up to $3M.
MFA, short for multi factor authentication, and OTP (One Time Passwords) create short-term passwords that a user receives on a device previously linked to their profile. It is most commonly a smartphone, but may also work with personal computers, smartwatches, or tablets. They are sometimes referred to as soft tokens.
The advantage of MFA and OTP is that it’s inexpensive, easy to use, and relatively low-friction for users.
However, a rise in fraudsters taking control of people’s phones means that if the device falls in the wrong hands, the security of MFA and OTP is compromised.
Digital footprint analysis is an invisible identity verification method that attempts to confirm user identities behind the scenes.
It works by gathering bits of information, such as a phone number or email address, and gathering more knowledge in open-source databases, a process known as data enrichment. Some examples of digital footprint analysis tools and the kinds of questions they can help you answer include:
While answering only one of these questions may not fully help with identification, it is entirely possible to create a risk profile of each individual. This is called verification with alternative data, and it is fast, low-friction, and increasingly effective for:
Identity verification can be complex and overwhelming, especially if you need to meet regulatory requirements. The good news is that there’s a growing number of fantastic SaaS fintech companies that let you integrate ID verification easily and seamlessly.
Of course, not all ID verification software vendors will work for your business needs, which is why it’s important to understand exactly what kind of tools are adapted to you. Hopefully, this guide is a great introduction to the topic.
Identity verification software is useful for compliance reasons, as well as KYC verification and anti-fraud. It helps learn who you are dealing with to ensure your business can grow safely.
Identity verification can be performed manually or with specific software. The methods include biometrics, multi-factor authentication, and behavior analytics or alternative data profiling.
The software you choose depends on your use case. If it’s for AML and KYC, you should be able to check identities against specific watchlists, for example. To reduce fraud, it’s important to leverage alternative data profiling techniques.
Most identity verification software is purchased via monthly subscriptions. You can also pay per API call.
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Gerg? Varga is SEON’s Product Evangelist. With more than 10+ years of experience in the Hungarian and international risk management sphere, he has developed an astute knowledge of RiskOps and Open Source Intelligence. He is the author of SEON’s Fraud Prevention for Dummies guide.
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