Digital Document Verification – How It Helps With Security and Regulatory Obligations Posted by On

Digital Document Verification - How It Helps With Security and Regulatory Obligations

Digital identity verification is crucial for banks and other financial institutions. To make sure that a customer is the one who he says he is, identity verification in the digital space has become mandatory. The traditional identity verification methods such as password authentication, 2-factor authentication, etc. are not secure. Fraudsters roaming in the digital space exploit vulnerabilities and try to forge the online user account through fraudulent tricks. For instance, they use credentials stuffing techniques in which fraudsters check every possible combination of username and password to get access to the user account. 

The increasing number of cyberattacks, high-potential data breaches, and financial crimes are a reason for weak security practices in financial institutions. The digital world requires digital and innovative solutions to cope up with the leading criminal’s activities. Digital document verification verifies the identity of customers through government-issued ID documents. It extracts the data from the documents and verifies the individual.

Using Optical Character Recognition (OCR) technology, the data will be extracted from the documents online automatically. This data will be secured and verified in the system’s internal data storage and can be verified at each sign-in. The banks operating in a digital environment are required to be vigilant with respect to security practices. Customer verification is not only an important part of customer due diligence but also it is considered regulatory compliance in which businesses need to comply at any cost.

KYC and AML Compliance

Know Your Customer (KYC) and Anti-money Laundering (AML) compliance corresponds to customer due diligence requirements which thoroughly verifies the identity of customers. Critical identity verification ensures Enhanced Due Diligence (EDD) in which not only the identity is verified but the individuals associated with the person and also critically analyzed. To mitigate the risks of criminal activities, the need is to take into consideration digital document verification that provides an assurance of legal entity.

Digital document verification acts as an identity proof which assures that a person is not involved in any criminal activity. KYC compliance is important for businesses that verify each onboarding person before providing them with services at the time of account creation. In manual verification, the process is time-consuming and costly. In automated KYC verification, the system automatically extracts the data from documents using AI-powered OCR technology.

Enhanced Due Diligence 

Verification of customers through documents digitally is not enough sometimes. Enhanced Due Diligence or EDD is a regulatory requirement in many regions. It incorporates detailed verification of customers against the updated criminal records, list of Politically Exposed Persons (PEPs), and several sanction lists. This evidences the legitimacy of an individual and helps the organization provide a risk rating against the person.

Risk scoring is a security practice in which a bank assigns a rating against a person that how much he/she could be risky for the company. Based on that, continuous evaluation and monitoring of individual activities as well as transaction history is monitored in order to curb the malevolent activities.


To sum up, digital document verification is the most innovative solution that helps banks and financial institutions take into account all global and local regulatory compliance with respect to data security. This also adds to the company’s reputation and ultimately secures it from uninvited circumstances that can affect the legitimacy of the brand. Digital document verification also provides enhanced customer experience and security to the platform while providing seamless compliance with regulatory authorities.


Digital document verification

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