Melissa UK Team | United Kingdom

Many businesses are now implementing KYC checks when onboarding new customers into their systems, high-risk transactions, and even general business activities. This is due to the growth in digitalisation, and the rising risk of fraudulent activity associated.

The meaning of knowing your customer is the process that companies take to verify the identity of customers before doing business with them and this tends to vary depending on the sector, compliance measures, risk and sometimes the actual business or individual.

The financial sector for example is now heavily regulated by the whole customer due diligence factor (CDD) which involves mandatory AML checks (anti-money laundering) as well as ongoing monitoring at times.

You can find out more about what is an AML check here.

On the deeper side of verifying one’s identity, many governmental directives and watchlists have worked to mitigate money laundering, fraud, and terrorist financing that all require due diligence.

The same goes for eCommerce, while there aren’t any compulsory compliance measures that must be implemented for retailers, this sector has seen a rise in fraudulent activity over the recent years, one reason for this is the rapid growth of online sales. Here is a list of common techniques fraudsters use today.

– Account Take Over (ATO)

– Card Not Present

– Chargebacks

– Refund Abuse

– Triangulation Fraud

This listing is only a short handful but shows that merchants of all natures must implement fraud prevention measures to not only meet obligations but also minimise their business risks. For Instance, The UK e-commerce industry experienced £400 mill worth of fraudulent transactions as well financial institutions experienced a 30% increase in fraud losses during the first half of 2021

It all starts with address verification

When mitigating any KYC initiatives, we see that verifying a person’s address should be the very start of any process, this is to ensure that the individual is providing a real address domestic or international and that they live at that address. for example, they are reliably identified and filtered out in advance. “customers” who provide an unreliable address, can then be limited to certain payment options or may not be able to be onboarded successfully to limited capabilities within a service. They may be even completely blocked from making a purchase.

Many ID verification providers have address validation embedded into their systems, this simply adds another layer to authentication for the service, whether it’s straightforward identity-checking practices were checking a person’s name against a database to obtain proof of address, to ID mobile apps using document scanning and optical character recognition to cross-match that individual an address checker is required throughout.

Address verification technology allows organisations of all nature to meet consumer and compliance obligations as well as safeguard themselves from potential fraudulent risk. As we continue to transition to a more digital nature, the know your customer element will only become more vital in years to come.

We have included a helpful article on how to verify an address here.