KYC Verification Methods

Last Updated: 2025-12-28 Status: Complete

This page details the various methods used to verify individual identity during the KYC process.

Documentary Verification

Verifying identity using government-issued documents.

Acceptable Documents (Individuals)

• Unexpired driver's license (state or foreign)
• Passport (U.S. or foreign)
• State-issued ID card
• Military ID
• Tribal ID

Requirements

• Must be current (not expired)
• Must contain photograph
• Must contain name, DOB, and address (or separate proof of address)
• Must be issued by a government authority

Verification Process

1. Collect document image (front/back for driver's license)
2. Extract data via OCR (Optical Character Recognition)
3. Verify authenticity (microprinting, holograms, fonts, security features)
4. Match extracted data to customer-provided data
5. Perform liveness detection (confirm person is present, not using photo of ID)

Non-Documentary Verification

Verifying identity using independent sources when documents are unavailable or require additional confirmation.

Acceptable Methods

Method	Description	Cost	Accuracy	Use Case
Contact Customer Directly	Call provided phone, send mail to address	Low	Medium	Low-risk verification
Credit Bureau Database	Check Experian, Equifax, TransUnion records	$0.10-$1.00	High	U.S. residents with credit history
Public Database	DMV records, voter registration, property records	$0.50-$2.00	Medium-High	U.S. residents
Knowledge-Based Authentication (KBA)	Quiz on personal history (past addresses, loans)	$1.00-$3.00	High	Thin-file or additional verification
References	Contact from other financial institutions	Low	Medium	Existing banking relationship

Knowledge-Based Authentication (KBA) Example

Question 1: Which of the following streets have you lived on?
A) 123 Oak Street
B) 456 Maple Avenue
C) 789 Pine Road
D) None of the above

Question 2: What was the monthly payment on your auto loan in 2020?
A) $250-$350
B) $350-$450
C) $450-$550
D) I did not have an auto loan

KBA Limitations

• Requires credit history (excludes "thin-file" individuals)
• Data breach risk (stolen personal info can pass KBA)
• Privacy concerns (perceived as invasive)

Biometric Verification

Modern KYC increasingly uses biometric authentication to combat deepfakes and synthetic identities.

Liveness Detection Standards

Standard	Level	Description	Use Case
ISO/IEC 30107-3 PAD Level 1	Basic	Detects printed photos, masks, replays	Standard onboarding
ISO/IEC 30107-3 PAD Level 2	Advanced	Detects deepfakes, injection attacks	High-risk merchants
CEN/TS 18099	EU Standard	Injection attack detection (server-side deepfakes)	EU operations

Liveness Detection Techniques

• Passive liveness: AI analyzes single photo for micro-textures, reflections, depth
• Active liveness: User performs action (blink, turn head, smile)
• Challenge-response: Random sequence of actions (harder to pre-record)

Deepfake Threat (2025)

Deepfake fraud has grown 2,000%+ in recent years:

• 1 in 15 identity fraud attempts involves deepfakes
• Deepfake toolkits available for under $20
• Advanced AI can generate realistic video in real-time

Mitigation:

• Require ISO/IEC 30107-3 PAD Level 2 compliance from verification providers
• Use multiple factors (document + biometric + database)
• Monitor for suspicious patterns (multiple applications from same device)

Verification Flow

Typical Processing Times

• Automated approval: <60 seconds (95%+ with AI-powered verification)
• Manual review: 1-3 business days (5-20% of applications)
• Additional documentation: 3-7 business days

Industry Benchmarks

• Auto-approval rate: 95%+ (modern AI systems)
• False positive rate: 30% of legitimate applications wrongly flagged (older systems)
• Customer abandonment: 68% abandon process if takes >10 minutes
• Lost clients: 70% of financial institutions lost clients due to slow onboarding

Related Topics

• KYC Requirements Overview - Core KYC concepts
• Provider Landscape - Verification vendor comparison
• PEP Screening - Politically Exposed Person checks