How to Fix Online Identity Verification Challenges Facing Your Business

As more businesses continue to adopt the use of online platforms, staying AML compliant and authenticating customers is critical to building trust

Identity and document verification are ever evolving, thus making it possible for companies to verify multiple clients - saving time and operational costs. While collecting digital credentials for authentication and as part of Anti-Money Laundering (AML) compliance, it is crucial to maintain high-security standards on your platform. Cyber criminals are becoming sophisticated and the risks associated with online transactions are increasing. This is why Know Your Customer (KYC) processes and other due diligence or AML regulations need to be met for fraud prevention.

These are only some of the challenges businesses are facing in regards to security, customer verification, and AML compliance. What other challenges do online businesses need to navigate to ensure system integrity?

Identity Verification Challenges

As more businesses continue to adopt the use of online platforms, staying AML compliant and authenticating customers is critical to building trust among users. As you implement identity verification into your platform, here are some challenges you might encounter and suggested solutions to them:

1. Keeping up with Evolving Technology

As technology evolves, cybercriminals are discovering more loopholes. Businesses need to adopt robust online ID verification methods to fight fraud and monitor activities on a user’s account. In many cases, document verification may not be enough, since some documents could be forged. Therefore, technology such as liveness detection can improve security.

Fraudsters have sought ways to maneuver ID verification systems with no liveness detection technology. They go as far as using deepfake software, which enables realistic 3D images and videos to try to fool identity verification systems. With deepfakes, someone with a stolen ID card can bypass multiple layers of security to gain access to a victim’s account. The use of bots allows these fraudsters to simultaneously hack several accounts, hacking into some of the most sophisticated systems.

Online ID verification methods should be sophisticated enough to detect every kind of activity. Identity verification experts are now turning to biometrics, since traits like fingerprints, iris texture, and facial structure are unique to each individual, and more difficult to forge.

2. Data Accuracy

Features that are unique to an individual increase security through biometric authentication. Advancements in technology have made it easy to collect these unique features in ways that enable unique digital identities on a system. The activities of users can then be tracked and transaction history becomes available for future reference.

KYC is meant to ensure that every user is who they say they are with the utmost accuracy, and biometrics has made that effort exponentially more precise.

3. User Experience

While trying to maintain system integrity, businesses also need to ensure that their platform offers a good user experience to limit the rate of abandonment. Good user experience means the platform must be easy to use, easy to navigate, be pleasing to the customer and features or processes like ID verification must be easy to find. Since undergoing an identity verification process can be time consuming, a user-friendly platform keeps the customer engaged and mitigates abandonment. Also, having too many security hurdles can affect user experience and hurt conversion.

When KYC measures are not intuitive, some users may find it difficult to accomplish certain tasks required to complete the authentication process. That said, an extensive shift towards convenience may create loopholes that could be exploited by cybercriminals to commit identity fraud. Ultimately, companies will need to strike the delicate balance between fraud prevention and drop-off.

4. Data Privacy and Regulatory Compliance

During an online identity verification process, customers submit personal data which is cross-checked before being admitted into the system. Most individuals are comfortable with providing basic credentials but often wonder if more personally identifiable information would expose them to security threats. An Amnesty International article reported that several people worry that facial recognition technologies (FRT) for identification could be used in mass surveillance which violates their right to privacy. So, they often feel uneasy about some data collection methods as the theft of personal information remains prevalent.

Users want to be informed about data collection and management procedures employed during identity verification. Therefore, businesses should be transparent on how customers’ data is collected, processed and stored. Information on what regulatory bodies and regulations they comply with, what KYC service provider they partner with and what customers ought to know about privacy laws should be made available on their website.

5. Account Take-Over Fraud

To maintain system integrity, online businesses often set up multiple authentication levels as customers onboard. The idea is to make the digital platform less attractive to fraudsters or those involved in illegal activities. However, fraudsters who find the passwords of customers bypass that and simply log in as the customer afterwards.

How long the stolen account remains usable is dependent on the identity verification framework on that platform. A platform with active or passive liveness check can deter or prevent the fraudster from using the platform for too long. With the theft of personal information causing a spike in incidents of identity fraud, firms need efficient risk management strategies to stay on top of the latest cyber threats. These strategies could include partnering with a trusted ID verification solution, and continuous assessment of the platform for loopholes and fixing them.

How to Fix Identity Verification Challenges

Maintaining identity verification standards and regulatory compliance while providing frictionless onboarding and a secure platform poses challenges for many businesses. These businesses are often forced to choose between meeting client expectations in terms of convenience and creating a highly secure system. Here are ways to tackle these challenges without compromising on regulatory and company security standards:

Ongoing Monitoring & Authentication: Businesses should have frameworks in place that assess and monitor the activities on the account of all customers to ensure that they are not involved in money laundering or other illicit activities. When there are transactions of high value or multi-transactions, a customer could be authenticated to ensure they are in control of their account.

Partnering with a reliable KYC provider: Online businesses are required to implement effective identity verification solutions. Instead of shifting focus from the services you provide, hand over the continuous monitoring of customers, their transactions, and their activities to a provider like Passbase.

Data Privacy: Ensure that documents and information are not over-collected or over-requested, and that your business complies with data privacy laws in the region where it’s located. This information should also be written or made visible on the website. It helps to ensure that customers remain comfortable conducting business with you or any other online platform. With increasing incidents of false positives and false negatives, having too much data that is not relevant to the process could put customer’s private information at risk in the case of a hack. This also helps assure them that the risk of identity fraud and theft of personal information is minimal.

Continuous assessment: It’s important to always carry out continuous assessment of your business and platform in line with KYC and AML regulations. This is critical to effective security management in the digital sphere. Have your developers and other departments keep up with evolving technology that can boost the sophistication and security of your platform. Though authentication and liveness detection can easily flag fraudulent activities in real-time, a continuously improved identity verification framework can prevent the hacker from even considering attacking your platform.


While users of online platforms remain skeptical about identity verification frameworks, businesses must try to establish secure spaces for legitimate transactions. A one-sided strategy that favors either convenience or system integrity is not effective – both are necessary. Authentication should not stop at active signals like the submission of documents and biometric data. Passive data collected through liveness checks like IP address, facial recognition, and the use of autofill, among other elements should be taken into account.

Partnering with identity verification providers like Passbase can ensure that organizations maintain a balance in terms of security and fraud prevention, while concentrating on doing what they do best. Passbase provides a convenient way for businesses to perform KYC and AML checks through identity verification. You can integrate Passbase into your platform via the Passbase API or with SDKs for iOS, Android, and web. To see how identity verification can work for your business today, book a demo.

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Passbase is an identity verification solution that makes facial recognition, liveness detection, ID verification and KYC and AML compliance accessible through a suite of flexible developer tools. A zero-knowledge architecture ensures that companies using Passbase can securely verify users from over 190 countries without having to store their data. Built for developers, it can be integrated with just a few lines of code on iOS, Android, and Web.