One of the hardest issues that banks and payment processors have to deal with is identity fraud.
According to Javelin, identity fraud cost US firms about $17 billion in lost revenue. A bank or payment processor may unknowingly facilitate money laundering, tax evasion, and terrorist activities by mistaking a criminal for a legitimate customer.
The old document validation method was inefficient, unreliable, and difficult to scale. It added a lot of friction to the registration process while also not ensuring complete security. And as your company grew, you couldn't help but recruit more and more security experts to keep up. This might be really pricey.
Fortunately, recent breakthroughs in machine learning (ML) and artificial intelligence (AI) technology can assist in resolving all of these problems.
Continue reading to learn everything you need to know about document fraud and how new AI-based document verification systems can detect false documents.
What Is Document Fraud and How Does It Happen?
Identity document fraud is the illegal purchase, sale, or manufacture of fake identification cards in order to engage in illegal payment, immigration, company registration, or other criminal activities.
According to Interpol, Criminals may utilise both counterfeit and real documents in order to commit identity fraud. That's when Document Verification plays a vital role in eliminating fake documents.
What Are the Purposes of Fake Documents?
Fraudulent documents are utilised in a wide range of criminal activities. Money laundering, obtaining illegitimate employment, and other sorts of financial crimes, as well as people trafficking and terrorism-related operations, are examples.
What Are the Top 4 Most Common Counterfeit Document Types?
Document fraud can be accomplished in a variety of ways. Pseudodocuments, false documents, changed documents, and image fraud is the four most common types of counterfeit documents.
Pseudo documents:
These are documents that aren't real. This is the most common form of forged identification. Pseudo documents, as previously said, are fully forged documents. Important security measures, such as watermarks and holograms, are frequently lacking. Despite this, the ID may appear genuine and may often claim to be from another country, which may be enough to trick unskilled personnel.
Fake Documents:
False documents are not replicas or counterfeits. Instead, they are actual government documents issued by legitimate government agencies. When a third party uses a legitimate ID for illegal purposes, it becomes a forged document.
Modified Documents:
For example, a thief might try to take out a series of bank loans in the victim's name using a stolen passport. The money will be pocketed, and the victim and the bank will be left to deal with the losses.
Modified documents are a hybrid of fraudulent and fictitious documents. A real personal identification document, such as a passport or ID card, is seized and altered to display additional information. The base might be a document issued in someone else's name or blanks stolen or leaked from the government's contracted printer.
Image Fraud:
If you work at a bank or payment processing company that allows customers to register online, you're well aware that dealing with image fraud is an unwelcome side effect of doing business online.
Because the end-user just has to submit an image of their ID rather than the physical document itself, digital document authentication is problematic.
To conduct fraud, thieves will either photograph manipulated documents in a light that obscures their defects, or they will alter a photo of a real document using image manipulation software such as Adobe Photoshop.
How Are Machine Learning and Artificial Intelligence Improving Document Verification?
Document verification is being improved in a variety of ways thanks to machine learning and artificial intelligence.
Previously, document verification had to be done by hand, with professional security experts scrutinising each application. Of course, this procedure is sluggish, incorrect, and expensive.
Processing thousands of applications every day, no matter how large your security staff is, can never be a quick or convenient process for the user.
Humans are fallible, and even the most seasoned security professionals make mistakes. That's not even taking into account the fact that scaling manual document verification is a prohibitively expensive and unsustainable enterprise.
Machine learning and artificial intelligence technologies, thankfully, are on their way to assisting financial institutions in combating document fraud in a much more efficient manner. A well-trained machine learning identity fraud protection algorithm can process hundreds of documents per second, weeding out the cases that require your team's immediate attention.
You may save money on staff while enhancing processing speeds and security with these AI-based techniques.
What is the Process of AI Document Verification?
Integration:
The first step in deploying AI technologies to verify documents is to integrate the software into your payment processing infrastructure.
Document Verification with Low Friction:
When document verification is required, the new client will be requested to upload a photo of their government-issued identification as well as a selfie taken immediately through the app.
Document Scanning using AI:
The fraud detection programme then reads the data from the document using OCR software (Optical Character Recognition software) algorithms, looking for any typographic differences that could suggest the document has been altered.
At the same time, the AI system compares the paper to a database of known genuine documents, looking for any evident forging markings.
Conclusion:
Undoubtedly, Artificial Intelligence is making life easier and technological advancement is overtaking the world. Document verification is a perfect example of it, as its saves the physical time of a person to verify each document manually. Rather it helps to verify documents easily and helps eliminate fraudsters.
How financial crime is increasing and the steps companies are taking to tackle it? Here’s the Financial Crime Report 2022.
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