The process of checking a borrower’s identity is an important part of customer due diligence, which can protect against fraudulent applications and money laundering. The process usually involves requiring the applicant to present 3 acceptable forms of identification. These can be divided into two sections. Each item must be current and valid. A borrower can produce a photo ID and proof of address to demonstrate address history. The amount of documentation required depends on the type of loan.
Identity is essential in financial transactions. It provides trust between a business and its customers. It also helps to keep transactions secure and prevents the possibility of unwittingly becoming involved in criminal activity. Identity checks are required for transactions such as in branch banking, loan applications, opening accounts and credit card applications. Find out more about KNOW YOUR CUSTOMER by visiting https://www.w2globaldata.com/regulatory-compliance-solutions-and-software/know-your-customer/
If you are a business offering loans, you should always do some basic identity checks before you make a deposit. If you find yourself getting applications with errors, you should be concerned. This is a common warning sign that the applicant isn’t trustworthy and may be based in a foreign country.
Another sign that you’re dealing with a fraudulent applicant is if they ask for payment in a strange way. Some may ask you to make a wire transfer to send them the money, which can be difficult to retrieve. In other words, it’s better to use a credit history when lending online. You’ll be able to see whether the customer is a legitimate one.