Are you lacking alternative ways to check customer identity? We’ve got you covered

The Financial Conduct Authority has just published the findings of a major multi-firm review of customer due diligence (CDD) controls.

It covers the basic initial checks, as well as enhanced due diligence (EDD) on high-risk customers, and ongoing monitoring.

Alongside unclear CDD/EDD procedures and escalation paths, one of the common problems they spotted stood out to us: “Lack of alternative ways to check customer identity and verify this”.

They say: “Policies and procedures lacked information for staff on how they could identify and verify a customer if the latter couldn’t provide the usual forms of identification.”

Many SaaS vendors claim to be fit for outsourcing the entire customer due diligence function, but in practice only accept for a subset of the most popular photo IDs.

There are 11 million Brits without passports or driving licence, and through regulatory tools like the Consumer Duty, the FCA has made it clear this is no longer acceptable.

What good looks like

As the FCA themselves say: “good practice often goes beyond the minimum regulatory requirements”.

Firms should be collecting enough information about the customer to classify them as normal or higher risk, and route them down the correct path:

Because risk can change over time (just look at the new additions to the UK sanctions list), everyone needs to be monitored on an ongoing basis, no matter what their risk at onboarding was.

And the actual verification procedures can’t just be “picture of your passport or driving licence” any more. Not to mention the rising tide of AI-powered fraud rendering purely document-based verification almost pointless, verification now has to work for the millions of people who don’t have the most common forms of photo ID.

Vouchsafe has set the standard for what inclusive, compliant CDD alternatives look like.

How Vouchsafe helps

We pioneered vouching, where a user without good photo ID can prove who they are with the help of a trusted referee.

It’s an automatic, safe and compliant way to help users pass verification they would otherwise fail, opening up more markets without affecting fraud risk.

Dozens of regulated firms and fintechs now use vouching as their default fallback route for customers without photo ID.

We also accept cutting-edge digital identity evidence like eVisas, EU digital wallets and, when they launch later this year, British mobile driving licences.

This uniquely wide range of identity evidence means genuine customers have many more ways to get verified, no matter their circumstances or what documents they happen to have on them.

Your identity fraud risk is also drastically cut, because digital evidence is far harder for AI to fake.

Another day, another FCA warning against rigid onboarding processes. If you’re tired of waiting for your KYC/AML vendor to take them seriously, consider switching to Vouchsafe. Book a conversation or get a free 14 day trial.