KYC AML Guide: the Clock shows the average reeding time of the blog13 min Read


KYC AML Guide: the Clock shows the average reeding time of the blogOctober 11, 2023

KYC Document Verification: 3 Steps For Successful Compliance

With the extensive use of technology and the internet, banks & fintech companies are mandated to fulfill particular standards to fight against money laundering and other financial crimes, such as fraud, corruption, and terrorist financing. Therefore, complying with KYC regulations helps financial institutions recognize and verify their customers before onboarding them. Essentially, the objective of KYC is to prevent businesses and their relationships with customers from being connected with entities that are involved in illicit activities. However, whenever a company onboards a new client, it needs to verify customer identity by implementing KYC regulatory steps. The KYC documentation verification process involves a few steps that help identify the firm that the client, they’re working with, is free of any risks and threats. In this blog, you will learn about what are the documents required for KYC verification and are necessary requirements for it.

Belal Mahmoud

KYC Product Consultant

Essentially, the objective of KYC is to prevent businesses and their relationships with customers from being connected with entities that are involved in illicit activities.

However, whenever a company onboards a new client, it needs to verify customer identity by implementing KYC regulatory steps. The KYC documentation verification process involves a few steps that help identify the firm that the client, they’re working with, is free of any risks and threats.

In this blog, you will learn about what are the vital steps of KYC document verification, advanced technologies for KYC document verification, and future trends.

What is KYC Verification?

KYC verification refers to the procedure of verifying the identity of a customer that a company goes through to identify the legitimacy and reliability of a customer. This process is conducted to investigate the threats and risks associated with the user’s financial and transactional activities. KYC verification is one of the vital parts of customer due diligence.

Fundamentally, financial organizations and businesses that deal with finances such as banks and insurance industries adopt this procedure. However, it has become a mandatory practice for such sectors to remain threat-free.

Know Your Customer verification requires the user’s personal information including:

  • Name
  • Date of birth
  • Residential address
  • National ID card number

Other than these documents, several companies may also require some additional documents such as a passport, driving license, or utility bills to verify the address. Once the company collects this information, it is compared with the data stored in a public database, sanction watchlists, global watchlists, and customer reporting agencies.

3 Vital Steps of KYC Document Verification

The KYC document verification process is done just like banks and financial institutions conduct KYC traditionally to verify their customers. However, this procedure involves numerous steps:

i. Collecting User Information

The first step to verifying customer identity is to gather user information. According to the CIP final rule, financial services providers must obtain specific information from consumers before opening an account, such as their full name, date of birth, address, and identity number — such as a passport ID number, a taxpayer ID number, or an Alien Registration Number. This data includes the client’s personal information with the user’s consent. This information is acquired from an online user where the customer is supposed to provide the required details while registering for an account opening application.

ii. Uploading of Supporting Evidence

Once the user has uploaded the information, he is further asked to provide adequate evidence that supports his identity. KYC proof of identity helps the company verify that the client has provided authentic information.

iii. Investigation of Information

Now that all the information and pieces of proof have been uploaded by the customer, the company begins the verification process. First of all, the document template is examined against various checks. The firm verifies that the uploaded documents are not stolen or modified. Once it is successfully verified, the institution extracts the data in two ways:

a. Via OCR

The first procedure of extracting user data is through Optical Character Recognition, in which the system automatically mines out the data for the documents that the user uploaded. Further, it also checks the authenticity of the information.

b. Without OCR

However, if the company wants to run authentication checks manually, it enters the acquired information and verifies the data by comparing it with the one present in the database.

Usually, depending on the organization, customer verification is done in numerous ways such as:

Nonetheless, the process of KYC document verification entirely depends on the industry and the level of risk associated with the customer. Besides, these documents should also carry an individual’s picture that indicates the person’s nationality and facial features to authenticate whether the user is genuine. The company has the right to request more than one of these or some additional documents to mitigate any possible risk.

Documents Required for KYC Verification

The KYC Verification Process varies based on the jurisdiction and institution that requires identity verification. Here is a detailed list of primary documents required for KYC verification.

Documents required for KYC

Advanced KYC Document Verification Technologies

Advanced KYC document verification approaches work together to speed the process, decrease errors, and increase KYC security. They include:

Optical Character Recognition (OCR) As described above OCR is a technique for extracting data from documents. OCR is a set of techniques necessary to recognize printed or handwritten text in a scanned identity document.
Near Field Communication (NFC) NFC is used for wireless data transfer. NFC can be used in KYC to read and send data from smart cards, electronic passports, and other NFC-enabled papers. This can increase the efficiency of KYC document verification, particularly in instances where manual data entry is time-consuming.
Machine Readable Zone (MRZ) MRZ codes are used to automate and increase the accuracy of identity verification. Matching the data on the paper with the data on the card is an important aspect of ID documentation verification.
Biometric Verification Biometric data, such as fingerprints, facial recognition, and iris scans, give an extra degree of protection to the KYC process. This not only makes fraudulent conduct more difficult but also gives a smoother and user-friendly experience for KYC document verification.
eKYC eKYC entails collecting digital data from government-issued smart IDs, using verified digital identities, and using facial recognition for online identity verification. Artificial intelligence enhances eKYC accuracy while expediting consumer onboarding via mobile platforms.

Benefits of KYC Document Verification

KYC document verification is critical for the financial industry and businesses. It aids in the identification and mitigation of potential dangers, creating strong client connections, and maintaining a company’s reputation. It has several advantages, including:

Identifies Money Laundering

When a company implements a KYC verification process, it becomes more challenging for financial criminals to set up fake accounts and steal genuine users’ identities. KYC also keeps track of accounts and observes transaction activities. Yet, in case of any suspicious activity, it sends an alert.


By applying KYC document verification, companies benefit from boosting their revenue and enhancing their conversion rates by sustaining customer trust. Especially, by implementing AI-driven automated KYC solutions.

Available, Anywhere, Anytime

Financial firms can conduct KYC document verification from anywhere and anytime through digital or eKYC solutions. Since this KYC verification process is more accessible, convenient, and user-friendly identifying user identity.

 Regulatory Compliance

KYC verification procedures are generally sanctioned and can be implemented for various security checks. However, numerous steps can be added to the process for enhanced due diligence and extensive regulatory compliance.

Also Read: 5 Issues in KYC Document Verification and Their Solution

The future of KYC document verification has many exciting possibilities. Decentralized identity solutions, zero-knowledge proof, and self-sovereign identification are gaining traction. These technologies are intended to provide individuals with greater control over their data while still passing stringent KYC standards.

Advanced KYC document verification technologies, such as ID document reader technology, are revolutionizing the KYC process by allowing businesses to scan and validate identity papers swiftly and efficiently.

Furthermore, the integration of blockchain technology has the potential to transform the KYC environment by offering a secure and tamper-proof ledger to hold identity information. This not only increases data security but also makes cross-border identification verification easier.

The future of KYC document verification is predicted to shift towards predictive document verification, which goes beyond simple binary document authenticity verification. This trend includes the use of machine learning and artificial intelligence (AI) to analyze complex patterns and characteristics inside documents, hence boosting the predictive capacities of document review procedures.

KYC AML Consultancy For Best KYC Solution

Banks and Financial Institutions usually hire KYC Vendors to provide a suite of KYC services that includes KYC Document Verification. However, it is difficult to say which solution is best suited to a specific fintech company. Therefore, KYC Tech-Buying Consultancy helps these firms in choosing the KYC partner that specifically suits their Identity Verification needs. Moreover, it guides companies and users in comparing different solutions over segments of KYC document verification like Fake Document Testing and original Document Testing.

Wrap Up

Almost every business sector requires an effective KYC to comply with specific regulations to prevent fraud and financial crimes. However, to comply with the evolutionary KYC and AML regulations, these institutions need users’ documents for KYC verification and follow all the required vital steps of KYC document verification. This process can be done in three simple steps and delivers numerous benefits. It is not only useful for financial organizations but for customers associated with them as well as it helps them prevent any possible financial loss and reputational damage.


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Belal Mahmoud

KYC AML Guide: the Linkedin share

Belal possess over 8 years experience in the KYC Identity Verification industry. He has consulted KYC solutions for over 20 new economy companies at DIFC and ADGM while ensuring a seamless technical integration and helped in jurisdictional compliance audits.