Identity verification and screening are two different aspects of a Know Your Customer (KYC) process and usually perceived to be similar. Let us explore how they are NOT.
Identity Verification:
KYC requirements compel certain measures known as customer due diligence (CDD), one of which is to seek customer’s identification documents and additionally and verify their identity. Identity verification protects and prevents from engaging in any commercial relationships with potentially risky, bad or suspicious persons.
Identity documentation usually requires an officially valid document (OVD), for e.g., a Permanent Account Number (PAN) card. PAN is validated by checking the original PAN card of the customer with a copy, and further digitally authenticated with the Income Tax (IT) database to ascertain if the PAN indeed belongs to the same customer. Another example is a video KYC when the mode is digital, where we ensure liveliness and match the photo on the OVD with the person in the video or selfie. These processes are known as identity verification.
Name Screening
In contrast, screening is distinctly different and usually follows the identity verification process.
Screening is needed to:
- to ensure that you do not do business with tainted or prohibited individuals/firms.
- meet law requirements if you are regulated entity by any regulator or any self-regulatory organization. See list at bottom.
Prohibited Individuals / firms are commonly included in a list that are called the Sanctions list, and to name a couple – the Ministry of Home Affairs list or the Consolidated United Nations Sanctions List. Tainted Individuals / firms means they are debarred by SEBI (Security & Exchange Board of India) or included in the sanctions / banned list (see below) and so on. Screenza helps protect businesses and individuals from entering any relationship with bad or suspected actors by helping in thorough due diligence across 90+ checks which, for example include:
- Sanctions (Indian and Global)
- Law Enforcement agencies like Interpol, EOW, Police etc.
- Regulatory Prohibition Orders from SEBI, RBI, IRDAI etc.
- Financial Defaulters and Fraudsters
- Politically Exposed Persons etc.
Two types of screening are performed to identify such individuals / firms viz.,
- At the time of on-boarding or establishing relationship, or
- On an on-going basis for all existing relationship
The screening activity for first time investors shall be conducted before establishing a business relationship, which means such a sanctioned person, if found on the designated list, is not allowed to commence a business relationship. If a sanctioned person is found at this validation stage, regulations also require a Suspicious Transaction Report (STR) to be filed, if you happen to be a regulated entity.
An existing customer or employee or partner or vendor, who at the time of their starting relationship was not part of any list i.e., is a “clean” customer but could at any time appear in the list, so ongoing screening is a must. Such persons pose a threat to society. Businesses are therefore required to ensure via “screening” of their customer database on an on-going basis too, preferably daily.
Conclusion
While identity verification is an activity to authenticate a customer’s OVD with original documents and further verified in some cases using the customer’s name with a government database, name screening is carried out to ensure that no sanctioned persons are allowed to open a new account/commence a new business relationship or are identified as part of an existing database of customers. This clearly demonstrates that identity verification and screening are two separate activities and validations, both of which are critical and if you are a regulated entity, then mandatory by regulation.
How Can We Help?
Screenza, is designed to assist businesses and professionals perform a robust name screening in milli seconds, delivering a high degree of accuracy to protect you from bad or suspected actors.
Be a responsible financial soldier!
Prevention is always better than cure. Protect your brand image & reputation!
- Performed in person at an onboarding stage.
- Obtain an Identity Document
- Check name mismatches, if any and re-verify the identity.
- Check photograph on PAN and Aadhaar, whether it matches or not.
- Conduct liveliness check with Video KYC.
- Person in Video and photo in Aadhaar matches or not.
- 1. Onboarding Stage
- If a name matches with any of the lists like Ministry of Home Affairs list or other criminals / bad actors, perform regulatorily mandated process.
- Multiple attributes to be used like name, date of birth, nationality, PAN etc.
- Record may be identified as prohibited or tainted.
- Decision on continuity of relationship
- 2. On an On-going basis
- Run a daily check against the designated sanctions list.
- Repeat the steps stated above.
