How to use Address Verification for Enhanced Due Diligence?

How to use address verification for enhanced due diligence?

Businesses are thriving in the digital era where customers, merchants, and fraudsters, all are present in online spaces. Businesses are looking for growth-oriented opportunities but the problem is that fraudsters are also present on the web. Identifying legitimate customers and fraudsters is becoming a vital part of customer onboarding processes. For years businesses are performing due diligence on their customer’s but it was limited to a few high-risk customers. The changing landscape of fraud and crime in the world made proactive fraud prevention inevitable. 

Nowadays performing due diligence on customers and merchants is the risk-prevention and regulatory compliance need of businesses. It helps businesses gain risk management insights about their prospects. Basic due diligence helps in deciding the risk rating of customers. The risk rating of a customer is used as the threshold to decide which customer needs enhanced due diligence. Address verification is a part of enhanced due diligence. 

Enhanced due diligence is one step ahead of basic due diligence and it involves verification of financial activity of a customer, business verification, address verification and background check of the customer. Often businesses use address verification solutions to verify the addresses of their customers as such solutions deliver highly accurate results within seconds and using such solutions is cost-effective as compared to manual verification. 

How the address verification solution helps businesses in enhanced due diligence?

Verifying the address of the customers gives an edge to the customer in terms of risk cover. In the era of online B2C and B2B relationships, it helps them gain concrete knowledge about their customers and use it to their benefit in case of fraud. For example, if a customer flees with the funds or goods the merchant will have someplace to look for him. The fraudster might not be available at that address but it can be used as a trail to find the culprit. 

Oline address verification ensures onboarding targeted stakeholders. Some times businesses have a predetermined preference of customers that they wish to onboard. Some businesses (especially financial institutions) don’t engage with customers from high-risk regions. In order to take those customers, they need a guarantee form some financial authority. Performing address verification ensures that the customer actually belongs to the country or region he claims to be or it is a lie to defraud the business. 

Performing online address verification ensures transparency in business relationships. Using an address verification solution helps in the verification of several stakeholders of a business. Such solutions can perform address verification on the people and businesses as well. So helps them build secure relationships online with customers and businesses coming from every corner of the world. 

Online address verification also helps online businesses in the verification of delivery address. Often when people are using a stolen credit card they will obviously use an address that is not present on the credit card. Address verification solution verifies the credibility of a person in real-time and the business knows if the address was right or not, within seconds. Performing address verification will give valuable insight into the risk associated with a certain customer. It reduces credit card fraud and fake customer fraud on online platforms.

To wrap up, address verification solutions have the potential to serve several industries in risk management and customer due diligence. It is a part of enhanced due diligence regulations of several AML/KYC regimes around the globe. An address verification solution helps in the verification of customers, merchants and employees to ensure that the people and business entities related to a certain business are legitimate and have not lied about their background. 


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