June 2023

Any nation is only as strong as its financial system, which is why this sector is important to the beginning and continuation of economic expansion. However, financial crimes and frauds present a substantial risk to the honesty of the banking industry. This blog will examine numerous types of financial fraud, the significance of pan card verification, and the best practices for preventing fraud in the banking sector. 

Understanding Banking Frauds

Banking frauds are white-collar crimes committed by individuals or groups taking advantage of loopholes in the banking system. These crimes often involve deceit, dishonesty, or manipulation to gain unauthorized access to financial resources or information. The impact of banking fraud can be widespread, affecting a bank’s reputation, causing financial losses, and ultimately slowing down the economy’s overall growth.

Types of Financial Frauds

1. Loan fraud involves borrowers providing false information or documentation to obtain loans they do not intend to repay.
2. Identity theft: Criminals steal personal information to impersonate someone and gain unauthorized access to accounts, credit cards, and other financial services.
3. Phishing: Fraudsters send fake emails or text messages posing as a legitimate organization to trick recipients into providing sensitive data or clicking on malicious links.
4. Card skimming: Thieves use devices to capture card information from ATMs or point-of-sale terminals and use the stolen data for unauthorized transactions.
5. Money laundering: Criminals attempt to hide the origins of illegally obtained funds by passing them through a series of transactions, eventually integrating them into the legitimate economy.
6. Insider fraud: Bank employees or partners collude with external parties to commit fraud or engage in unauthorized activities for personal gain.

Preventive Measures: Checks to Combat Financial Crimes

PAN Card Verification

PANan Card verification is crucial in identity verification and KYC (Know Your Customer). Pan Card verification helps banks and financial institutions confirm the authenticity of an individual’s identity and reduce the risk of financial fraud. A PANan Card numbers has ten digits which are unique to each individual. The Indian Income Tax Department issues this identification number to taxpayers in India. It serves as essential proof of identity and is mandatory for financial transactions, including opening bank accounts, applying for loans, and filing income tax returns. Verify the PAN number with the help of a PAN verification API to authenticate the individual’s identity.

Anti-money Laundering Solution

Under the Prevention of Money Laundering Act, conducting the KYC of the individuals/clients is mandatory. This helps the financial and accouning professionals to stay compliant while safeguarding their firm and identifying fradulent activities. An anti-money laundering solution is a great way to curb financial crimes by continously monitoring the risk, family mapping to identify politically exposed people (PEP) among other benefits.

KYC and Digital KYC Solutions

KYC (Know Your Customer) refers to the procedure by which financial institutions confirm the identity of their clients using PoI and PoA documents such as the Voter ID, PAN Card, Aadhaar card, etc. This process helps banks and other organizations assess the risk associated with a particular customer and prevent fraudulent activities. Technological advancements have made digital KYC solutions a more efficient, secure, and cost-effective alternative to traditional KYC processes. Digital KYC solutions leverage artificial intelligence, machine learning, and deep search algorithms to enable instant KYC verification for faster account opening and onboarding.

Educating Customers and Employees

Banks must educate their customers and employees about various types of financial fraud and the best practices to prevent them. Regular training sessions, seminars, and workshops can be organized to raise awareness about cyber threats, phishing attacks, and social engineering tactics. Banks should also encourage customers to report any suspicious activity or communication to the bank immediately.

Implementing Robust Security Measures

Banks should invest in cutting-edge security technologies and adopt multi-layered security measures to protect their networks, systems, and customer data. This includes using strong encryption algorithms, deploying firewalls, implementing intrusion detection and prevention systems, and conducting regular security audits and penetration tests.

Enhancing Regulatory Compliance

Financial institutions must adhere to stringent regulatory and compliance standards to prevent fraud. This includes implementing effective anti-money laundering (AML) and counter-terrorism financing (CTF) measures, maintaining proper records of customer transactions, and reporting suspicious activities to the relevant authorities.

Collaboration and Information Sharing

Banks should collaborate with other financial institutions, government agencies, and law enforcement authorities to share information about emerging fraud trends, threat actors, and best practices to combat financial crimes. This will help the banking sector as a whole to stay ahead of the curve and effectively prevent fraud.

Regulations and Compliances

Several legal provisions and regulatory guidelines have been implemented to prevent and combat financial fraud in the banking sector. Some of these include:

1. The SARFAESI Act, 2002
2. The Negotiable Instruments Act, 1881
3. Banking Regulation Act, 1949
4. Insolvency and Bankruptcy Code, 2016
5. Fugitive Economic Offenders Act, 2018

Each bank must also have a Chief Vigilance Officer who investigates and reports fraud cases to the police and the Reserve Bank of India (RBI).

AuthBridge: A Trusted Solution for Combating Financial Fraud

AuthBridge, a leading identity verification and background screening service provider, offers a comprehensive suite of solutions to help banks and financial institutions combat fraud. With its AI-powered Digital KYC and Video KYC solutions, AuthBridge enables organizations to streamline customer verification processes, enhance regulatory compliance, and protect themselves from financial crimes. AuthBridge’s solutions can significantly reduce the risk of fraud, identity theft, and money laundering by harnessing the power of technologies such as Generative artificial intelligence, machine learning, and deep search algorithms.

Conclusion

Financial institutions must continually invest in advanced technologies and adopt best practices to safeguard their operations and customers from financial crimes. Preventing fraud in the banking sector requires a multi-pronged approach, including pan card verification, robust KYC processes, employee and customer education, strong security measures, regulatory compliance, and stakeholder collaboration. Banks can stay ahead of emerging threats by leveraging innovative solutions like AuthBridge’s Digital KYC and Video KYC products and protect their reputation, financial assets, and the economy’s overall growth.

Introduction

The Election Commission of India issues the Indian Voter ID Card (officially known as the Elector’s Photo Identity Card (EPIC)) to adult Indian citizens who have reached the age of 18. The significance of the Voter ID card extends beyond the realm of elections, as it is widely utilised by numerous companies and financial organisations to authenticate their clients’ identities, ages, and addresses. To combat fraudulent activities effectively, many businesses have turned to using a Voter ID Verification API, simplifying onboarding new users. The API leverages the OCR technology to extract information from the voter ID card and use it as proof of Identity and proof of address. The ubiquity of the Voter card as an address proof across the nation makes it an ideal solution to prevent fraud.

Voter ID verification through an API offers numerous advantages across different industries and transactions. From opening bank accounts and facilitating loan transactions to enabling gaming activities and onboarding employees of various sectors, such as blue-collar, white-collar, and grey-collar workers, the versatility of voter card verification is invaluable. Additionally, it plays a crucial role in insurance transactions, ensuring the accuracy of user identities and minimising potential risks.

Although some users might perceive the identity verification process as time-consuming and bothersome, technological advancements have significantly improved the accessibility and effectiveness of such procedures. By exploring the application of voter ID verification for online service signups and identity confirmation, this blog post aims to highlight the potential of this innovative approach.

In the upcoming sections, we will dive deeper into the capabilities of voter card verification APIs, emphasising their role in streamlining user onboarding and enhancing security measures. By leveraging it, businesses can optimise their operations and provide a seamless user experience while mitigating the risks associated with identity fraud.

What is a Voter ID Verification API?

A Voter ID Verification API is a fast and efficient way to verify the identity of an individual. The Voter Card API uses the AI-based OCR technology to extract digital information of the individual such as their name, address, date of birth, and father’s name from the voter card. The extracted information is then matched across pre-validated databases or the Election Commission’s database to authenticate the individual’s identity. 

How to Verify Voter Card?

Let us look at the process to verify the Voter ID details using a Voter ID verification API:

• Initiate the request for Voter ID verification
• Enter the Voter ID number
• Upload the document (clear photo of the voter ID card)
• Real-time check across sourced and government databases
• Voter ID verification complete

Voter ID Verification API Optimizes User Onboarding

Whether it’s social networking platforms, streaming services, or e-commerce sites, these platforms require users to verify their identities to prevent fraud and ensure user security. By incorporating a Voter ID Verification API into the signup process, businesses can optimise user onboarding in several ways.

1. Streamlined User Experience:
   1. Voter ID verification simplifies the identification process for users during online service signups.
   2. Users can quickly and easily verify their identity by providing their voter ID details, eliminating the need for cumbersome manual processes.
   3. This streamlined user experience improves conversion rates, as users can seamlessly complete the onboarding process without unnecessary delays or complexities.
2.  Compliance with KYC Regulations:
   1. Know Your Customer (KYC) verification is a crucial regulatory requirement for many industries.
   2. Integrating a Voter ID Verification API ensures compliance with KYC regulations by validating the user’s identity and addressing the need for robust verification measures.
   3. By leveraging the API, businesses can enhance their risk management strategies and establish a stronger foundation of trust and authenticity.
3. Enhanced Security and Fraud Prevention:

1. Voter ID verification is a robust security measure, reducing the risks associated with fraudulent activities and identity theft.
2. By validating the user’s identity through their voter ID, businesses can ensure that only genuine individuals gain access to their services.
3. This helps in safeguarding user data and sensitive information, fostering a secure environment for both the business and its users.

Final Word 

In today’s digital landscape, Voter ID API Verification is indispensable. This robust tool streamlines the user onboarding process, validating identities swiftly and efficiently. Providing real-time access to relevant databases, it automates voter card verification, minimising human errors and maximising accuracy. It fortifies trust and security by confirming Voter ID authenticity, effectively mitigating fraudulent activities. The Voter ID API Verification, therefore, stands as a beacon for organisations, aligning with regulatory requirements, enhancing user experience, and bolstering their reputation. In essence, its significance for businesses in need of efficient, reliable, and rigorous identity verification is inarguable and paramount.

Check out how you can onboard individuals, vendors and third parties faster with AuthBridge’s Voter ID Verification API.

Introduction

The BFSI industry, which includes banking, financial services, and insurance, is undergoing a radical change as a result of the modern world’s more advanced digital infrastructure.As a catalyst, the COVID-19 epidemic hastened the transition to digital technology across sectors, including banking. As a result, a significant shift is taking place in how banks interact with their customers, particularly regarding Know Your Customer (KYC) processes. Digital KYC or Digital Know Your Customer, is revolutionising the BFSI sector by streamlining customer onboarding and enhancing security measures.

Digital transformation in the banking industry encompasses a wide range of initiatives. On the one hand, it provides customers convenient access to banking services through various digital channels, such as the Internet, mobile devices, and wearables. This enables individuals to conduct financial transactions digitally at their own convenience, eliminating the need to visit physical bank branches. On the other hand, digitalization is reshaping internal banking processes, such as customer onboarding and loan applications. Previously performed manually at bank branches, these processes are digitised, resulting in increased efficiency, reduced paperwork, and improved customer experience.

In this blog, we will examine how Digital KYC may alter the BFSI industry. You will have an understanding of the influence that Digital KYC has had on the BFSI sector as well as its promise for the future of banking by the time you have finished reading this blog post.

What is Digital KYC or eKYC?

Digital KYC, or eKYC (Electronic Know Your Customer) is a way to verify the identity of an individual online. Unlike the paper-based KYC process, where the users submit the hard-copies of their ID proof documents, DKYC allows them to directly upload the digital copies of Aadhaar card, voter ID card, PAN card or other PoI and PoA to the bank’s portal. The same can be done on a live video call to do a liveliness check as well,

Digital KYC empowers these individuals by allowing them to establish their identity and initiate banking relationships remotely through digital channels such as mobile phones.

Types of Digital KYC

The contemporary era of technological advancement has transformed conventional operations across numerous sectors, including the banking and financial industries.This transformation is most evident in Know Your Customer (KYC) processes, which have evolved from paper-based methods to highly digitalized solutions. Digital KYC has emerged as a key tool in client onboarding, ensuring adherence to regulatory compliances and preventing identity theft and financial fraud.To elaborate on this, we dissect the common types of digital KYC processes below.

Online KYC Form

• Process: Clients must fill an online KYC form, providing all required personal and identification details.
• Signature: After everything is finished, there is a requirement for a signature, which may be executed in one of two ways:
  • Physical: Print the form, sign, and mail it to the organization’s postal address.
  • Digital: Apply a digital signature to the online form and submit it electronically.

Video-Based KYC

Video KYC is one of the most popular methods to do KYC for the banks and other financial institutions.This technologically advanced KYC method involves extensive audio-visual interaction.

• Registration: The process begins with service sign-up, followed by a prompt for video KYC verification.
• Link: A text or email link is sent to the client to initiate the process.
• Verification: A designated executive captures a live image of the applicant to do a liveliness check and verifies necessary documents such as a PAN card or Aadhaar card on the video call.
• Geotagging: The location of the person is confirmed via geotagging.
• Status: Upon completion, clients receive an update on their KYC status within a few days.

OTP-Based KYC

The OTP-based KYC is widely used to open digital wallets or online bank accounts.

• Details: Clients input basic information and navigate to the Aadhaar e-KYC tab.
• Aadhaar: After entering their Aadhaar number, an OTP is sent to the linked mobile number.
• OTP: The KYC process concludes once clients enter the received OTP.

To sum up, these digital KYC methods have significantly streamlined the KYC process, enhancing efficiency and ensuring regulatory compliance. Organisations and clients must familiarise themselves with these digital procedures, ensuring adherence to the relevant regulations.

Enhancing Customer Experience Through BFSI ID Verification Automation

Significant progress has been made in the Banking, Financial Services, and Insurance (BFSI) industry as a result of the use of low-code automation, digital KYC solutions, and electronic Know Your Customer procedures. This shift towards technological integration transforms the traditional customer onboarding process into a more seamless, user-friendly experience.

The Role of Automation and Digital KYC in BFSI

Automation has played a crucial role in structuring various operations within the BFSI sector, particularly in identity verification. Banks have been leveraging ID verification automation to orchestrate data across diverse systems efficiently. It allows for the processing and consolidation of data into one secure and easily accessible location, ultimately accelerating processes like commercial lending and onboarding.

An essential part of this automation process is digital KYC, or eKYC, which can involve using Aadhaar eKYC online. A digital KYC solution provides bank employees with a comprehensive 360° view of a customer’s KYC lifecycle. This holistic understanding enables real-time responses with minimal friction, ensuring a smoother customer journey.

Creating a Competitive Edge

Organisations constantly seek a competitive edge over their peers in the rapidly evolving financial landscape. The fusion of automation and digital KYC verification techniques offers this advantage, allowing institutions to improve their customer experience significantly. At the same time, it ensures adherence to essential fraud mitigation strategies and regulatory standards, striking a balance between user experience and compliance.

Conclusion

The digital landscape has significantly evolved, propelling the BFSI sector into an era of digital transformation. With digital KYC and eKYC procedures, digital customer onboarding and security measures have been revolutionised, offering clients convenience and efficiency. Automation has also streamlined internal processes such as identity verification and compliance, providing employees with a comprehensive view of a customer’s KYC lifecycle. Amid rapid technological advancements and the incessant pursuit of a competitive edge, organisations must balance offering enhanced customer experience and adhering to regulatory standards. Ultimately, the integration of digital KYC, automation, and identity verification is reshaping the BFSI sector and redefining the future of banking.

The Prevention of Money Laundering Act (PMLA) is a comprehensive law that aims to prevent money laundering and terrorist financing in India. The PMLA has been amended several times over the years, and the latest amendments, which came into effect on May 3, 2023, & May 9, 2023, have significant implications for accounting professionals in India.

Under the new amendments, accounting professionals are now considered to be “reporting entities” under the PMLA. This means that they are required to comply with certain AML/CFT requirements, including:

1. Identifying and verifying the identity of their clients
2. Keeping records of all financial transactions
3. Reporting any suspicious transactions to the Financial Intelligence Unit of India (FIU-IND)

The new amendments also clarify which activities carried out by accounting professionals are considered to be “financial transactions” for the purposes of the PMLA. These activities include:

1. Managing client money, securities, or other assets
2. Managing bank, savings, or securities accounts
3. Organizing contributions for the creation, operation, or management of companies
4. Creation, operation, or management of companies, limited liability partnerships, or trusts, and buying and selling of business entities
5. Buying and selling of any immovable property
6. Acting as a trustee, nominee shareholder, director, formation agent, secretary, or partner for a company or LLP
7. Providing registered office or business address services

It is important to note that not all transactions performed by accounting professionals will come under PMLA scrutiny. For example, transactions that are carried out as part of any agreement of lease, sub-lease, tenancy, or any other agreement or arrangement for the use of land or building or any space and the consideration is subjected to deduction of income-tax as defined under section 194-I of Income-tax Act, 1961, are not considered to be “financial transactions” for the purposes of the PMLA.

The new AML/CFT requirements for accounting professionals are significant and will have a major impact on the way that they conduct their business. Accounting professionals who fail to comply with these requirements could face significant penalties, including fines of up to ₹1 lakh per transaction.

What does the notification mean for accounting professionals?

The new AML/CFT requirements for accounting professionals will have a significant impact on the way that they conduct their business. Accounting professionals will now need to take steps to identify and verify the identity of their clients, keep records of all financial transactions, and report any suspicious transactions to the FIU-IND. Failure to comply with these requirements could result in significant penalties, including fines of up to ₹1 lakh for each failure.

What can accounting professionals do to comply with the new AML/CFT requirements?

There are a number of things that accounting professionals can do to comply with the new AML/CFT requirements. These include:

1. Implementing a customer due diligence (CDD) process to identify and verify the identity of their clients including but not limited to PEP, Sanctions, Criminal, Defaulting Directors and Companies, Credit Default checks
2. Keeping records of all financial transactions
3. Reporting any suspicious transactions to the FIU-IND
4. Training their staff on the new AML/CFT requirements

What are the benefits of complying with the new AML/CFT requirements?

There are a number of benefits to complying with the new AML/CFT requirements. These include:

1. Reducing the risk of being involved in money laundering or terrorist financing
2. Protecting the reputation of your business
3. Avoiding fines and penalties

How can AuthBridge help?

AuthBridge is a leading provider of AML/CFT compliance solutions. We can help you understand the new AML/CFT requirements and implement the necessary controls to ensure that you are compliant. Our solutions are easy to use and can be customized to meet the specific needs of your business.

To learn more about how AuthBridge can help you comply with the new AML/CFT requirements, please get in touch with us today.

A GST number, known as a Goods and Services Tax Identification Number, is a unique identification number assigned to businesses registered under the GST regime. This number is not only an essential requirement for businesses to carry out various GST-related activities, such as collecting and remitting taxes, filing GST returns, and claiming input tax credits but also helps in the identification and tracking of businesses for taxation purposes and ensures compliance with the regulations.

With GST verification (Goods and Services Tax Identification Number verification), businesses can validate the authenticity and accuracy of GST identification numbers provided by businesses and ensure that they are operating legitimately. 

Why do businesses need to conduct GST ID verification?

• Prevent tax evasion: GST ID verification helps businesses to ensure that the entities are registered and operating legally to prevent tax evasion. It helps identify cases where entities create bogus invoices, manipulate transaction values, or engage in fraudulent activities to evade taxes. The authenticity of the GST number ensures that it corresponds to the legitimate entity. 

• Identity theft and misuse: Verifying GST IDs helps detect cases of identity theft and misuse, where fraudsters use someone else’s GST identification number to carry out illegal transactions. It ensures that the GST ID’s registered owner is involved in the transactions.

• Eliminate fake dealer fraud: With GST ID verification, businesses can filter out ‘phantom dealers’ who do not exist physically but are created to issue counterfeit invoices and claim fraudulent input tax credits. Companies can prevent fictitious transactions and financial loss by validating the GST IDs.

• Ensure reliable and smoother B2B transactions: Verifying GST ID is critical in B2B (business-to-business) transactions. It helps businesses validate the GST registration status of trading entities or other third parties, setting the seal on them being reliable and trustworthy. This helps establish trust and facilitates seamless transactions within the GST framework.

• Stay compliant: GST ID verification is crucial for ensuring compliance with tax laws and regulations. By verifying the GST identification number, businesses can stay assured that the entity is registered under the GST regime and has fulfilled its obligations, such as filing tax returns and paying taxes.

• Filter out non-existent businesses: GST ID verification helps identify businesses that portray themselves as registered entities but, in actual fact, either do not exist or are not registered under GST. It prevents non-existent businesses from participating in the GST system and committing fraud.

Summing up, GST ID verification is essential for maintaining the integrity of the GST system, preventing tax evasion, promoting compliance, and facilitating seamless business transactions within the GST framework.

Using GST Verification API for Fast and Secure Vendor Onboarding

The GST Verification API is useful for businesses and individuals who want to verify the GST registration status of a company before entering into a transaction with them. Businesses can also use it to verify the GST registration status of their suppliers and customers and prevent fraudulent activities like identity theft, tax evasion, fake transactions, phantom dealers, etc. The API typically accepts the GSTIN as the API request and responds with validated data such as the GSTIN, Business Name, Constitution of Business, Address, etc.

Leveraging the GST verification API helps businesses with faster onboarding, scalability, and smooth KYC verification with easy integrations. Businesses can set up automated workflows and perform bulk GSTIN verification in real-time.

Why AuthBridge’s GST Verification API?

With AuthBridge’s GST Verification API, you can validate the authenticity of GST numbers in real-time and onboard genuine and compliant business partners while being assured of the industry’s fastest onboarding turnaround time. The plug-and-play APIs help you digitize and scale your operations with easy-to-activate, simple-to-use data exchange mechanisms.

With our GST Verification APIs, you can get:

• GSTIN Active Status: Enter the provided GSTIN number and verify if the provided account is active and valid.
• GST Filing Details: Verify GST numbers, Status, Taxpayer types, and state bifurcation.
• Credibility Analysis: Dig deeper with details like mode of filing and return type bifurcation for further analysis.

Types of GST Verification APIs and their working:

• Know Your GST: Fetches all the GST numbers registered to a PAN card
• PAN-GST linkage: Fetches all the GST numbers registered on a PAN card
• GSTIN View and Track Return: Fetches GST return of the person/entity in a given financial year
• GSTIN TAXPAYER: Fetches GST return of the entity in a given financial year

You can choose from different types of modes as per your business requirements.

Simplify your compliance journey with our robust GST API, assuring seamless integration with your existing workflows. AuthBridge’s GST Verification API helps you validate GST IN in bulk in real time and assures you of the industry’s fastest onboarding TAT.

Get in touch with our solution expert, or email us at sales@authbridge.com  to learn more. Book a free consultation today and help us understand your requirements in detail.