Proof of address (PoA) has a vital role in identity verification. Companies request proof of address documents as part of the due diligence procedure and verification obligations regarding Anti-Money Laundering (AML) compliance. Typically, a customer verifies their identity by taking a photo of their ID document.
Despite that, there are cases when businesses are obliged to dig deeper and ask their clients to provide proof of address information. This is where the challenges begin. So, what documents are accepted as proof of address, and when is it mandatory to proceed with PoA check? Keep on reading to find out.
What is Proof of Address?
Proof of address is exactly what it sounds to be. It proves that the customer who provided the document lives in the registered location. For instance, financial institutions ask clients to verify their identity and provide proof of address if they want to open a bank account. That’s why PoA measures keep customers’ funds and identities safe.
Once proof of address documents, such as bank statements or utility bills, are collected, they require manual or semi-manual review. This way, businesses that fall under AML regulations can prevent restricted residents from accessing their services more efficiently – all thanks to Address Verification.
When Should Businesses Use Proof of Address?
Proof of address verification is an obligatory requirement for many financial services, such as crypto, e-money institutions, banks, or fintech firms.
As part of the compliance process specified by AML laws, customers must provide PoA documents as evidence to prove their residential address when:
Performing transactions. In cases when customers exceed a specified threshold, which is determined by AML obligations.
Registering for financial services. During the onboarding process, the client can be asked to provide an extra proof of address document as part of the AML compliance process.
Restricting account openings. There are regional compliance requirements, which determine restrictions for customers living in high-risk regional areas and countries. Checking their proof of address ensures compliance and prevents fraud.
Additionally, there are other benefits to proof of address verification. Finding out where a person lives helps when a company wants to send physical documents, especially in legally challenging situations. For example, when the bank is obliged to contact the customer physically.
What Documents are Accepted for Address Verification?
Proof of address practices can differ, and each company has specific requirements. The most common examples of PoA include:
- Utility bills (electricity, water, gas, etc.)
- Tax bills
- Bank statements
- Credit card statements
- House purchase deeds
- Tenancy agreements
- Employment letters
Keep in mind that most organizations will not accept bank statements or utility bills that are not older than 3 months, as it is the general period for relevance.
Statements can be accepted from credit unions, building societies, and banks. Credit card statements are typically considered valid proof of address documents if they are recent.
Other documents also have address verification data specified on them. They can be accepted as alternative proof of address documents:
- ID card
- Passport
- Driver’s license
- Residence permit
- Social security card
Some key facts to remember:
Bear in mind that some jurisdictions do not allow using the same document for both identity and address verification.
Most PoA documents (ID cards, passports, or driving licenses) hold address data. Despite that, there are some exceptions.
Persons younger than 18 must provide a valid proof of address document in their parent’s name.
How to Check Proof of Address Documents?
Specialists typically review all submitted proof of address documents manually to ensure accuracy. But it’s not as easy as it sounds since fraudsters tend to forge PoA documents, especially if they don’t have security markings.
Here’s a standard example of reviewing a proof of address document:
Step one. Inspect the PoA document’s issuing date and check if it’s valid.
Step two. Check if the document contains the person’s name and surname.
Step three. Look for common fraud patterns to detect fraudulent alterations. For more details, check our guide on how to spot fake documents.
Step four. This is the most important part. Carefully examine the document’s address and authenticate its legitimacy using a search engine. If the client doesn’t provide full address data on their PoA document, they must specify it to complete their address.
Current Proof of Address Practices
As technology evolves, new services come into the market. Proof of address isn’t an exception. To speed up onboarding and simplify compliance, modern businesses tend to switch from complicated manual proof of address methods to swift automated Address Verification services.
So how does iDenfy verify proof of address? We explain it below.
Address Verification
iDenfy’s in-house experts manually extract the address information from the identity document.
As an optional step, iDenfy’s specialists can cross-check the address across databases to identify if the address is legitimate.
Here’s what the Address Verification flow looks like:
- The client uploads the document.
- iDenfy’s specialist manually extracts the address.
- The specialist compares the address with the partner’s provided address via API.
As the fourth step in the proof of address verification, our team can perform an additional Address Lookup procedure to validate the authenticity of the address.
There are four possible Address Lookup outcomes: VERIFIED – AMBIGUOUS – PARTIAL – NONE.
Direct Utility Provider Check
With the endless capabilities that technology brings us today, you can fake any proof of address document. To combat crime and prevent the misuse of fraudulent, photoshopped documents, iDenfy created a unique feature for proof of address verification.
To maximize security, you can customize the Address Verification flow and ask the user to connect to their utility provider. After the user connects to their utility provider, iDenfy’s team checks the document to ensure that it exists and captures their residential address.
Free demo alert! Learn how to ensure compliance and detect altered proof of address documents easier while providing a seamless account opening process with iDenfy’s Address Verification tool.
This blog post was updated on the 1st of February, 2024, to reflect the latest insights.
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