IBAN Verification

The process confirms the bank account is valid and belongs to the account holder. IBAN verification systems typically verify the structure automatically, by recalculating the check digits and confirming the bank and country code are legitimate. The results show whether the IBAN is valid, sometimes providing extra details like bank and country information, depending on the concrete solution.

The IBAN can be collected from the user by asking them to enter it manually or by sending them questionnaires as part of a bigger onboarding workflow. Some solutions, like iDenfy, connect to the user’s bank directly, streamlining access to banking information, including IBAN, transaction history, etc. The check runs in the background without affecting the client during onboarding. 

A proper IBAN verification process enhances KYC, or Know Your Customer verification, by cross-checking details collected during onboarding and open banking, when the user is asked to both upload their ID document and connect to their bank’s portal. 

For example, iDenfy’s Bank Verification solution can do this, verifying not only that the IBAN is valid but also that it actually belongs to the same customer. This automates fraud prevention without requiring complex steps from the user that require manual input. 

The length of an IBAN depends on the country, even though its structure is standardized. For example, France has 27 characters (for instance, “FR14 12345 67890 12345678901 06”), while Spain has 24 characters.  

IBANs are assigned by banks under the supervision of national banking authorities, which also define their standardized format. In general, each country follows the ISO 13616 standard, ensuring IBANs are unique and accurate. For example, in Germany, banks generate IBANs according to Bundesbank guidelines, while the UK follows protocols set by the British Standards Institution.

Extra identifiers, especially when collected and catered to a specific industry, in this case, finance, help better assess risks and enhance the company’s risk assessment measures. This is beneficial for complying with KYC and Anti-Money Laundering (AML) requirements, streamlining operations like user onboarding, document checks, and IBAN verification, which all boil down to automatically confirming the authenticity of bank accounts and lowering the risk of fraud while protecting assets and overall financial integrity.