In Germany, Switzerland, Liechtenstein, Estonia, and other jurisdictions with strict regulatory requirements, selfie-based solutions may not enough for AML compliance.
This leaves video identification as the most viable and sometimes the only available option for carrying out KYC in these regions.
Know Your Customer (KYC) is the process of identifying and verifying customers. Identification means gathering a customer’s personal data; verification means checking that this data is accurate. Businesses carry out KYC procedures to understand the purpose and intended nature of a business relationship or transaction, build risk profiles of their new customers and perform other due diligence measures.
Video identification, or “video KYC,” allows users to confirm their identities in a live video interview with an identification operator. This process can be performed either by a third-party service provider or by identification operators employed by the business. Video identification steps may differ based on the user’s risk profile, but usually include the video interview itself, AML screening and document. verification.
The types of entities obligated to perform video KYC differ by jurisdiction. For instance, regulatory authorities in Germany identify the following as requiring video KYC:
National AML laws often include video KYC requirements either as an obligation or as an option for high-risk customers and transactions. The jurisdictions in which video identification may be used for KYC include:
For example, video identification is a must in Germany and Estonia. In Germany, this type of verification is required during customer onboarding. The requirements and details are set by BaFin, Germany’s financial regulator. Here are some of them:
Businesses failing to comply with AML requirements may face fines, license revocation, seizure of assets, and even criminal liability.
In case you need a detailed guide on BaFin, find it here:
Below are common requirements for video identification of persons in non-face-to-face business relations. Please note that these may differ by jurisdiction.
Here is a typical step-by-step procedure:
Users should prepare the following identity documents and means of identification:
The organization/service provider should be ready with the following:
Also, it’s necessary to check the quality of connection from both sides to ensure the transmission of clear, recordable and reproducible synchronized sound and image, which is sufficient to understand the transmitted content clearly.
At the beginning of the video interview, the user provides explicit consent to the entire identification process as well as to photos or screenshots of them and their identity document being taken. This consent is recorded.
The interview process may differ depending on the regulatory requirements, but there are common steps, such as:
Users demonstrate their identity document (and other documents if needed) in front of the camera and upload them via the dashboard. The system and operator assess the document and ask to carry out additional procedures if necessary.
Document evaluation criteria:
During the video identification process, the user’s head and shoulders should be:
The user may be instructed to:
Depending on the jurisdiction’s AML rules, it may be required to record and retain the entire video identification process, including all of its individual steps. Retention of both visual and sound recordings is required in accordance with the user’s consent.
This data may be kept for several years (depending on the jurisdiction) in accordance with recordkeeping requirements.
Video KYC, while complicated, can still be smooth and comprehensible with the right solution. Sumsub covers all the regulatory requirements in a 4-step process and onboards users in just 3-5 minutes.
Sumsub’s Video Ident Process
There are two ways to use Sumsub’s Video Identification solution:
Digital video KYC is a complex procedure but it still can help businesses to onboard users remotely and securely. And even though it requires more than standard doc+selfie verification, all-in-one digital KYC solutions can ensure compliance with regulatory requirements, protect against fraud and keep conversion high.
KYC/AML regulatory compliance. Regulated industries such as banking need to ensure full compliance with local AML laws. This is to protect themselves from money laundering, terrorist financing and regulatory penalties. Digital onboarding solutions help them to manage all the requirements in a time- and cost-effective manner.
Fraud protection. Online businesses in the E-commerce, peer-to-peer and car sharing sectors are constantly combating fraud. Fraudsters use fake documents and stolen identities to access such services with malicious intent. That’s why more and more businesses count on video identification solutions to ensure that only authorized and real customers are entering their services.
Conversion rate. Businesses are very concerned about losing customers during the onboarding process. Fortunately, video KYC is much friendlier than the manual alternative.
Businesses can decide which users get video-verified according to their risk profile and transaction volumes. This way, they can choose between standard KYC to maximize their pass rates or video KYC if it is legally required or risks are high.
It’s difficult for businesses to find a globally-scalable solution that works for both video and document-based checks. The options might be expensive, bad for conversion, or not flexible enough to set up different kinds of checks for different user groups.
Sumsub’s video identification solution isn’t just a tool for automated video checks. It’s a ready-made system that combines compliance expertise, a powerful technological platform, and trained operators.