Global financial institutions are faced with a growing need to "know" - identify and authenticate - their customers, to forestall fraud losses, the funding of terrorism, money laundering, and tax evasion. Failure to comply with allowable identification of the institutions customers can supervene in monetary losses, fines, and bad publicity.
Current Id Verification Practices at Financial Institutions
Financial institutions typically verify Id for the following types of transactions:
- Account Opening: The Patriot act initially required institutions to preserve a copy of the Id presented while the account opening. This was subsequently reduced to requiring only the recording of key facts proving that Id was verified (e.g. Driver's license number). While it may suffice to note the Id number, a easy clerical error, such as transposing numbers may invalidate the proof of the Id verification. Capturing the Id card while the account occasion process confirms that the Id was verified, and opens the door for good subsequent interactions with the customer. Possibilities include: a) Adding the photo Id to a bank-issued debit or reputation card, without the need for photo capture equipment. Small photo Ids are used by warehouse clubs in combined member/credit card applications. B) Showing the Id/photo, personal characteristics, and signature to the teller while a transaction to reduce Id fraud.
- Routine Transactions: Machine-readable identification cards (Id cards, credit/debit/Atm cards) can be used to identify a customer. The teller application can pre-populate facts about the customer to speed up the transaction, and to generate a more pleasant customer experience.
- Cash Withdrawals: Id cards are typically required for any cash resignation by a customer at a branch unless the resignation is at the customer's home bank and the customer is personally known to the bank employee.
- Large Transactions: Financial institutions typically require multiple pieces of Id for transactions over a determined estimate threshold, together with transfers and deposits. This is significant because losses can occur with large deposits (such as cashier's checks) where the deposit is a forgery, but only detected after the estimate was withdrawn.
- Check cashing: A modern Fdic gawk (1) showed that 7.7% Us households are unbanked, and over a quarter - 25.6 percent - of all households whether don't have a checking or savings account at all, or have a bank account but still select to rely usually on "alternative financial services" like payday lenders and pawn shops. Serving these customers can be profitable, especially in a tough economy, but require solutions to unmistakably identify a man who is not a customer of the financial institution. This business is today largely handled by check cashing stores, pawn brokers, but increasingly viewed as an occasion to bring customer into shop (such as convenience shop and gas stations) by offering check cashing services. In check cashing applications, the Id card is required for initial account registration and for subsequent check cashing transactions.
- Government Regulations: Id verification is required for any financial transaction that may require government reporting, such as in the Us cash transactions over ,000. In countries with foreign replacement regulations, transactions need to be reported by government Id number. Most foreign replacement windows require a valid Id.
Developments in Identification Documents
Post 9/11, it has become obvious that government-issued identification (passports, national Id cards, driver's licenses) were not sufficiently protected against forgery. The 9/11 Commission recommended that the U.S. Enhance its ideas for issuing identification documents, urging the federal government to set standards for the issuance of sources of identification.
For international travel, the International Civil Aviation club (Icao) issues a standard for biometric passports, or e-passports. E-passports contain biometric facts on the passport possessor on a procure chip. Communal key infrastructure is used to authenticate the data stored on the passport chip. The United States (2) and most of the Eu nations have adopted e-passports for all new passports issued.
Passports are only required for international travel, and are not typically used as Id in domestic commercial transactions where state-issued driver's licenses are the former identification documents.
The organize of state driver's licenses has typically been insecure and very easy to forge. The easy availability of counterfeit state Id documents creates a qoute with Id theft, and the obligation of liquor sales restrictions.
In 2005, President Bush signed the Real Id-"Improved safety for Driver's License and Personal Identification Cards" Act (3). Real Id has been controversial, with any states demanding a repeal and replacement with the proposed Pass Id act. As of January 2011, agency of Homeland safety issued a waiver of the deadline, but states must be in full yielding by May 2011.
In addition to Real Id, Michigan, New York, Vermont, and Washington are issuing Enhanced Driver's Licenses (Edl) (4). Edl's furnish proof of identity and U.S. Citizenship, are issued using a procure process, and contain technology that makes travel easier. Edls are an alternative document to comply with travel rules under the Western Hemisphere travel Initiative (Whti) for entering the United States from Canada, Mexico, or the Caribbean through a land or sea port, in addition to serving as the permit to drive. Michigan, New York, Vermont, and Washington issue Whti compliant documents.
Despite the opposition to Real Id, most states are implementing new driver's licenses and state Id cards that contain enhanced safety features:
- Magnetic stripes - magnetic stripes have been the main formula for storing facts on a credit/debit/Id card. They are not very secure, but are usually retained for compatibility with a large installed base of equipment.
- 2-D barcodes. Edls require a Machine-Readable Zone (Mrz) or barcode as backup to the Rfid. Many states are adopting 2-D barcodes in basic driver's licenses. 2-D barcodes used in Ohio and Georgia driver's licenses can store more data, and data can be protected with encryption or digital signatures.
- Radio Frequency Identification (Rfid) chips. Rfid is used for Enhanced Driver's Licenses and the Trusted Travelers Programs (Nexus, Sentri, and Fast).
- Ultra Violet Zones. Uv zones contain imperceptible symbols that light up only in the nearnessy of Uv light. These are difficult for counterfeiters to copy.
- Microprint. Microprint on driver's licenses prevents forgery. As with bank notes, microprint can be recognized with magnifiers and high resolution imaging devices and make counterfeiting more difficult.
- Color and positioning of possessor photograph. As with banknotes, color patterns and placement are used to decree forgeries.
Applications of Id Card Imaging
The availability of scanners and software to capture Id card magnetic stripes and images open opportunities for two levels of utilization of the Id card images:
Archival warehouse of Id card images provides a exact proof that Id cards were presented. As noted earlier, they can furnish levels of safety against Id theft by displaying images of the Id holder. Even a easy application of recognition technologies (comparing facts from the card text, magnetic stripe, and barcode) will detect many base forgeries. Storing front/rear images of Id cards furnish proof that the bank employee complied with the Patriot Act, obtaining the Id of a new account holder.
Authentication takes the Id verification to the next level. Authentication solutions offer an automated coming to Id verification, alerting the user of possible risk factors, forgeries, and expired Id cards.
Advanced Id detection systems (see example: advancediddetection.com), typically contain a color/high resolution scanner combined with software to authentic Id cards. Id authentication solutions
- Scan the Id in color, with high resolution
- Read barcodes and magnetic stripe data
- Verify infrared patterns
- Cross-check facts in clear text, barcode and magnetic stripes
- Warn if the Id card is expired, a man is under legal age, etc.
Automated authentication systems are used, for example, in liquor shop and restaurants to avoid sales to minors. It is exciting to note that the communication safety supervision (Tsa) has not implemented automated authentication on a wide scale. Tsa has standard bids for systems, but so far has puny Id authentication to office training and hand-held Uv lights.
Application of Id Scan/Archive and Authentication in Financial Institutions
Most teller stations in financial institutions are adequate with a validation/receipt printer, a Pc, monitor and keyboard. More developed institutions deploy cash dispensers, cash recyclers, coin recyclers, and signature/Pin pads.
Check image capture has moved largely from centralized proof/reader/sorter operations to branch capture. A majority of financial institutions have implemented branch capture (est. 68% of branches) at the back counters. Back counter capture eliminates the "prime pass" but does not eliminate most of the back-office check processing tasks. It offers few fraud arresting opportunities - by the time the item is captured the man will have left the branch.
Fewer but more technologically developed institutions have implemented check capture at the teller. Implementations of teller capture are growing rapidly in 2010/2011 with many major regional institutions adopting teller capture.
Unfortunately, current teller scanners are not marvelous for Id capture, and even less for Id authentication
- First generation check scanners were oriented towards the "lowest base denominator", 200 dpi bi-tonal images, which may be adequate for check image replacement but not well marvelous for Ids.
- The installed bases of devices have a u-track organize that cannot process stiff items such as Ids.
Teller scanners are designed for a five year life cycle, but with declining check volumes will last 7-10 years or longer. It is therefore significant for the industry to ensure that the next generation teller scanner is more versatile to protect the ample speculation required to implement teller capture.
The currently ready free-standing solutions for Id authentication are not well-suited for branch banking, because
- Id authentication solutions are not integrated with other banking applications
- Free-standing Id authentication solutions are high-priced and would consume significant teller workspace.
It makes much more sense to use teller check scanners for Id capture. To enable time to come Id scan/authentication applications, a favorable teller scanner must offer
- A straight track for stiff Id cards. Since puny footprint and the need of 100-item hoppers and stackers require a u-shaped design, Id cards must be scanned using a "by-pass feeder" that enters still items after the bend, but before the front/rear cameras.
- A resolution of at least 300 dpi, with 256 gray level image capture.
- An integrated magnetic stripe reader.
The next generation of check scanning devices will allow institutions to capture Id images for
- Archival warehouse of proof that the convention validated the Id
- automated capture of customer facts (name, address, age, sex) for new account occasion or time to come marketing of unbanked / competitor prospects.
- additional logon safety by authenticating the teller using the teller employee Id card.
- Faster teller assistance by automatically occasion the customer account when an Id or credit/debit card is captured -without an extra Pc peripheral device. This is generally used in teller operations in international banks.
- Recoding of Id images for display at teller workstations to forestall withdrawals with stolen Id
- A level of authentication supported by 300 dpi grey-scale images, such as decoding 2-D barcodes, and matching Id card and account data with barcodes and magnetic stripe information
- Potentially adding Id pictures to bank-issued Debit/Atm cards, a convention successfully used by warehouse clubs for combined membership/credit cards, without additional photo equipment.
Application of Id Scan/Archive and Authentication in Alternate Financial Services Channels
Alternative financial services channels furnish services that are mostly targeting the unbanked/under-banked population. Alternate financial services are in case,granted by pawn brokers, check cashing stores, pay day lenders, gas station stores, casinos, convenience stores, and even prisons. A modern Wall street Journal description (5) ] lamented that the 2009 reputation Card (Card responsibility responsibility and Disclosure) Act "pushed more Americans outside the banking system" in the name of buyer protection.
Many alternate financial transactions are conducted on financial self-service kiosks. Kiosk integrator organize devices with a wide array of features: Id card readers, debit/credit card readers, check acceptors, cash dispensers and acceptors, cameras, and even money order and store value card printers.
Since these customers typically do not use a bank card as the Id or debit/credit card, the driver's license becomes the former identification tool. The following is an example of an application implemented at convenience shop of a gas station chain with the Cts Sb50E module in a self-service kiosk:
- customer registers by inserting the driver's license. The Id is scanned, stored, authenticated by software, and returned to the customer.
- The customer is registered using facts from the Id (clear text, magnetic stripe and barcode).
- The customer feeds in the check.
- The Id and photo/video of the customer is used for approval by a human operator at a central location. The operator accepts the check and it is endorsed, stamped and retained in the device, or rejected and returned to the customer.
- The kiosk dispenses cash, a stored value card, or a money order (minus a commission).
Financial self-service kiosks are funded by transaction fees, but are often deployed as a marketing tool to bring customers into the convenience store.
Future Technology Advancements - Uv and Color Imaging
While color images are standard in most imaging applications, they have not been widely adopted in Us check processing. But in international banking, the use of color imaging and Uv is growing rapidly.
- Asian applications require higher-resolution color images to authenticate "chops" - seals that function as signatures.
- Central banks in India (6) and Latin America are establishing check standards that contain Uv zones to forestall fraud. The new preserve Bank of India Check Truncation ideas Cts-2010 (7) features contain use of watermark and printing of bank logos that are only illustrated with ultra violet images.
As a result, we will see advancements in check scanner technology, together with Uv and color image capture for check capture and authentication. Color / Uv image capture will offer the occasion to additional Enhance the power of Id authentication.
1) ]Fdic National Household Survey
2) Bureau of Consular Affairs, U.S. agency of State
3) Us agency of Homeland safety - Real Id Final Rule
4) Us Customs and Border safety Enhanced Drivers License website
5) Wall street Journal, Jan.4 2011, Todd Zywicki, Dodd-Frank and the Return of the Loan Shark
[6) Rbi prescribes enhanced safety norms for checks- Indian bank org
7)Reserve Bank of India Cts 2010 standard for cheque forms - specifications
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