Sep 9, 2021

Biometric authentication in banking and how it helps prevent money laundering

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Biometric authentication in banking and how it helps prevent money laundering

Facial recognition has become widespread in the financial industry as a way of verifying clients’ identities and it has taken a key role in banking, mainly because of its security and convenience for the customer. To a greater extent, biometric authentication in banking and other financial companies serves as one of the most efficient weapons to fight and prevent money laundering. 

What is biometric authentication?

Biometric authentication is the process of verifying the identity of a person through the physical characteristics that make us unique. The objective of biometric authentication in banking is to grant clients access to an online service.

Biometric authentication is based on the measurement of technical characteristics through different processes and technologies.

Probably the most widespread technology for biometric authentication in banking and other industries is facial recognition, such as our VideoID solution, or the analysis of fingerprints.

However, there are other methods for verifying users such as iris or voice identification systems, or even the analysis of behavioural claims such as gestures and handwriting. Only the combination of these latter two increases the process’ security to the level required by the European regulations eIDAS and AML established for customer identity verification in banking and other financial services.

Biometric authentication in banking through facial recognition: what software to use?

In the case of carrying out a biometric authentication process through facial recognition, the software used must be able to analyse the images captured on a recorded video.

In fact, biometric authentication for online banking can’t be done with personal photographs or selfies, since they do not meet the legal requirements according to the regulation established by the EU and are not considered as a secure identification system. 

Therefore, biometric authentication in online banking is used as a second authentication factor when a high level of security is required in operations such as product purchases or money transactions. Its main advantage is that it reduces the time required for any operation, which improves the user experience by making it faster and smoother. 

Our qualified electronic signature solution based on a video identification process that records the video end-to-end is the only electronic signature on the market that meets the highest national and European security standards.

Learn how to implement the Qualified Electronic Signature in hours in a free consultation with an expert in digital identity.

Is facial recognition for biometric authentication in banking compliant with the current legal framework?

With the rise of the digitisation of processes and biometric authentication for online banking being more relevant by the day, the EU legislation keeps placing limits and adjusting the regulations on the use of facial recognition for biometric authentication in banking and other financial services. Regulations in force that all member states of the EU must transpose into their legislative corpus.

Thus, the European Commission Regulation 2015/1502 of 8 September 2015 (eIDAS) details the minimum specifications the identification means must achieve to guarantee the security of the process, especially the ones that are taking a key role in this time such as biometric authentication in mobile banking. For this matter, it establishes different levels of security needed to guarantee the user’s identity.

eIDAS is the highest regulatory authority on electronic identification and eTrust Services and all digital identification solutions must ensure the total compliance of the process for which they are used.

Our solution of Qualified Electronic Signature based on our VideoID technology not only complies with the highest eIDAS regulations but also with the European AML5 directive on the prevention of money laundering and terrorist financing.

AML5 extends and details the use of digital identity verification technologies as an effective way to detect and prevent money laundering, even when performing biometric authentication in mobile banking or through any other channel or device.

Adjusting processes to fit the AMLD5 is an ongoing process in which many companies are immersed, so we guide our clients to adopt the regulation in record time.

Download here for free this complete guide on eIDAS and AML5

The use of facial recognition technologies in biometric authentication in banking as the main fight for money laundering

The identity verification processes have a fundamental role in anti-money laundering policies. The European regulation requires that the systems used for biometric authentication in banking, one of the main actors in the fight against money laundering, apply the Know Your Client (KYC) methodology.

Complying with KYC involves reliably verifying the identity of customers both during the underwriting and contracting processes and in the transactions that are carried out, to which banks using biometric authentication technologies plays a key role.

Together with other biometric authentication measures, facial recognition technology is an ideal tool to successfully fight money laundering. Our SmileID solution is based on the use of AI and machine learning to perform a biometric facial recognition through the analysis of the customer’s smile by a video recorded in streaming. The accuracy of this biometric authentication process makes up for the shortcomings of systems such as the selfie and prevents potential identity theft and fraud by involving the recognition of a gesture.

Use cases for facial recognition software in biometric authentication for online banking with anti-money laundering purposes

In cases as the ones that will be mentioned below such as the ones that involve biometric authentication in mobile banking, the security of their processes needs to be ensured through state-of-the-art technology for digital identity proofing.

Only banks using biometric authentication through solutions such as the Qualified Electronic Signature are able to comply with all the regulations and therefore are the only ones to truly reduce the risk of fraud.

Carrying out biometric authentication in banking through facial recognition is a much less expensive solution than technologies that require specific hardware. And it is much more convenient and seamless for both banks and customers.

Use a facial recognition system for biometric authentication in mobile banking and all your on and offline processes now:

  • Online account opening
  • Biometric access to apps 
  • As a security factor in ATM transactions with and without cards
  • Online contracting of products and services
  • Biometric authentication for customer registration
  • Streamline queues and identify customers in commercial branches

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