Why Automating Address Verification Service (AVS) is Key to Faster Onboarding
By Rudi Kesic – CEO at Verify 365
22 October 2022 – London
Yes, it’s a cliché, but nonetheless true: you never get another chance to make a first impression.
For law firms, onboarding new clients is your first opportunity to win them over and set the stage for the entire relationship going forward. Your client onboarding process needs to be as fast as possible, seamless, remote, and integrated with your case management system – giving your clients an opportunity to start their address verification and digital identity check journey anywhere, anytime, through a simple and user-friendly app that meets all the regulatory requirements from HM Land Registry, Solicitors Regulation Authority and LSAG Anti Money Laundering Guidance, which was recently approved by HM Treasury in the UK.
Clients who feel your initial digital onboarding and Address Verification Service (AVS) is too difficult or time-consuming are likely to walk away. In fact, research undertaken by Lawtech 365 indicates that 90 percent of new clients abandon manual address verification proof requirements before they are completed.
Automate Address Verification Service to reduce fraud risk
The Address Verification Service from Verify 365 is a fully automated software system that verifies if a billing address for your client matches the address linked to their debit or credit card, using an FCA-regulated Open Banking Account Information Service (AIS) check.
AVS is a widely used fraud-prevention measure in the financial sector for Card Not Present (CNP) transactions, such as online payments or point-of-sale Mail Order/Telephone Order (MOTO) payments.
In the legal sector, Verify 365’s AVS check gives you a way to check if the client who is being onboarded is the same person as the cardholder, which is more likely if the billing address details match.
How does Verify 365 AVS technology work?
When a client is requested to undertake an Anti-Money Laundering (AML) check and an ID verification (eIDV) using the Verify 365 app, the system will collect and verify their proof of address and billing address details. Then, the platform sends that data to the AIS verification check as part of the wider fraud detection mechanisms which are part of the AVS authentication algorithms.
In principle, when you use an automated AVS check, the system will check if and to what extent the billing address submitted matches the information that the bank has on file about the account holder – your client.
The response to the account information request will contain a “Verify 365 AVS Response Code” which is mapped to a raw AVS response code. When the AVS check results in a mismatch, Verify 365’s risk engine will trigger a “risk rule”, and based on the AVS response, we can configure the system to decide what to do with that client: you can accept and approve, make an exception, or decline and request further information from your client. This is all fully automated and instant.
AVS is supported for account information card checks with Visa, Mastercard, Discover or American Express. Credit card issuers in the United States, Canada, and the United Kingdom all support AVS verification requests when we send them in, however, using AVS is not mandatory for solicitors firms in England and Wales under LSAG’s anti-money laundering guidance. It is simply good practice which can save you time and money.
Automated Customer Due Diligence for Conveyancers
Know Your Customer (KYC), Anti-Money Laundering (AML), and Customer Due Diligence (CDD) regulations require verification of a client’s identity against numerous Politically Exposed Persons and Sanctions watch lists (PEPs), and public record databases, before conveyancers can open a new matter or advise a client on a property transaction. You also need to conduct ongoing due diligence for any material changes such as billing address changes, adverse media, and ongoing (daily) PEPs and Sanctions monitoring.
On a global basis, law firms spend an average of £10 billion on client onboarding and regulatory compliance, yet problems persist. These regulations have complicated client onboarding and are slowing it down to a painful crawl — frustrating potential new clients and leading to a bad first impression.
SRA penalties for non-compliance
Adding insult to injury, penalties for non-compliance can be hefty and damage your firm’s reputation in the marketplace. The number of fines against law firms, handed out by the UK’s solicitors’ watchdog, has increased six-fold over the past five years following an anti-money laundering compliance crackdown.
The Solicitors Regulation Authority (SRA), which regulates more than 11,000 law firms in England and Wales, gave out just six fines in the financial year 2017/18 compared to 37 in 2021/22.
The number of fines issued against law firms has also more than doubled each year over the past three years, from a total of seven in 2019/20, to 16 in 2020/21, and 37 in 2021/22.
Taking the complexity out of Customer Due Diligence
To solve these challenges, most law firms are now moving to technology-based, more cost-effective solutions that simplify compliance. Smart and agile technology, such as Verify 365 which provides a fraud prevention system that automates identity verification checks and billing address matches, will ensure you can open new matters more quickly and accelerate onboarding.
A majority of client onboarding problems can be eliminated or managed better if lawyers focus on automation and reduce manual intervention. It will help ensure timely completion of the process and the availability of accurate verification data.
If you don’t use automated AML checks, your solicitors practice should consider implementing an electronic platform that can provide easy-to-use software, end-to-end tools and an expandable architecture that eliminates manual tasks and enables you to adapt quickly to ever-changing SRA and FCA regulations. You also want a solution that improves the client experience across both your in-branch and remote channels. For example, Verify 365 AML software allows your clients to scan their ID and verify billing address provided with a smartphone to jumpstart the matter opening process and speed up onboarding, with the ability to engage with your clients across multiple channels, and in the manner they prefer, such as via a smartphone, or in the office.
So, what are the benefits to your law firm of embracing smart AVS and eIDV technology?
Consider that law firms and conveyancers that digitise their processes have seen significant improvements, such as an 80 percent reduction in fraud, 75 reduction percent in onboarding times, 60 percent of manual steps eliminated and increased visibility of client status during onboarding.
Leveraging AVS checks to speed compliance and client onboarding
AVS checks are fast emerging as a smart solution to ease compliance and expedite onboarding. Verify 365 technology mimics the actions your staff take while performing repetitive compliance tasks, eliminating time-consuming, error-prone manual data entry. In essence, Verify 365 creates a digital client onboarding system that works side-by-side with your lawyers and compliance officers to streamline KYC operations.
Verify 365 automatically checks a client’s background against thousands of sources –gathering, verifying, and integrating data from sites such as the UK’s Electoral Register, law enforcement agencies and credit checking companies. Verify 365 then validates all these sources simultaneously and instantly, in less than two seconds, hence improving the quality of data and reducing the time to accurately verify that a client is who they say they are.
Is there anything else I should be aware of about AVS?
Yes, it’s important to understand that AVS is not a guaranteed fraud prevention solution. Do not rely on only AVS to onboard new clients, or prevent credit card fraud, or validate a credit card transaction.
Use AVS in conjunction with other fraud detection mechanisms
Your identity verification and AML check procedure should be relying on AVS in conjunction with other fraud detection mechanisms, such as Verify 365’s ID document NFC-chip and biometric analysis, IP address verification, source of funds analytics, liveness detection and device authentication.
If you law firm works with clients globally, make sure your digital onboarding software can manage international address verification system capabilities. Do not overlook this key aspect of your anti-money laundering and fraud prevention strategy. Remember that most money laundering fraud cases occur when a client from an international address is buying a property in the United Kingdom.
Don’t leave your fraud prevention strategy to chance
Relying on your client to provide a proof of street address by email, e.g. a copy of their utility bill to address match, or just the biometrics, may not be enough.
It’s important to implement a multi-layered fraud prevention approach, including biometrics and automated address matching, to protect your solicitors firm and legitimate clients from the boom in identity and credit card fraud.
Contact Verify 365 to learn more about the latest in AVS fraud detection technology and how you can best protect your law firm.