The standard Know Your Customer (KYC) check requires obtaining Proof of Identity (PoI) and Proof of Address (PoA). Businesses request these to establish user identity as part of their Anti-Money Laundering (AML) obligations. Let’s get into the finer details of PoA and when it’s mandatory for businesses to gather it.
What is a Proof of Address?
Proof of Address (also known as Proof of Residence) is evidence that a user truly resides at their claimed address. The conventional approach to PoA is collecting documents requiring manual or semi-manual review, such as utility bills or bank statements.
PoA ensures that businesses can communicate effectively with customers or clients, enabling them to send important documents, bills, statements, or legal notices to the correct address. It also allows companies to check whether a client comes from a high-risk country, which can be necessary for compliance purposes.
PoA is a requirement in most jurisdictions. This typically obligates financial services, fintechs, payment and e-money institutions, and other similar businesses to verify it. Accordingly, clients need to provide documents establishing their address when registering with such services or when performing a transaction that exceeds a certain amount (usually specified by AML laws).
What is accepted as Proof of Address?
There’s no definitive list of documents that can be accepted as PoA. Yet, there are certain documents that typically get used as such. Here are some of the most common examples:
- Bank statements
- Utility bill for gas, electricity, water, internet, etc.
- Letters from a recognized public authority or public servant/any government-issued correspondence
- Current lease agreement with signatures of the landlord and the tenant
- Credit card statements
- Employer’s certificate for proof of residence
- House purchase deed
Passports, IDs, and driving licenses can be used to establish PoA—however, in some jurisdictions, it’s forbidden to use the same document to establish both proof of identity and PoA.
What is not an acceptable document for Proof of Address?
However, companies generally shouldn’t accept documents that are:
- Past their validity period
- Invoices for purchases
- Library cards
- Photocopies of a document
Issues with Proof of Address
Proof of Address is often not readily available, as people change their residences frequently. Therefore, it may take some time and effort for businesses to obtain it.
In addition, some proof of address documents have no security markings or photos, and therefore can easily be forged. Besides, many of these documents are non-standardized and may require additional checks, which leads to longer onboarding times and, consequently, lower pass rates.
Proof of Address best practices
Below you’ll find the typical steps to PoA verification:
- Accurately inspect the document for common patterns of graphic editing and other types of fraud
- Check if the document is valid (the validity period may vary depending on the jurisdiction)
- Make sure that the document has the person’s full name on it
- Check if the document contains the user’s claimed address (the more specific the better) and confirm its existence through search engines. For instance, if the applicant resides in an apartment building but does not provide a unit number, the compliance officer must request them to specify it.
The traditional approach to verifying PoA requires manual intervention, leading to issues such as lengthy verification and human error. That’s why the best way to speed up PoA, increase pass rates, and keep both regulators and customers happy is to employ an automated PoA verification system that can analyze a variety of documents from all parts of the world. Such systems will be able to quickly verify users, detect altered images, and work around the 24/7.
Sumsub offers rapid and automated PoA verification in under a minute. Effortlessly onboard users with document-based proof of address or opt for geolocation and non-doc methods for verification. Ensure full compliance, skyrocket conversion rates, and eliminate fraud with advanced automated checks.
Suggested read: Documentary vs Non-Documentary Verification (2024)
FAQ
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What is meant by Proof of Residence?
Proof of Address (also known as Proof of Residence) is evidence that a user truly resides at their claimed address. The conventional approach to Proof of Address verification is collecting documents requiring manual or semi-manual review, such as utility bills or bank statements. This ensures that businesses can communicate effectively with customers or clients, enabling them to send important documents, bills, statements, or legal notices to the correct address.
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What is the easiest Proof of Address method?
The easiest Proof of Address method would involve utilizing universally-held documents, such as passports and IDs. Yet, these documents can be accepted only if they contain an address. In some jurisdictions, it’s forbidden to use the same document to establish both proof of identity and PoA.
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What is the most common Proof of Address?
Some of the most common examples that count as valid proof of address are:
- Bank statements
- Utility bills for gas, electricity, water, internet, etc
- Letters from a recognized public authority or public servant/any government-issued correspondence
- Current lease agreement with signatures of the landlord and the tenant
- Credit card statements
- Employer’s certificate for proof of residence
- House purchase deed
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Is a bank statement Proof of Address?
Yes, it is.
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Proof of Address vs Proof of Residence
Proof of Address and Proof of Residence are interchangeable terms.
