Income verification documents provide evidence for sources of individuals’ earnings that enable businesses to restrict the onboarding of high-risk entities.
Property, finance, and employment sectors are rapidly embracing digitization to automate their document-handling processes. Criminals simultaneously are employing advanced identity theft techniques to escape digital ID verification. Similarly, income proof forgery is another prevalent fraud trend. Companies require it to validate the source of funds, assets, and property ownership. However, fraudsters tamper with information to trick businesses and exploit illicit benefits.
Proof of earning is essential for Enhanced Due Diligence (EDD), especially for customers requesting high-value transactions. Income verification document solutions enable businesses to build secure relationships by validating sources of funds. AI-powered IDV services scan and authenticate salary proofs irrespective of their type and nature of customer employment. This blog covers how document verification systems validate income and enable secure client onboarding.
Income Official Document Verification – A Brief Introduction
In the case of manual data entry, authentication, and onboarding, businesses can face unexpected delays. While these traditional methods are prone to human error, discrepancies within the information extraction and chances of inaccurate customer verification arise. Businesses offer various types of employment such as hourly, monthly, and contract-based. Similarly, remote hiring and investments are some other types.
Depending on the nature of employment, income differs from active to passive earning. The latter refers to salaries the company pays as per decided at the end of tenure. Whereas, the former is extra revenue customers earn either through profits, stock investments, capital gains, or interests. However, in every case, businesses require income verification documents to validate customers’ sources of funds. By verifying salary slips or other earning proofs, companies can ensure they are not hiring a risk-possessed entity or exposing themselves to fraud risks.
Documents Required for Income Validation
Generally while hiring individuals, companies ask for income proof for performing identity authentication and risk assessment. During the process, institutions clarify the details and papers they require for original document verification. In the case of digital onboarding, which is the new normal, individuals can limit the hassle of carrying a bunch of papers. They can simply scan income verification documents and pass through identity authentication seamlessly.
Businesses’ requirements regarding income verification documents differ as per the nature of the work. Some can ask for an employment letter with proof of salary while others may also require bank statements and company authorization. Due to the rapid digitization of companies’ operations, there is a significant increase in information forgeries that enables fraudsters to either avail illicit employment or make malicious investments. Therefore, analyzing income verification documents with advanced IDV tools has become mandatory.
Normally, income verification documents should include crucial information such as basic salary, working hours, allowances, benefits, deductions, and annual earnings. However, individuals might also need to provide additional papers as supporting shreds of evidence. Typical proofs required for official document verification involve:
- Bank statements
- Pay stubs
- Earnings Proofs
- Tax statements
- Federal remittance returns
Requirements for Pay As You Earn (PAYE) Employees
As previously mentioned, there are different requirements for distinct natures of employment. While permanent employees provide banks, tax, and salary statements, requisites for PAYE differ. They have to provide payslips of 2 or more weeks and from the previous 8 months depending on their salary scale. Similarly, income verification documents also include earnings for the previous tax years. In case individuals worked at different locations, they need to submit proof attested by every regional authority.
Individuals with pensions or other sources of earnings should provide the following income verification documents:
- Annual Pension Statements
- Maintenance payments
- Liability Records
- Trust fund income
- State financial benefits proof (if applicable)
Requisites for Self-Employed Individuals
Individuals who are self-employed have to present different proofs while applying for government benefits, medical assistance, insurance, or other such activities. Companies with global document verification solutions can validate them in less time by limiting human error, data discrepancies, and identity theft. Freelancers pose the highest risks of fraud as no legitimate firm overlooks them.
Businesses ask for self-employed tax and income verification documents to authenticate self-employed individuals. Furthermore, bank statements including transfer details from clients and project owners also help in validating the earnings of freelancers. Not just this, companies should cross-check the income verification documents with the respective platforms where the individuals claim to be working.
Working Mechanism of the Digital Document Verification Solutions
The AI-powered company document verification solutions automate income authentication processes by deploying a variety of checks. For individuals, the scans involve real-time identification, facial recognition, and liveness detection. For income verification documents, the checks include:
- Crumbled edges
- Information tampering
- Forgery signs
- Colorspace analysis
- Template cross-check
- Data correlation
Businesses are striving to generate more revenue and retain a high employee base. For financial uplift, they are embracing digital onboarding and hiring different types of workers. However, they are facing an increase in income verification document fraud. Therefore, businesses should integrate efficient proceed authentication solutions. Hence, AI-powered IDV services come in handy for income verification document validation and ensuring risk-free company development.