ID Authentication In Banking Applications

Global commercial enterprise institutions are bald-faced with a growing need to "know" - identify and authenticate - their clients, to prevent fraud losings, the funding of terrorism, money laundering, and tax evasion. Failure to follow with proper identification of the institutions clients can result in medium of exchange system losings, fines, and bad publicity.

Current ID Verification Practices at Financial Institutions

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Financial institutions typically verify ID for the following types of dealings:

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1. Account Opening: The Patriot act first required institutions to retain a copy of the ID given during the account opening. This was laterly reduced to requiring only the transcription of key information proving that ID was verified (e.g. driver's license number). While it may do to note the ID number, a simple clerical error, such as transposing numbers may invalidate the proof of the ID confirmation. Capturing the ID card during the account opening process confirms that the ID was verified, and opens the door for better later interactions with the client. Possibilities admit: a) Adding the pic ID to a bank-issued debit or credit card, without the need for pic capture equipment. Small pic IDs are used by storage warehouse clubs in combined member/credit card applications. b) Showing the ID/pic, individualal characteristics, and signature to the teller during a dealing to reduce ID fraud.
2. Routine Transactions: Machine-readable identification card game (ID card game, credit/debit/ATM card game) can be accustomed identify a client. The teller application can pre-populate information about the client to speed up the dealing, and to create a more pleasant client experience.
3. Cash Withdrawals: ID card game are typically required for any cash withdrawal by a client at a branch unless the withdrawal is at the client's home bank and the client is individualally proverbial to the bank employee.
4. Large Transactions: Financial institutions typically require four-fold pieces of ID for dealings over a certain amount threshold, including transfers and deposits. This is necessary because losings can occur with large deposits (such as cashier's checks) where the deposit is a forgery, but only observeed after the amount was withdrawn.
5. Check cashing: A recent FDIC survey (1) showed that 7.7% US households are unbanked, and over a quarter - 25.6 pct - of all households either don't have a checking or nest egg account at all, or have a bank account but still choose to depend on a regular basis on "alternative commercial enterprise services" like payday lenders and pawn shops. Serving these clients can be profitable, especially in a tough economy, but require solutions to positively identify a individual who is not a client of the commercial enterprise institution. This business is now for the most part handled by check cashing stores, pawn brokers, but increasingly viewed as an chance to bring client into stores (such as convenience stores and gasolene Stations) by offering check cashing services. In check cashing applications, the ID card is required for first account registration and for later check cashing dealings.
6. Government Regulations: ID confirmation is required for any commercial enterprise dealing that may require government reporting, such as in the US cash dealings over $10,000. In countries with foreign exchange regulations, dealings need to be according by government ID number. Most foreign exchange windows require a valid ID.

Developments in Identification Documents

Post 9/11, it has become evident that government-issued identification (passports, national ID card game, driver's licenses) were not comfortablely protected against forgery. The 9/11 Commission well that the U.S. improve its system for issue identification documents, urging the federal government to set standards for the issue of sources of identification.

For international travel, the International Civil Aviation Organization (ICAO) issues a standard for

biometric passports

, or e-passports. E-passports admit biometric information on the passport bearer on a secure chip. Public key infrastructure is accustomed 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 dealings where state-issued

driver's licenses

are the primary identification documents.

The design of state driver's licenses has typically been insecure and very easy to forge. The easy accessibility of counterfeit state ID documents creates a problem with ID stealing, and the enforcement of liquor gross sales restrictions.

In 2005, President Bush signed the Real ID-"Improved Security for Driver's License and Personal Identification Cards" Act (3). Real ID has been controversial, with several states hard-to-please a repeal and replacement with the planned PASS ID act. As of January 2011, Department of Homeland Security issued a release of the deadline, but states must be fully compliance by May 2011.

In addition to Real ID, Michigan, New York, Vermont, and Washington are issue Enhanced Driver's Licenses (EDL) (4). EDL's provide proof of identity and U.S. citizenship, are issued exploitation a secure process, and admit technology that makes travel easier. EDLs are an alternative document to follow 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, additionally to serving as the permit to drive. Michigan, New York, Vermont, and Washington issue WHTI manageable documents.

Despite the opposition to REAL ID, most states are implementing new driver's licenses and state ID card game that admit exaggerated security features:

• Magnetic grade insignia

  - magnetic grade insignia have been the main method for storing information on a credit/debit/ID card. They are not very secure, but are commonly preserved 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 encoding 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 invisible symbols that light up only in the presence 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 bearer picgraph.

  As with banknotes, color patterns and placement are accustomed determine forgeries.

Applications of ID Card Imaging

The accessibility of scanners and package program to capture ID card magnetic grade insignia and images open opportunities for two levels of use of the ID card images:

Archival storage of ID card images

provides a definite proof that ID card game were given. As noted earlier, they can provide levels of protection against ID stealing by displaying images of the ID bearer. Even a simple application of recognition technologies (comparing information from the card text, magnetic stripe, and barcode) will observe many common forgeries. Storing front/rear images of ID card game provide proof that the bank employee complied with the Patriot Act, obtaining the ID of a new account bearer.

Authentication

takes the ID confirmation to the next level. Authentication solutions offer an automatic approach to ID confirmation, alerting the user of potential risk factors, forgeries, and invalid ID card game.

Advanced ID observeion systems (see example: advancedidobserveion.com), typically admit a color/high resolution scanner combined with package program to authentic ID card game. ID authentication solutions

• Scan the ID in color, with high resolution
• Read barcodes and magnetic stripe data
• Verify infrared patterns
• Cross-check information in clear text, barcode and magnetic grade insignia
• Warn if the ID card is invalid, a individual is under legal age, etc.

Automated authentication systems are used, for example, in liquor stores and restaurants to avoid gross sales to minors. It is absorbing to note that the Transportation Security Administration (TSA) has not enforced automatic authentication on a wide scale. TSA has accepted bids for systems, but so far has limited ID authentication to office training and hand-held UV lights.

Application of ID Scan/Archive and Authentication in Financial Institutions

Most teller Stations in commercial enterprise institutions are equipped with a validation/receipt printer, a PC, monitor and keyboard. More advanced institutions deploy cash dispensers, cash recyclers, coin recyclers, and signature/PIN pads.

Check image capture has affected for the most part from centralized proof/reader/sorter operations to branch capture. A majority of commercial enterprise institutions have enforced 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 bar opportunities - by the time the item is captured the individual will have left the branch.

Fewer but more technologically advanced institutions have enforced check capture at the teller. Implementations of teller capture are growing chop-chop in 2010/2011 with many major regional institutions adopting teller capture.

Unfortunately, current teller scanners are not suited for ID capture, and even less for ID authentication

• First generation check scanners were headed towards the "last-place common denominator", 200 dpi bi-tonal images, which may be comfortable for check image exchange but not well suited for IDs.
• The installed bases of devices have a u-track design 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 essential for the industry to ensure that the next generation teller scanner is more versatile to protect the substantial investment required to implement teller capture.

The presently available 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 valuable teller workspace.

It makes much more sense to use teller check scanners for ID capture. To enable future ID scan/authentication applications, a suitable teller scanner must offer

• A straight track for stiff ID card game. Since limited step and the need of 100-item hoppers and stackers require a u-shaped design, ID card game must be scanned exploitation a "by-pass feeder" that enters still items after the bend, but before the front/rear cameras.
• A resolution of at to the last-place degree 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 storage of proof that the institution valid the ID
• Automatic capture of client information (name, address, age, sex) for new account opening or future merchandising of unbanked / competition prospects.
• Additional logon security by authenticating the teller exploitation the teller employee ID card.
• Faster teller service by automatically opening the client account when an ID or credit/debit card is captured -without an extra PC peripheral device. This is ordinarily used in teller operations in international Sir Joseph Banks.
• Recoding of ID images for display at teller workStations to prevent withdrawals with taken ID
• A level of authentication supported by 300 dpi grey-scale images, such as decipherment 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 card game, a practice successfully used by storage warehouse clubs for combined membership/credit card game, without extra pic equipment.

Application of ID Scan/Archive and Authentication in Alternate Financial Services Channels
Alternative commercial enterprise services channels provide services that are mostly targeting the unbanked/under-banked population. Alternate commercial enterprise services are provided by pawn brokers, check cashing stores, pay day lenders, gasolene station stores, casinos, convenience stores, and even prisons. A recent Wall Street Journal clause (5) ] lamented that the 2009 Credit CARD (Card Accountability Responsibility and Disclosure) Act "pushed more Americans outside the banking system" in the name of consumer protection.

Many alternate commercial enterprise dealings are conducted on commercial enterprise self-service cubicles. Kiosk integrator manufacture devices with a wide array of features: ID card readers, debit/credit card readers, check acceptors, cash dispensers and acceptors, cameras, and even communication order and store value card printers.

Since these clients typically do not use a bank card as the ID or debit/credit card, the driver's license becomes the primary identification tool. The following is an example of an application enforced at convenience stores of a gasolene station chain with the CTS SB50E faculty in a self-service cubicle:

• Customer registers by inserting the driver's license. The ID is scanned, stored, documented by package program, and returned to the client.
• The client is registered exploitation information from the ID (clear text, magnetic stripe and barcode).
• The client feeds in the check.
• The ID and pic/video of the client is used for approval by a human operator at a central location. The operator accepts the check and it is endorsed, sealed and preserved in the device, or rejected and returned to the client.
• The cubicle dispenses cash, a stored value card, or a communication order (minus a commission).

Financial self-service cubicles are funded by dealing fees, but are often deployed as a merchandising tool to bring clients into the convenience store.

Future Technology Advancements - UV and Color Imaging

While color images are standard in most imaging applications, they have not been wide adopted in US check processing. But in international banking, the use of color imaging and UV is growing chop-chop.

• Asian applications require higher-resolution color images to authenticate "chops" - seals that function as signatures.
• Central Sir Joseph Banks in India (6) and Latin America are establishing check standards that admit UV zones to prevent fraud. The new Reserve Bank of India Check Truncation System CTS-2010 (7) features admit use of water line and printing of bank Son that are only visible with radical violet images.

As a result, we will see advancements in restraint scanner technology, including UV and color image capture for check capture and authentication. Color / UV image capture will offer the chance to further improve the strength of ID authentication.

1) ]FDIC National Household Survey
2) Bureau of Consular Affairs, U.S. Department of State
3) US Department of Homeland Security - Real ID Final Rule
4) US Customs and Border Protection 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 exaggerated security norms for checks- Indian bank org
7)Reserve Bank of India CTS 2010 Standard for cheque forms - specifications