What is Proof of Address?

Proof of Address (PoA) is a crucial part of the verification process when customers sign up for an account or conduct a transaction. In order to comply with local or international legislation and prevent fraudulent activities, companies require customers to provide two types of documents for verification: proof of identity and proof of address.

However, forging proof of residence has become a significant issue in recent years. It is relatively easy to alter paperwork or provide a temporary address that resembles the actual one, making it challenging for companies to verify a customer's identity accurately.

The types of documents that can serve as proof of address may vary slightly depending on the type of institution or jurisdiction. Examples of acceptable documents may include utility bills, bank statements, government-issued documents such as a driver's license or passport, or a rental agreement.

Common Residency Proof Documents

  • Current financial statements with the date of issue and the person's name (the document must be no older than three months)
  • Utility payment for fuel, electricity, water, internet, and other services related to the property (the document must be no older than three months)
  • Terms and conditions with the property owner and tenant's signature verification (the document must be no older than three months)
  • A credit card bill
  • A letter from a recognized public authority or public worker (any government-issued correspondence that is not more than three months old)
  • A letter from the employer attesting to current residency
  • A document for the ownership of a home

Banks, asset management firms, insurance companies, and other financial institutions are likely to require one of these documents in order to prove the address of their clients. However, there are a few additional choices that can be used as a means of proof of address.

Alternative Proofs of Residence Documents

In addition to the common residency proof documents, there are some alternative proofs of residence that can be used to establish the address of the related person during customer onboarding or KYC processes of financial firms. However, it's important to note that these documents can only be considered legitimate evidence of address if they include the address of the related person.

Some examples of alternative proofs of residence documents are:

It's important to remember that if one of the ID papers has an address, additional supporting documentation will be requested at the time of identity verification to strengthen KYC checks. For instance, if a driver's license is presented as proof of address, additional documentation such as a utility bill or lease agreement may be required to establish the validity of the address. It's also worth noting that the acceptability of these documents may vary depending on the institution or jurisdiction in which it is located.

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Documents That Do Not Account as Proof of Address

While there are many documents that can be used as proof of address, some papers are insufficient to verify that the person's reported ID and address is, in fact, what they say it is. The following documents do not account as proof of address:

  • Pension statement
  • Bank referencing
  • Insurance company documents
  • Transfer documents
  • Old government-issued communications (older than three months)
  • Old bank statements (older than three months)
  • Old energy bills related to the property (older than three months)

In addition to ensuring compliance with regulatory requirements and preventing fraudulent activities, verifying the address of clients accurately can also help businesses to better understand their customer base. By collecting and analyzing data related to the location of their customers, businesses can identify new opportunities for growth, tailor their products and services to meet the specific needs of different regions, and improve their overall customer experience. As such, while the process of collecting and verifying proof of address documents may seem burdensome, it can ultimately lead to greater business success and customer satisfaction.

When Do Organizations Request Proof of Address?

Most jurisdictions require legitimate proof of residence to be presented during the verification process, and failure to provide such proof can result in the rejection of the application or the transaction. This requirement is in place to ensure that individuals are who they claim to be and to prevent identity theft and fraud.

However, the process of collecting and verifying proof of address can be challenging, as it is relatively easy to falsify documents or provide temporary or inaccurate addresses. To combat this issue, financial institutions and other organizations may require multiple forms of documentation and may also use advanced verification technologies to authenticate documents and ensure their accuracy.

In addition, many organizations have implemented strict data privacy and security policies to protect the personal information of their customers. This includes the secure storage and handling of proof of address documentation, as well as the use of encryption and other security measures to prevent unauthorized access or theft.

It's also worth noting that some jurisdictions, such as Hong Kong, do not require proof of residency for the purposes of opening a bank account or performing financial transactions. This is because the government considers such requirements to be unnecessary and burdensome for customers. However, it is likely that more and more regulations will ultimately adopt the practice of requiring proof of address to ensure compliance and prevent fraud.

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How To Check Proof of Address?

To begin with, every firm that does a proof of address check must have a detailed user guide that explains the procedure and criteria for identity verification.

  1. If an automatic check is not possible, there are a few methods to manually verifying residence documents:
  2. Check for watermarks, security features, and typical patterns of graphics modification; 
  3. Make sure the document has a current issue date (no more than three months for bank accounts, energy bills, and government communications); 
  4. Verify if the paper includes the person's name;
  5. Check for an address on the paper (the more detailed, the better) and validate its presence using a search engine like Google. Suppose the applicant enters the address without specifying the apartment number while residing in a block of flats. In that case, the compliance officer must ask them to add it as well as the other details of residency.
  6. Benefit from technological improvements which regtechs can offer for aml compliance, ID verification and KYC processes.

regulated financial institutions must comply with the requirements of AML/CTF and KYC and customer onboarding processes

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