Documentary vs. Non-Documentary ID Verification: The Difference and When to Use Each

Identity verification is crucial for businesses that need to onboard new customers, meet regulatory requirements, and prevent fraud. Businesses typically rely on one of two primary ID verification methods: Documentary and non-documentary.

While both approaches have their strengths, understanding the differences between them, as well as when each should be used, can significantly impact an organization’s compliance efforts, risk management, and customer experience.

In this blog post, we’ll explore what you need to know about documentary and non-documentary ID verification methods, how to know the difference, and when to look at each one as an ideal means of ID verification.

What is documentary verification?

Documentary verification involves using physical or digital copies of identity documents — such as passports, driver’s licenses, or national ID cards — to confirm a person’s identity. This method often involves comparing the information on these documents with data provided by the individual during the onboarding process.

Verifying documents provides 2 important layers of review:

1. You’re ensuring that the document includes expected elements such as barcodes or Machine Readable Zones (MRZs).
2. You’re confirming that the information provided on the document aligns with a person’s expected/provided identity information.

There are both advantages and limitations to documentary verification. 

Advantages

• Accuracy: Documentary verification relies on official government-issued documents (such as passports, driver’s licenses, or identity cards) which often contain security features (such as barcodes or MRZs) that can make them harder to forge or manipulate.
• Regulatory Compliance: Many industries, especially financial services, require documentary verification to satisfy Know Your Customer (KYC) and FINTRAC regulations, and Anti-Money Laundering (AML) laws.
• Global Applicability: Documentary methods are universally applicable, regardless of the individual's location, making them particularly useful for cross-border transactions.

Limitations

• Customer Friction: Asking customers to take a picture of their government ID can be cumbersome and can slow down the onboarding process, especially if additional steps like manual verification are involved.
• Risk of Fraud: While more secure than some alternatives, fake or stolen IDs can still be used to deceive documentary verification, particularly if businesses rely on manual checks or if security features on the documents are not properly scrutinized.
• Cost: If the documentary verification process relies solely on manual processes, it can be very resource-intensive and expensive for businesses, especially when scaling operations.

What is non-documentary verification?

Non-documentary verification relies on alternative sources of information to verify a person's identity. Some common examples of non-documentary verification include:

• Knowledge-based authentication (KBA): A customer is asked a question about previously specified and fixed information (e.g. mother’s maiden name, father’s middle name) to confirm their identity.
• One-time passcodes (OTPs): Commonly used during login, payment, or account recovery ID verification workflows (e.g. when logging in to your banking app), a one-time code is sent to a registered mobile number or email, or through an app, to confirm identity.
• Credit bureau and database checks: Cross-referencing an individual’s information against public records such as a telecom database or a credit bureau database.
  There are both advantages and limitations to non-documentary verification. 
  

There are both advantages and limitations to non-documentary verification. 

What is non-documentary verification?

Non-documentary verification relies on alternative sources of information to verify a person's identity. Some common examples of non-documentary verification include: 

• Knowledge-based authentication (KBA): A customer is asked a question about previously specified and fixed information (e.g. mother’s maiden name, father’s middle name) to confirm their identity.
• One-time passcodes (OTPs): Commonly used during login, payment, or account recovery ID verification workflows (e.g. when logging in to your banking app), a one-time code is sent to a registered mobile number or email, or through an app, to confirm identity.
• Credit bureau and database checks: Cross-referencing an individual’s information against public records such as a telecom database or a credit bureau database.

There are both advantages and limitations to non-documentary verification. 
Advantages 

• Faster and More Streamlined Experience: Non-documentary methods eliminate the need for customers to visit physical locations and can streamline the process through real-time database checks or knowledge-based questions.
• Enhanced Privacy: Non-documentary ID verification methods can limit the collection and storage of personal information by verifying identities without the need to share sensitive documentation.
• Scalable: Non-documentary verification is more scalable and cost-effective, especially for companies that deal with high volumes of international or manual ID verification processing.
  

Limitations

• Accuracy Dependent on Data Sources: Non-documentary methods can be only as accurate as the databases they rely on. Incomplete or outdated records can lead to false positives or negatives, causing either unnecessary friction for legitimate users or allowing fraudsters to slip through the cracks.
• Limited Regulatory Compliance: In some regulated industries, relying solely on non-documentary methods may not meet KYC/AML requirements, especially in jurisdictions where physical ID verification is required.
• Accessibility and Inclusivity Concerns: Non-documentary methods can be fraught with usability, fairness, and inclusion concerns. For example: Individuals in low-lighting environments or with older mobile devices, or those with facial disfigurements or mobility challenges may struggle with facial recognition, while a bias in algorithms for those with darker skin or specific facial features can lead to higher error rates.
  

Choosing the ID verification solution that’s right for you

There are several things to consider when you’re selecting an ID verification method. This table can help you understand the preferred scenarios for both documentary and non-documentary verification scenarios.

Oliu offers the best of both worlds

Choosing between documentary and non-documentary verification is not a one-size-fits-all decision. Businesses must assess the level of risk associated with their services, the regulatory and compliance requirements, and the customer experience they aim to deliver. For high-risk, high-value transactions in highly-regulated industries, documentary methods often provide the most secure and compliant solution. Meanwhile, non-documentary methods are preferable in lower-risk scenarios, where speed and convenience are the most important considerations.

In many cases, a hybrid approach combining both documentary and non-documentary methods is the preferred solution. This combined approach helps mitigate fraud risk while enhancing a customer’s experience. For example: 

• Businesses might ask users to upload a physical ID (documentary verification) and then use a liveness check (non-documentary) to tie the individual to the presented identity in a way that is more difficult to fake.
• Businesses might begin an ID verification journey with a non-documentary element (e.g. telecom data) and then request additional layers of ID verification that are both documentary (e.g. driver’s license or passport) or non-documentary (e.g. provincial or financial credentials) depending on an individual’s risk signal.

Oliu provides a multi-layered, customizable ID verification solution that supports both documentary and non-documentary workflows. It enables businesses to meet both single and dual-source FINTRAC compliance requirements, while mitigating fraud and enhancing the overall customer experience.

Reach out to one of our Solutions Experts today to see how Oliu can help your business streamline and satisfy your ID verification requirements.