Digital Identity and Online Verification Tools in New Zealand
Digital identity programs and online verification services are becoming a normal part of the internet economy. They are vital to combating fraud, identity theft, money laundering and terrorist financing in New Zealand and worldwide. Our guide explains the current options available in New Zealand.
Updated 20 July 2024
Online customer identity verification solutions are commonplace in the fintech sector. Many new digitised financial services platforms like Wise, PayPal, Sharesies and many other e-wallets and investing apps have emerged in the past decade. Besides a handful of exceptions, companies providing financial services are obliged to perform identity verification on their clients, commonly known as KYC or know-your-customer.
Online identity verification tools enable fintech platforms to perform non-face-to-face verification. Instead of visiting the local bank branch to open a bank account and handing your passport and latest utility bill over to the teller to make photocopies, online identity verification tools make that process possible online.
Identity verification solutions are a two-way street; consumers use them to share extremely sensitive data, and businesses need them to follow regulations and protect their interests. This guide reviews some of the leading online verification tools available to New Zealand businesses, examines the growing need for such solutions outside of the financial services sector and the adoption of centralised government-supported digital identity solutions like Real Me.
Summary
Online identity verification tools enable fintech platforms to perform non-face-to-face verification. Instead of visiting the local bank branch to open a bank account and handing your passport and latest utility bill over to the teller to make photocopies, online identity verification tools make that process possible online.
Identity verification solutions are a two-way street; consumers use them to share extremely sensitive data, and businesses need them to follow regulations and protect their interests. This guide reviews some of the leading online verification tools available to New Zealand businesses, examines the growing need for such solutions outside of the financial services sector and the adoption of centralised government-supported digital identity solutions like Real Me.
Summary
- Online identity verification services have been used by online trading platforms, neo-banks, e-wallets and gaming sites for several years. These solutions help companies collect and verify customer identity documents.
- New Zealand is home to a handful of innovative regtech (regulation-technology) companies providing innovative solutions to help companies meet CDD (customer due diligence), AML (anti-money laundering), CTF (counter-terrorist financing) obligations and best practices.
- Digital identity or electronic identity programs are emerging worldwide and aim to replace our physical identity documents. Initiatives are being supported by governments and international organisations like the World Economic Forum, Gates Foundation's ID2020 and the World Bank’s ID4D.
- New Zealand’s national digital identity program, RealMe, is positioned to take market share away from New Zealand-based regtech platforms. Businesses integrated with RealMe can identify their customers via RealMe as opposed to other solutions.
- RealMe is developed by overseas companies. The Department of Internal Affairs cooperates with US, Japanese and Irish firms to develop its technology.
- Digital identity programs can bring a lot of good to societies but cybersecurity, privacy and human rights advocates have concerns about the responsibility and power these programs put in the government's hands.
An introduction to online identity verification services
Have you ever applied for a bank or payment account online? Or perhaps opened an online trading or betting account? Then you’ve likely used an online service to verify your identity.
Online identity verification services emerged primarily to cater to online financial services and gambling sites to help them onboard customers seamlessly while meeting their KYC and AML obligations. These sectors are highly regulated because they support ecosystems that can potentially be used to launder money. Therefore, international and local regulations require these companies to verify the identity of individuals applying to use their services using reliable documentation.
The only way to adequately verify identities online is with technology. Online ID verification platforms provide easy to use widgets (accurately known as software development kits, or SDKs) for companies to integrate into their web or mobile applications to collect and process sensitive personal documents.
ID verification services collect applicants’ identity documentation, for example, national ID, driver’s license or passport, and often proof of residence documents, such as a utility bill or bank statement. The verification service will use sophisticated software to verify the authenticity of a document and look for any red flags. Most platforms will perform a manual review of documents before providing an evaluation.
Besides verifying the authenticity of ID documents, many platforms build added value services to enhance the quality of their services, such as screening customer names and addresses against various databases and performing liveness detection and face matching.
Online identity verification services emerged primarily to cater to online financial services and gambling sites to help them onboard customers seamlessly while meeting their KYC and AML obligations. These sectors are highly regulated because they support ecosystems that can potentially be used to launder money. Therefore, international and local regulations require these companies to verify the identity of individuals applying to use their services using reliable documentation.
The only way to adequately verify identities online is with technology. Online ID verification platforms provide easy to use widgets (accurately known as software development kits, or SDKs) for companies to integrate into their web or mobile applications to collect and process sensitive personal documents.
ID verification services collect applicants’ identity documentation, for example, national ID, driver’s license or passport, and often proof of residence documents, such as a utility bill or bank statement. The verification service will use sophisticated software to verify the authenticity of a document and look for any red flags. Most platforms will perform a manual review of documents before providing an evaluation.
Besides verifying the authenticity of ID documents, many platforms build added value services to enhance the quality of their services, such as screening customer names and addresses against various databases and performing liveness detection and face matching.
The growing need for online verification services
It’s not just financial services and gaming platforms that should apply KYC policies to their customers. As more businesses take their services online and only know their customers digitally, there is a growing need to tackle fraud and follow regulations. Online businesses, large and small, need to find innovative ways to protect their interests and reduce fraud without causing friction and inconvenience for their customers.
Online verification services have branched out and started catering to other sectors, such as eCommerce, online marketplaces, sharing economy platforms, telecommunications companies, travel companies, e-learning platforms and more.
Know this:
Online verification services have branched out and started catering to other sectors, such as eCommerce, online marketplaces, sharing economy platforms, telecommunications companies, travel companies, e-learning platforms and more.
Know this:
- Sharing economy platforms like Trade Me, Airbnb and Uber are at risk of scammers and bad actors who can harm communities and companies’ reputations.
- Telecommunication providers like Vodafone, Spark and 2degrees need to know their customers’ identities to protect them from SIM swap fraud.
- Travel companies like hotels, airlines, and booking sites can check-in their guests before they arrive instead of bothering tired travellers with identity checks.
- Universities providing distance learning, such as Victoria University, Massey University, and the Open Polytechnic, need to know who the right students attend the courses and sit exams.
Introduction to digital identity programs
The digital identity concept has been around for decades. Ever since people began transacting online, the need to verify users and customers has existed. Identity is defined as a set of attributes related to an entity. The attributes assigned to an entity can vary depending on the use case. For example, a passport does not define what vehicle classes you can drive as the purpose is to permit you to pass through ports and borders, not drive vehicles.
Attributes that can be assigned to an identity include:
The first generation of digital IDs that emerged was developed by online services to provide a single account to access multiple services. Facebook Login, Apple ID, Google Sign-in, and other services let third-party developers use authentication solutions.
You can see a snapshot of the current usage of popular single-sign-on services according to data from BuiltWith. It’s no secret that tech giants like Google, Facebook and Apple have lots of information about consumers. These companies also have sophisticated tools to reduce fraud and secure information. Companies using authentication services provided by big-tech can piggyback on their infrastructure and know with a good degree of confidence that when someone registers, they are a real person, without even collecting any information. Popular platforms using Google to help verify the authenticity of users in their community include Fiverr, UpWork and Medium.
Social login services helped lay the ground for further innovation related to digital identity, as did the widespread adoption of mobile technologies and apps like Apple Wallet.
While verifying with a reasonable level of confidence that a user leaving a product review or writing an article is authentic, the emergence of online identity verification services indicates that companies from many industries need more data and confidence when onboarding customers and users.
National digital identity programs
A digital identity (digital ID), or electronic identification (eID), is a digital equivalent to your physical identity documents, such as your passport, driver’s license or national ID.
Digital identity programs are typically sponsored by governments, just like your other ID documents. For example, New Zealand’s RealMe is managed by the Department of Internal Affairs, the same department responsible for issuing passports, processing citizenship applications and registering births, deaths, marriages and civil unions.
Because digital IDs are not printed on small pieces of plastic, they can store much more data and be regularly updated as your information changes. The promoted use cases of digital ID programs include:
Attributes that can be assigned to an identity include:
- Name (first name, last name, middle name, maiden name, alias, etc.)
- Date of birth
- Place of birth (city, country)
- Nationality
- Citizenship
- Residential address
- Phone number
- Email address
- Tax identification number
- Personal number/Birth number
- Biometric data (facial recognition, fingerprints, retina scan)
The first generation of digital IDs that emerged was developed by online services to provide a single account to access multiple services. Facebook Login, Apple ID, Google Sign-in, and other services let third-party developers use authentication solutions.
You can see a snapshot of the current usage of popular single-sign-on services according to data from BuiltWith. It’s no secret that tech giants like Google, Facebook and Apple have lots of information about consumers. These companies also have sophisticated tools to reduce fraud and secure information. Companies using authentication services provided by big-tech can piggyback on their infrastructure and know with a good degree of confidence that when someone registers, they are a real person, without even collecting any information. Popular platforms using Google to help verify the authenticity of users in their community include Fiverr, UpWork and Medium.
Social login services helped lay the ground for further innovation related to digital identity, as did the widespread adoption of mobile technologies and apps like Apple Wallet.
While verifying with a reasonable level of confidence that a user leaving a product review or writing an article is authentic, the emergence of online identity verification services indicates that companies from many industries need more data and confidence when onboarding customers and users.
National digital identity programs
A digital identity (digital ID), or electronic identification (eID), is a digital equivalent to your physical identity documents, such as your passport, driver’s license or national ID.
Digital identity programs are typically sponsored by governments, just like your other ID documents. For example, New Zealand’s RealMe is managed by the Department of Internal Affairs, the same department responsible for issuing passports, processing citizenship applications and registering births, deaths, marriages and civil unions.
Because digital IDs are not printed on small pieces of plastic, they can store much more data and be regularly updated as your information changes. The promoted use cases of digital ID programs include:
- Make an age-sensitive purchase online, such as alcohol or a lottery ticket
- Collect a package from the post office
- Apply for government assistance, such as disability support or unemployment benefits.
- Merge all your documents in one place.
- Apply electronic signatures and seals to documents.
- Act as a single-sign-on service for all government services.
- Make notary services obsolete.
- Access and use vaccination records.
- Open a bank account or register to use financial services.
Introduction to RealMe
RealMe is New Zealand’s digital identity service. The service was launched in 2013 and administered by the Department of Internal Affairs. As of July 2021, RealMe has 901,253 users out of the estimated population of 5,122,600, according to RealMe and Stats NZ.
You can use RealMe to interact with various government departments and businesses in New Zealand. You can find a full list of where you can use RealMe on the official website.
Know This: Besides New Zealand, numerous other countries have implemented national digital identity programs to help citizens interact with government services and securely verify their identity to private institutions online.
Although many countries have introduced an eID scheme, the level of adoption is low, and the scope of supported services are limited. Many countries are still preparing their citizens for upcoming plans to introduce digital ID programs. Countries with functioning digital identity programs include China, India, Singapore, Sweden, Oman, Estonia, Denmark, Norway, Netherlands and Italy, among others.
You can use RealMe to interact with various government departments and businesses in New Zealand. You can find a full list of where you can use RealMe on the official website.
- Apply for a bank account ANZ, BNZ, Kiwibank or Westpac.
- Onboard with financial services providers, such as Kiwi-Coin.
- Request a replacement driver licence and update vehicle ownership details with the NZTA.
- Log in to your My Health Account using your RealMe credentials.
- Set up a company with Companies Register, apply for licenses and permits with Business Connect and register trademarks with IPONZ.
- Access various local council services.
Know This: Besides New Zealand, numerous other countries have implemented national digital identity programs to help citizens interact with government services and securely verify their identity to private institutions online.
Although many countries have introduced an eID scheme, the level of adoption is low, and the scope of supported services are limited. Many countries are still preparing their citizens for upcoming plans to introduce digital ID programs. Countries with functioning digital identity programs include China, India, Singapore, Sweden, Oman, Estonia, Denmark, Norway, Netherlands and Italy, among others.
Leading New Zealand customer verification services
There are dozens of online ID and customer verification services. On the surface, most of them offer a similar scope of features and provide great coverage for English speaking regions, such as New Zealand, Australia, Singapore, the UK, Canada, the USA. It’s not just about language, but localisation is easier too. In developed countries, the availability of secondary data, such as watchlists, adverse media and public registries, is greater.
When choosing a customer verification service, you need to consider several things:
When choosing a customer verification service, you need to consider several things:
- Does the solution support languages you need, such as Māori language?
- Is the solution compliant with the local regulations you’re trying to comply with?
- Where is the solution hosted, and will you comply with applicable data protection regulations?
- Is the solution easy to implement and use?
APLYiD
APLYiD was founded in New Zealand in 2018 by Russell and Claudia Smith, both serial entrepreneurs and executives with strong backgrounds in AML, KYC and regulatory compliance. The company offers a platform-as-a-service for performing customer verification and due diligence. APLYiD has over 20 people based in New Zealand and another dozen team members overseas in Australia and the UK to support global efforts.
Key features of the APLYiD platform include:
Key features of the APLYiD platform include:
- Verifies IDs by comparing them against a global database of document templates using artificial intelligence, machine learning and manual reviews to identify document tampering and digital manipulation.
- Screens customers names and attributes against global sanctions and watchlists to identify if any customers are politically exposed or linked to criminal offences.
- Performs facial recognition to ensure the customer onboarding is the same person in the photo document.
- Provides an out-of-the-box solution allowing companies to launch with the solutions quickly.
- Offers flexible APIs and integration with leading CRMs, such as Salesforce.
- APLYiD provides a feature where they delete all Personal Identity Information once it’s downloaded.
Cloudcheck
Cloudcheck is an online electronic identity verification platform specialising in supporting New Zealand and Australian businesses to meet their KYC and AML obligations. The company is led by Vincent McCartney, formerly a non-executive director of Backbull Markets, senior manager at CMC Markets and recently co-founded RegTech NZ.
The Cloudcheck platform offers numerous features and tools to perform customer verification and perform customer due diligence. Cloudcheck provides various mediums for performing customer onboarding, such as:
Cloudcheck also offers customer identity verification using Akahu, performs MRZ code validation, supports know-your-business (KYB) checks for New Zealand companies and offers biometric face matching against identity documents.
The Cloudcheck platform offers numerous features and tools to perform customer verification and perform customer due diligence. Cloudcheck provides various mediums for performing customer onboarding, such as:
- A stand-alone web application for companies to manually upload customer information they collected in-person or via email, or another online registration tools;
- A function to send registration links to customers via SMS or email to complete onboarding online;
- An SDK for iOS and Android application and a hosted web registration page; and,
- An API (application programming interface) for transferring data from the company’s platform to Cloudcheck.
Cloudcheck also offers customer identity verification using Akahu, performs MRZ code validation, supports know-your-business (KYB) checks for New Zealand companies and offers biometric face matching against identity documents.
First AML
First AML is a New Zealand based AML outsourcing specialist that allows companies to delegate their customer due diligence and KYC obligations to a compliance specialist. It can be hard for fintech startups to build and scale a compliance department, and some businesses like law firms and real estate agents perform customer due diligence irregularly, making it infeasible to have even one full-time compliance officer.
First AML helps establish a compliance program and then manages the entire customer onboarding process using an in-house AML analyst team to review documents and perform checks. The company can perform complex and time-consuming corporate structure analysis and uses industry-standard tools, such as biometric electronic ID verification.
First AML helps establish a compliance program and then manages the entire customer onboarding process using an in-house AML analyst team to review documents and perform checks. The company can perform complex and time-consuming corporate structure analysis and uses industry-standard tools, such as biometric electronic ID verification.
RealAML
RealAML, incorporated as Realyou Limited, is a New Zealand based AML outsourcing company. The company was launched in 2019 by Jordan McCown, a former hedge fund manager and compliance officer who faced first-hand the shortcomings of compliance solutions in the early 2000s. After building two other startups, he co-founded RealAML with CTO Gowtham Selvaraj.
RealAML provides either a completely outsourced KYC service and various tools to assist with customer onboarding. The outsourced KYC service follows New Zealand’s AML Act 2009. The company performs customer and enhanced due diligence on behalf of their clients and produces a comprehensive PDF report with all the mandatory information in an average of two days.
Besides the outsourced KYC service, the RealAML provides tools for companies to independently verify a person’s identity by processing images and text from a photo ID document. The system then performs facial recognition and liveness detection using a selfie. It also lets companies screen customers against global sanctions and watchlists to monitor politically exposed persons and their close relatives and persons and entities of special interest.
While RealAML provides a complete KYC outsourcing solution compliant with New Zealand regulations, the platform lacks modern onboarding technologies and a mobile-first approach.
RealAML provides either a completely outsourced KYC service and various tools to assist with customer onboarding. The outsourced KYC service follows New Zealand’s AML Act 2009. The company performs customer and enhanced due diligence on behalf of their clients and produces a comprehensive PDF report with all the mandatory information in an average of two days.
Besides the outsourced KYC service, the RealAML provides tools for companies to independently verify a person’s identity by processing images and text from a photo ID document. The system then performs facial recognition and liveness detection using a selfie. It also lets companies screen customers against global sanctions and watchlists to monitor politically exposed persons and their close relatives and persons and entities of special interest.
While RealAML provides a complete KYC outsourcing solution compliant with New Zealand regulations, the platform lacks modern onboarding technologies and a mobile-first approach.
Risks of digital identity and verification solutions
The many benefits of having a digital identity and the merits of ID verification services are clear, but there are always risks to innovation. Specifically:
- Cybersecurity, privacy and human rights advocates have voiced various concerns about digital ID programs.
- The cybersecurity experts are sceptical that governments have the know-how to develop or even tender for sophisticated systems that safeguard and administer some of the most sensitive data their country holds.
- For example, in October, it was revealed that despite having access to the world’s best consultants, the UK’s COVID-19 test and trace efforts were diminished because Public Health England’s test and trace database was an Excel spreadsheet, despite the government allocating a budget of hundreds of millions of pounds to contact tracing.
- The identity verification, facial recognition and biometric data processing functions used by RealMe and the New Zealand Department of Internal Affairs use components from various overseas companies. Companies contributing to New Zealand’s identity programs include Doan, DXC Technology and NEC.
- The Department of Internal Affairs is leveraging the IdentityX platform from Daon, an Irish company, to enable citizens to establish a verified identity online instead of visiting a New Zealand PostShop.
- The Department of Internal Affairs signed a master services agreement with US-based DXC Technology to develop the country’s facial recognition program. The master services agreement includes access to Neoface Reveal technology, developed by NEC, a Japanese company.
- When there are already several established identity verification solutions to serve the New Zealand market, it would be pleasing to see the government support local business and innovation.
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