So many industries and companies today face increasingly high-stakes security challenges, and the rapid-paced real estate sector is no different. Because of its big-dollar transactions, the real estate market can become a target for fraudsters, money launderers, and illicit actors who are trying to steal identities or obtain unauthorized access to sensitive corporate data.
One of the main defenses that risk professionals in the real estate industry have to combat these threats is identity verification, which has taken on immense importance today. Yet, even as real estate companies have several useful methods to engage in identify verification, significant challenges still remain.
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| How can identity verification protect the real estate industry? |
| What methods of identity verification are best for real estate companies? |
| What are the challenges ahead for real estate companies? |
How can identity verification protect the real estate industry?
There are several reasons why identity verification is important in real estate, including:
Preventing fraud & money laundering — As mentioned, real estate transactions can be large and complex, and identity verification ensures that only legitimate parties are involved, reducing the risk of fraudulent activities. Also, by verifying the identities of buyers, sellers, and others, real estate companies can prevent fraud on their platforms from being used for illegal activities such as money laundering.
Preventing identity theft — As more real estate transactions go digital, new vulnerabilities get introduced into the process, which increases the risk of digital identity theft. Fortunately, identity verification technologies can help mitigate these risks by confirming the authenticity of individuals and businesses involved in transactions, even as fraudsters become more sophisticated.
Protecting corporate data — Corporate real estate matters involve the use of significant company data, including property records, contracts, and financial documents. Identity verification ensures that only authorized personnel can access and manage this data, thereby safeguarding the company’s interests by reducing the risk of theft or unauthorized access.
Ensuring regulatory compliance — Finally, but no less important, is identity verification’s ability to help corporate entities ensure compliance with regulators’ strict anti-money laundering and know-your-customer (KYC) rules. Indeed, compliance with these laws is not only required, but it also remains a crucial aspect of maintaining a company’s reputation and trustworthiness.
What methods of identity verification are best for real estate companies?
There are several methods of identity verification that would best protect real estate companies, including:
Conducting customer and business checks — As part of compliance with KYC rules, digital identities need to be verified. Real estate companies need to conduct both individual verification, by using common methods such as verifying government-issued IDs, passports, and other official documents; and business verification, which includes ensuring that business licenses, tax records, and other official documentation are legit and in compliance with relevant regulations.
Also, real estate companies need to screen individuals and businesses against global watchlists to detect any risks associated with politically exposed persons or those involved in financial crime.
Using digital identity verification — There are several advanced technologies that use AI and machine learning to quickly and accurately ensure proper identity verification. For example, facial recognition technology that can match an individual’s facial features with those in official documents; biometric authentication that uses fingerprint scanning or iris recognition to confirm the physical identity of individuals; and two-factor authentication, which requires active response and can significantly reduce unauthorized access, are all vital methods.
Also, crucial real estate documents like deeds, contracts, and financial statements can be scanned with advanced optical character recognition technologies to automate the verification process and further reduce errors.
What are the challenges ahead for real estate companies?
Of course, identity verification does have some challenges for the real estate industry, including addressing data privacy and regulatory compliance issues. In fact, real estate companies must navigate a complex landscape of regulations, both in the United States and internationally, to ensure compliance and avoid regulatory fines or penalties.
Another challenge involves the growing sophistication of fraud tactics among illicit actors. Today, fraudsters are increasingly using more complex tactics, such as deepfakes with AI and synthetic identities, to bypass the verification process. Real estate companies’ risk professionals must stay ahead of these threats by adopting advanced verification technologies and continuously updating their security protocol.
Finally, integrating all this new fraud-fighting technology with an organization’s existing legacy systems presents its own challenges. Many real estate firms still rely on manual verification processes, which can be slow and error prone. Transitioning these legacy systems to more modern, digital verification platforms can present a significant challenge. However, the benefits of digital adoption, such as increased efficiency and security, make it a worthwhile — and quite necessary —investment.
Like it has in many other industries, identity verification is quickly becoming a cornerstone of security in the real estate industry. Real estate companies need to implement robust verification processes and technologies to best protect their data, ensure regulatory compliance, and build trust with their clients.
While challenges such as data privacy and sophisticated fraud tactics remain, the continuous evolution of verification methods offers hope that a more secure future for the real estate industry lies ahead.
Find out more about how a comprehensive identity verification program can protect your real estate assets.
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