Deferred identity verification

Deferred identity verification allows platforms to onboard businesses or individuals as connected accounts and activate a limited wallet without completing full identity verification at sign-up. Identity verification is initiated later when the account reaches specific risk or activity thresholds, or when the platform triggers it proactively.

The connected accounts can start transacting with a limited wallet before completing all Know Your Customer (KYC) checks. Specifically, it delays the requirement for liveness checks and full document verification until the user's activity warrants it. This allows platforms to reduce upfront friction during sign-up while maintaining compliance through initial screenings and ongoing transaction monitoring.

Key benefits

Deferred identity verification offers several benefits for platforms with high-volume consumer use cases:

• Reduced friction: By removing the immediate need for document uploads and liveness checks, users can sign up and start using the platform faster, leading to higher conversion rates.
• Cost efficiency: Identity verification costs, such as liveness checks, are incurred only for active users who reach specific value thresholds. You don't pay for verifying users who sign up but never transact.
• Immediate utility: Users gain immediate access to the platform's features (within safe limits), allowing them to experience value right away.

How deferred identity verification works

When platforms onboard businesses or individuals as connected accounts, basic compliance checks are performed at sign-up even when deferred identity verification is enabled. These compliance checks include:

• Sanctions screening: Checking the user against sanctions lists.
• Prohibited country checks: Ensuring the user is not located in a restricted jurisdiction.
• Age verification: Confirming the user meets the minimum age requirement.

Until verification is completed, the account operates as a limited wallet with risk-based operational restrictions. These may include:

• Lifetime payout limit: The total amount of funds that can be paid out from the account is capped. Once this limit is reached, no further payouts are allowed until verification is complete.
• Balance limit: In some regions, there may also be a cap on the maximum balance the account can hold.

How identity verification is triggered

Identity verification is triggered in two ways, depending on user behavior and platform needs:

• Activity thresholds: When the user's activity, for example, cumulative payout amount or balance size, approaches specific regional limits determined by applicable regulations. See Handling deferred ID collection RFIs.
• Proactive trigger: When the platform chooses to initiate verification early, for example, if a user requests a higher limit or to unlock specific features. See Proactively triggering ID collection.

When either condition is met, the system flags the account for further verification.

RFI process

When the activity threshold reaches limits or the platform requests verification early, Airwallex issues a request for identity verification. This requires the user to complete a liveness check and potentially submit identity documents.

1. Trigger: The user hits the activity threshold or the platform requests verification early.
2. Request: Airwallex issues an RFI prompting liveness and identity checks.
3. Verification: The user completes the required checks, typically through a mobile device.
4. Unlock: Upon successful verification, limited wallet restrictions are removed and the user gains full access to the account.