Identity Verification: New Measures and Challenges

The U.S. Department of the Treasury has strengthened its verification processes after identifying over 4,900 payments associated with deceased individuals, valued at approximately $99 million. These payments, detected among more than 885 million transactions valued at around $2.77 trillion, were returned to agencies for review before disbursement.

Importance of Pre-Payment Verification

The measure underscores the relevance of verifying before paying to avoid improper disbursements. While not all $99 million can be attributed to fraud, the exercise demonstrates that stopping questionable payments is easier than trying to recover them afterward. Banks and FinTechs find themselves in a strategic position to improve in this area.

PYMNTS and Trulioo Report: Challenges in Identity Verification

The PYMNTS report in collaboration with Trulioo indicates that financial services companies lose nearly $34 billion due to failures in identity verification. Additionally, 76.1% of these companies have lost growth opportunities due to issues in their KYC and KYB processes. These types of friction reduce revenue.

New Regulation on Verification

Since March 2025, an executive order mandates the Department of the Treasury to strengthen controls over federal disbursements. This includes consolidating more payment activities and utilizing information from the Social Security Administration. The aim is to keep the information updated, integrating it into the payment process, seeking issues while the money is still in the sender's hands.

Ongoing Challenges for Financial Institutions

Banks and FinTechs concentrate their verification efforts when opening accounts, but KYC data must be continuously updated. Synthetic identities and credential theft are threats that require attention throughout the customer and payment lifecycle. The key is to constantly ask if the customer information can still be trusted for the current transaction.

Improving Identity Infrastructure

According to the report, 92.3% of companies using global identification platforms found that KYC/KYB has become easier over time. A more integrated identity infrastructure offers better signals without subjecting customers to constant authentication barriers. The Department of the Treasury has shown through its action that these processes can prevent significant identity-related losses.

With nearly $34 billion in revenue losses due to identity issues, the lesson is clear: it is crucial to verify who is receiving the money and ensure that the recipient is still alive.