A big portion of modern businesses operate in an online-first environment, and they all need reliable identity verification mechanisms for two reasons:
- To keep fraudsters at bay.
- To comply with industry regulations.
That’s why the global identity verification market is currently worth almost $11 billion.
Australian companies play the same KYC game, but they face unique privacy laws and industry-specific requirements. For these firms, understanding how identity validation works — and how to implement it effectively — is key to building user trust.
Our goal is to help you with that by breaking down everything you need to know about online ID verification in Australia.
A brief intro to the regulatory landscape
Australia has a strong regulatory framework for online identity verification because the country is trying to protect security and compliance across industries. The most important document in this area is the Identity Verification Services Act 2023.
The 2023 Act establishes a formal framework for the secure use of government-backed identity verification systems. Simply put, it allows businesses to access Australian government verification tools to make sure that client-related data is accurate and up-to-date.
Related: 5 client onboarding best practices for making a lasting first impression
Local businesses can access verified identity data through the Document Verification Service (DVS) and biometric matching systems, provided they meet strict compliance requirements:
- Privacy and data protection requirements: Companies using these services must adhere to strict data handling protocols such as the Privacy Act 1988 and the Australian Privacy Principles (APPs). Firms must obtain consent from clients and use data solely for identity verification purposes.
- Eligibility criteria: To access these services, a company has to demonstrate the ability to meet security standards and adhere to proper governance protocols.
When do you need to validate your client’s identity?
Almost all companies need to verify their client’s identity during the onboarding process. The reason is obvious — this is the critical stage where businesses establish trust while complying with regulations and mitigating risks.
Client onboarding is the exact moment when companies have to make sure they are working with legitimate customers to prevent fraudulent activity.
This often involves confirming that the individual is who they claim to be, using methods like document verification, or biometric authentication. For some companies, this is an integral part of the Know Your Customer onboarding process and AML requirements.
Businesses that must verify clients online
A whole range of businesses, across different industries, are obliged to check identities before taking clients onboard. Though it’s impossible to list them all here, we will mention some of the most notable examples:
- Accounting and tax firms
- Financial services (banks, credit unions, fintech companies)
- Online commerce and marketplaces
- Healthcare providers
- Legal services (law firms, notaries)
- Telecommunications
- Real estate and property management
We must also point out SaaS and tech platforms, because they are fully dependent on digital transactions and remote access. In such circumstances, tech providers have to make sure that they’re interacting with legitimate clients, while protecting sensitive data.
Related: Client onboarding automation: How to streamline and simplify your onboarding process
Technologies that power digital ID validation
Many tech solutions can help prove your client’s digital identity. In some cases, multiple systems work together to capture identity documents, minimize fraud, and provide a better user experience. Below are some of the key technologies driving digital ID validation today.
1. Document Verification Systems
DVS is a government-backed system that allows businesses to cross-check user-provided documents against official databases. The system relies on biometric data to check different types of identity documents:
- Australian passport
- Driver’s licence
- Medicare card
The purpose of DVS is to confirm that the identity document is valid, current, and untampered.
2. Biometric authentication
Biometric technologies, such as facial recognition and fingerprint scanning, add an extra layer of security by verifying that the individual is physically present and matches the identity provided. It prevents identity theft and the use of fake documents.
Biometric authentication is already a major trend in Australia. For example, nearly 80% of the nation’s financial services have already implemented — or plan to implement soon — facial recognition.
3. Document validation
Another solution is to confirm the authenticity of personal documents. Advanced systems use a combination of technologies like Optical Character Recognition (OCR) and AI-driven pattern recognition to analyze document features such as:
- Holograms
- Watermarks
- Fonts
- Expiration dates
This step prevents the use of forged or stolen IDs and also builds confidence in the verification process.
4. Risk analysis
Risk analysis software evaluates contextual data — device fingerprinting, IP addresses, and geolocation — to detect suspicious activity during the verification process. This is rarely used as a standalone tool, but it remains an important method for solidifying fraud prevention.
The best client onboarding and ID verification tool: Content Snare
Content Snare is a perfect tool for companies looking to integrate ID verification with client onboarding.
Our platform features dozens of built-in onboarding questionnaire templates for Aussie firms, helping you quickly collect accurate information from new clients. Each template is fully editable — you can add, remove, or rearrange as many pages, sections, and fields as you like.
Speaking of fields, Content Snare features a special ID verification field type that enables clients to identify themselves directly within your request:
All it takes is for your client to upload government-issued documentation or provide biometric proof of identity. That way, online identity verification becomes but a small step in your client onboarding process — one that requires little to no effort from your side.
Interested in seeing Content Snare in action? Sign up for a 14-day free trial right now.
