Netspend’s KYC Program

KYC is a crucial process to verify the identity of customers and identify risk factors. It involves collecting and verifying personal information and documents to ensure compliance with regulatory requirements and prevent financial fraud and other financial crimes. KYC helps understand customers better, assess risks, and build trust while enabling secure transactions.

Netspend complies with 31 CFR 1020.100 and Section 326 of the USA Patriot Act–Customer Identification Program (CIP) Joint Final Rule, on behalf of its Issuing Banks, as well as on its own behalf as a licensed money transmitter, licensed sale of checks provider, and provider of prepaid access.

To comply with the regulatory requirements, Netspend requires :

  • Verification of customer identifying information
  • Retention of identification records and verification results
  • Determination as to whether the customer appears on any list of known or suspected terrorists or terrorist organizations by any Federal government agency and designated as such by Treasury in consultation with the Federal functional regulators.

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A person can order a card only post the KYC is approved.

When a person provides certain PII information like name, address, date of birth, and SSN, in your mobile app, the KYC check is automatically initiated.

There are four different states based on how the verification progresses. They are:

  • Pending
  • Approved
  • Conditional
  • Rejected

Following is a sample flow depicting the states in the KYC process.

KYC Flow

KYC States

After the KYC progresses, depending upon the scenarios, there are four different states:

  • Pending—KYC check is pending and is triggered when name, address, and date of birth (DOB) is provided for the person. It is triggered automatically and no explicit action is required.
  • Approved—When the KYC is successfully completed.
  • Conditional—KYC is not approved and additional information for KYC approval is required.
  • Rejected—When the KYC is not approved or the grace period for “conditional” as the KYC status of 30 days is over. It can also be rejected during the preliminary check.

The states—Conditional and Rejected are discussed below.

Conditional

KYC can be in a “conditional” state for multiple reasons. The KYC process could not determine if the customer was in an “approved” or “rejected” state because additional customer information is required. The customer has 30 days to provide the additional information to Netspend before their KYC is rejected.

If a customer's KYC status is “conditional”, the following scenarios can happen :

  1. Move to the “approved” state either by answering identity questions successfully or submitting the needed documents.
  2. Stay in “conditional” status until the grace period (30 days) expires to Rejected.

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Make sure to accurately capture and include the device IP address in the x-forwarded-for header in POST /sessions request payload. There is a risk that accounts can get into the conditional state if the server IP address is provided in the request. Several requests from the same ip address would trigger the risk flags that can mark an account as “KYC conditional”.

Rejected

The card holder has failed the KYC check and can no longer use their card account or access any funds in the account.

If the KYC is rejected, the account is blocked until the KYC status is cured.

If the KYC status is rejected and a workflow is not available to direct the customer to the next step, direct the customer to the Netspend customer service agent to resolve the KYC issues. A Netspend customer support agent provides instructions on the required documents for verification and the process to submit them. When the documents are reviewed and verified, the card holder’s KYC status is marked as “approved”.

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See Workflows for more information on the workflows involved in KYC.

KYC Cure Methods Supported by Netspend

Following are the KYC cure methods supported by Netspend:

  1. Identity Questions
  2. ID Scan
  3. Secure Document Upload

Identity Questions

When the required PII information is submitted and KYC status is not approved, this method is activated for identity verification through a series of identity questions needed to cure KYC for the person.

If the KYC is flagged as “conditional”, the identity_questions workflow is presented to answer identity questions.

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The identity_questions workflow is available only if the identity verification questions are available to cure KYC.

Identity questions expire within 5 minutes after the KYC check is done. The customer can answer these questions only once. If the API displays the identity questions workflow but the request to GET/people/{person_id}/kyc/identity_questions returns the "id_questions_not_available" error, the customer needs to contact a Netspend Customer Support agent to cure the KYC.

The Identity questions are retrieved by making a request to GET people/{person_id}/kyc/identity_questions. The encrypted questions are decrypted using the Netspend SDK. They are multiple choice questions and are regulated by the bank. Once the customer answers the questions, encrypted answers are submitted by sending a request to PUT /people/{person_id}/kyc_identity_questions. If the answers provided are correct, the customer's KYC status is updated to “approved”.

Sample Questions

Here is a list of sample questions that might be presented for identity verification. The number of questions presented can be 3-5 and are multiple choice.

  1. What type of residence is 222333 Peachtree Place?
    • Townhome
    • Single Family Residence
    • Apartment
    • None of the above
  2. What year is your Ford Expedition?
    • 2005
    • 2006
    • 2007
    • None of the above
  3. In which city is Any Street?
    • Hillside
    • Minot
    • Atlanta
    • None of the above
  4. From whom did you purchase the property at 222333 Peachtree Place?
    • Joe Anderson
    • Steve Reifel
    • Chris Thomas
    • None of the above
  5. In which county have you lived?
    • Fulton
    • Ross
    • Kanabec
    • None of the above

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If the customer answers the identity questions incorrectly, KYC status remains conditional. Card holders might have to contact Netspend CS agent to cure KYC.

ID Scan

ID Scan is one of the methods available to cure KYC status that is not approved. If this method is enabled, the kyc_approve workflow with identity_scan step is presented. When the ID Scan is triggered, the customer can upload the image requested and submit it for the review. Following are the endpoints to complete ID Scan:

  1. To get the ID Scan information for a person, a request is made to GET ​/people​/{person_id}​/kyc​/identity_scan endpoint using the person’s id.
  2. As the next step, for the customer to upload the image, a request is made by POST /people/{person_id}/kyc/identity_scan endpoint by using the person’s id.
    Along with the person_id in the path, type of document and encrypted image of the document is sent through the request. Verification of documents provided through ID scan is asynchronous. Webhooks are triggered for the id scan status updates.
  3. To get the ID Scan status, make a request to the GET/people/{person_id}/kyc/identity_scan/{identity_scan_id} endpoint.

When the documents provided are verified and accurate, KYC status is set to Approved.

Secure Document Upload

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This is an optional feature for you if you want to drive your customers to upload the required documents in their application instead of the customer calling a Netspend Customer Support agent.

When this feature is enabled, you can use the secure document upload endpoints to:

  • Determine required documents for upload, to fulfill the KYC requirements
  • Securely upload the requested documents

Following is a list of possible verification documents that the customer can provide:

  • Address verification
  • Identity verification (driver’s license)
  • Proof of name change
  • SSN document

In the event that the KYC is not approved, if the customer is eligible to upload the documents, provide_documents workflow is presented. This workflow also contains a document_request_id that is used while submitting the documents. This id is used to request documents using the GET /document_requests/{document_request_id} endpoint.

Required documents can be uploaded by calling an endpoint, POST /document_requests/{document_request_id} using the document_id provided in the workflow. Apart from the id in the path, the request may contain the purpose of the request and also contains the type of the document and actual document in encrypted format. Along with the actual document, the encryption contains the file type of the document.

If there is a request for any additional documents, the document_request.created webhook is triggered. Then you can notify the customer to upload additional documents that are requested. The PUT /document_requests/{document_request_id} endpoint can be used to submit these additional documents

If the KYC status is “approved”, the process ends here. If not, and the KYC status is rejected or conditional, customers are directed to contact Netspend Customer Service.

For more details on how these document requests are handled, see Document Requests.

Updated 7 months ago