Introducing Address Risk Insights: Smarter onboarding for better compliance

As fraud prevention regulations continue to evolve and tighten, existing approaches to address verification are no longer sufficient to ensure compliance. Financial institutions need to verify their business customers have a legitimate U.S. presence and face increasing pressure from regulators and sponsor banks to strengthen address controls and policies.

At Middesk, we’re excited to introduce the first of many proprietary Risk Insights to help you combat fraud and approve more trusted customers. Starting with Address Risk Insights, you'll be able to flag risky addresses at the top of your onboarding funnel for further due diligence. Customers can streamline compliance with heightened regulatory demands by swiftly determining whether an address presents low, moderate, or high risk based on a set of evaluated characteristics and attributes. 

The challenge: Evolving address fraud in onboarding

Traditionally, businesses were verified by matching their address with government listings. However, as fraud schemes grow more sophisticated, this method falls short. Fraudsters are using addresses that aren’t physically linked to the business—like registered agents and mail services—to appear legitimate and bypass onboarding checks while engaging in illicit activities. 

To address this, it’s important to distinguish between various types of addresses and their appropriate uses. Understanding these differences is crucial when verifying business applicants to avoid onboarding entities that lack a genuine physical presence in the U.S. and may be engaged in fraudulent activities. Such practices pose significant compliance challenges, particularly with the increasing enforcement of regulations under the Bank Secrecy Act (BSA) and Customer Identification Program (CIP) requirements. 

So, how can you ensure that the business you're onboarding truly has a legitimate U.S. presence and isn't using an address linked to fraudulent activity?

The solution: Address Risk Insights

Our new Address Risk Insights, included in our core Verify product at no additional cost, addresses these exact challenges (Address Risk API Guide). Leveraging our extensive, proprietary database of over 40,000 registered agents across the U.S., authoritative U.S. government business data, international address data, and high-quality alternative data, Middesk helps you minimize risk, reduce manual address audits, and prevent high-risk businesses from accessing your platform and services. Here’s how:

• Risk-based verification: Identify and flag high-risk locations by assessing address validity, determining if the address is U.S.-based or international, and confirming deliverability to ensure a genuine U.S. business address
• Registered agent detection: Use our comprehensive list of registered agents to flag addresses commonly used in fraudulent schemes
• Mailbox designations: Detect addresses registered as private mailboxes, PO boxes, and other high-risk mail services using postal service data
• Location frequency: Quickly identify how many businesses operate at any known or submitted address, indicating potential fraud risk

Unlock smarter onboarding

With Address Risk Insights, you can meet Customer Identification Program (CIP) and Customer Due Diligence (CDD) requirements while lowering your risk exposure. Benefits include:

• Targeted Risk Identification: Detect and flag high-risk addresses early to prevent potential issues
• Proactive Monitoring and Compliance: Regularly review and remediate existing customer addresses to stay compliant and get ahead of any concerns that could arrive during audits

With these insights, you can quickly determine:

• If the submitted address is unique to the business and a strong indicator of U.S.-based operations
• If there are other addresses associated with the business that suggest international operations
• If the address belongs to a non-physical location, and the riskiness associated with it

“Middesk's Address Risk Insights gave us the ability to quickly audit hundreds of thousands of business addresses, identify high-risk ones, and ensure compliance with our banking partner. It saved us countless hours while strengthening our fraud prevention efforts.” — Frank Bozzo, Senior Program Manager, Mercury

Elevate your KYB screening with proprietary compliance & fraud risk insights

Address Risk Insights is now available in our core Verify product, offering powerful, comprehensive tools to assess risk with confidence (Address Risk API Guide). Looking for a lightweight solution? Use Signal offers instant evaluations of business legitimacy and key risk factors—covering addresses, registration status, business names, and more—all in a fraction of a second.

Want to see Address Risk Insights in action? Register for our upcoming group demo for a quick walkthrough, or reach out to your Account Manager or fill out this form for a personalized demo.

Looking for more resources? 

• Download our guide, Navigating Regulatory Changes and Mitigating Risk in Business Onboarding
• Check out our BEV Break: Address Fraud Prevention in Business Onboarding
• Read our latest guide on Why address risk matters now more than ever in business onboarding.

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