What Are AVS Checks? 

Broadly, Account Verification Services verify information about a bank account, such as the identity of its owner and the type of account. 

AVS checks typically work by cross-checking the identity of the account holder against the bank account number provided. This validates firstly that a bank account is legitimate, and secondly, that it is owned by a verified individual and not a fraudster.

Most commonly, AVS checks are used to verify that an individual is the actual owner of the bank account number that they provide.

To read our comprehensive guide on how AVS Checks are used, click here. 

How Are AVS Checks Used? 

AVS checks are important because they ensure transparency and reduce fraud. By verifying the identity of a bank account owner, AVS checks help businesses to ensure important information, such as the account they are paying into actually belongs to the person they think it does, or that the account they are receiving payments from is actually owned by the individual whose identity they are dealing with.

Conducting AVS checks empowers a business to scan for red flags such as discrepancies relating to account owner information. Should red flags emerge as a result of the AVS check, a business can account for the heightened risk and take the appropriate risk mitigation steps. 

Accordingly, the failure to conduct AVS checks can expose businesses to heightened levels of risk.

In many countries, AVS checks are a legal requirement that financial institutions are legally obligated to conduct. Regulatory compliance obligations concerning AVS checks are an important part of national AML/CFT legislation designed to combat financial crime. 

Failure to comply with these regulatory obligations can lead to national regulators imposing severe punishments on the offending business – fines and even jail time can be issued as punishments for non-compliance or active breaches in national AML/CFT law.

AVS Checks Help Protect Your Business Fraud

Significant fraud occurs in the faking of payments in business relationships. 

AVS checks have a near-endless list of use cases. One important example of a use case for AVS Checks is when a business is establishing a new business-to-business relationship, such as with a new supplier. 

When initiating a new business relationship, a company is exposed to a significant risk of fraud. The world’s economy – as well as South Africa specifically – is rife with examples of companies losing millions of dollars to fraudulent transactions that could have been prevented by a thorough AVS check. 

Recent years have seen a rapid increase in sophisticated credit scams that target South African suppliers. Sometimes totalling tens of millions of Rands, these types of scams target the suppliers of goods that can easily be resold, such as building materials or, in the time of COVID-19, personal protective equipment (PPE). In South Africa, a Carte Blanche investigation in 2021 investigated how suppliers were defrauded of millions of Rands of essential PPE stock at the height of the pandemic.

This is where AVS checks become essential. 

Verifying a company’s bank account is an excellent way to verify the integrity of the business in question. By conducting an AVS check and verifying the account that the company registration number is linked to, a responsible business can check how long the bank account has been active – a recently created bank account is a warning sign of fraud. 

As well-performing as an AVS check is, businesses can go further to protect against fraud. Businesses can conduct a wide variety of due diligence checks to authenticate the legitimacy of a business partner. These include: 

• Director Identity Verification: ThisIsMe offers a director lookup check that returns information concerning the identity of a company’s director – a key method of verifying their legitimacy as an individual. 
• Company Registration Checks: If a company is fraudulent, it will typically only recently have registered with the Companies and Intellectual Properties Commission (CIPC). By pulling data from the CIPC database, a thorough due diligence check will reveal the date of company registration, enterprise name and duration of registration, and tax and VAT numbers. Past and present director details that are linked to the company registration number will also be displayed.
• Company Sanctions/AML Check: It is essential to ensure that the company in question does not feature on any sanction lists. In addition, identifying a company’s connection or association with any politically exposed persons is key to managing risk and ensuring that all AML/CFT compliance obligations are met before any business is conducted.  
• Company Credit Check: A company credit check is an indispensable risk assessment tool when evaluating another company’s request for credit. However, comprehensive credit checks should not be done in isolation and should return more than simply a credit score – world-class solutions will include a full company credit report, credit summaries of all the associated directors, and a calculated company risk score.

AVS Checks and Due Diligence Services for South African Businesses 

As South Africa’s leading provider of world-class due diligence and digital onboarding solutions, ThisIsMe is proud to be at the forefront of a trust-based and privacy-compliant digital world. By supplying high-quality tools like AVS checks, we empower businesses to verify identities, validate information, secure transactions, and mitigate risk. To experience our full suite of advanced due diligence services, book a demonstration by contacting our team here.