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Why do Money Transfer Providers Ask for Additional Documentation?

In addition to regular documents required for money transfer, some financial institutions ask for additional supporting documents that can be:

Government Issued IDs:
US Driver’s License / State ID / US passport with a US address / Indian Passport with copies of US visa / Green card.

Address Proof:
The address proof can be copy of utility bill, bank statement, phone bill, housing lease agreement, and credit card statement.

Documents to Verify Source of Income:
Paystubs and Bank Statements.

The reasons these documents are required can be:

1 Cross-Verification Of Identity:
In order to continue their services effectively, financial institutions like banks ask for these additional proofs of identity. These institutions also lawfully acquire information from services like credit reporting agencies, identity verification services, and electronic database services to cross-verify the ID. The banks and financial institutions have to validate the sender's identity before they initiate the money transfer transaction. Without a confirmation of identity money transfer will not be completed. Also, in case the money transfer gets delayed or stuck, these additional documents may be required to proceed with the transaction.

2 To Detect And Prevent Fraud and Other Illegitimate Uses Of The Service:
The companies are required to follow federal laws related to "know-your-customer" and anti-money laundering requirements. By collecting these documents the banks can effectively avoid scams. Unauthorized income like income on which income tax was not paid in US can be transferred to India to these accounts. With the help of these documents banks can trace the money laundering and put a stop to it.

3 Opening A Bank Account:
If a non-resident Indian wants to open an account like an NRI/NRE account with an Indian bank, these documents or any one of these proofs of identity may be required by the bank.

Additional documentation are asked not only to fulfill formalities but are also asked keeping the safety concerns of the sender and receiver in mind. You can always call the customer service of the company or visit the company’s website to check if any additional documents are required for the service you desire. 

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