Financial Action Task Force Consults on Digital Identity in Customer Due Diligence Guidance

The Financial Action Task Force is seeking feedback from private sector stakeholders on its draft guidance on the use of digital identity systems in customer due diligence. The guidance will supplement Recommendation 10 of the FATF's Recommendations regarding customer due diligence and demonstrates how authentication of customer identities in the digital finance and digital ID context supports broader anti-money laundering/counter-terrorism financing efforts. Stakeholders should submit responses to the consultation by November 29, 2019. The FATF intends to make further amendments to its draft guidance at its February 2020 meetings.

Digital ID systems use electronic means to confirm a person's identity in digital and/or in-person environments, including via electronic databases, biometrics and digital application program interfaces or platforms that assist with online identification. The FATF's draft guidance considers how such systems could be used to assist firms in complying with the FATF's recommended customer due diligence procedures. It describes some of the key benefits and risks of using digital ID systems for this purpose and sets out assessments that relevant governments, institutions and stakeholders should undertake to determine whether their use of a given digital ID system is acceptable. In particular, relevant parties should: (i) understand the level of assurance of the digital ID system's technology, architecture and governance to determine its reliability/independence; and (ii) make a risk-based determination of whether the particular system provides an appropriate level of reliability and independence in light of potential money laundering, terrorism financing, fraud and other risks.

View the FATF's draft guidance on digital identity in customer due diligence.

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