Financial Action Task Force (FATF) Guidance on Digital Identity

26 March 2020

Clearly, we are all currently experiencing difficult times.

When it is all over, we will have learnt some important lessons.

We will reflect on how we could have been better prepared.

One area that will stand out is the lack of a ‘ubiquitous UK digital identity marketplace’ – expectant words spoken by Oliver Dowden in 2019 as Minister for the Cabinet Office and Paymaster General.

Working remotely, applying for emergency grants and loans from local authorities, proving a medical condition, being able to confidently engage online knowing that the real person or organisation is at the other end and being able to prove your identity have all become even more important aspects of daily life.

Earlier this month, the Financial Action Task Force (FATF) published an excellent document: Guidance on Digital Identity.

Some of the highlights are:

  1. Non face-to-face identification and transactions which are deemed high risk could become a standard level of risk or even a low risk in the context of the prevention of money laundering and preventing terrorist financing when using digital identities.
  2. The value of digital identities can be realised by all sectors, public and private, and is not just limited to financial services.
  3. Organisations that undertake identity checks in the UK would have the confidence to use federated digital identities if the UK Government endorses the associated digital identity scheme (and their regulators are mandated to include this in their guidance to these organisations).
  4. Where a non-government identity scheme is utilised, the relying party organisation can choose not to request the underlying identity proofs associated with the customer’s digital identity on the basis that the identity provider will store it.
  5. Utilising digital identities will help remove weaknesses in the human inspection processes inherent within existing customer due diligence (CDD) practices.
  6. There will be an improvement in customer experience, as the customer will be able assert their identity using their digital identity and the time to fulfilment will be reduced from days or weeks down to minutes and reducing costs by up to 90%.
  7. The ability to monitor transactions will be enhanced due to a greater level of confidence in knowing that the person currently accessing an account, or initiating a transaction, is the same person that opened the account in the first place.
  8. Increasing financial inclusion where individuals:
  • do not have government documents
  • need someone to vouch for them in terms of proving their identity
  • are geographically physically remote
  • need to engage with increasing levels of digitisation of services.

This guidance contains many positive aspects with regards to the use of digital identities, not just in the UK but around the world.

With the recognition from FATF that digital identities can play a major role in:

  • reducing risk
  • saving money
  • improving time to fulfillment
  • enhancing the customer experience
  • increasing financial inclusion

The UK Government and governments around the world have the remit to allow robust digital identity schemes to be adopted not only in the financial services sector but in any circumstance where an individual needs to assert their identity and provide associated attributes to prove eligibility for a product or service.

Learn more about the future of digital identity in the UK and beyond.

Find out how the FATF advice could positively influence your digital identity projects.