Financial standards for digital ID released by global body
24 January, 2020
category: Digital ID, Financial, Government
A sure sign of the spread of digital ID is how the technology, increasingly backed by biometrics, is being applied to use cases outside border and airport security, and government services. Digital ID promises to help shape the future of payments and commerce — in many cases, probably in tandem with governmental efforts. Further proof of that comes from a relatively obscure but important Paris-based standards body.
Digital payments are growing nearly 13 percent year over year. That translates into some 700 billion transactions annually.
That body is called the Financial Action Task Force (FATF), and its job is to set anti-money laundering and similar standards that are vital to secure and efficient transactions, including digital payments. The group commands significant global influence, and that’s why its new digital ID draft report is newsworthy.
The report contains technical and other types of recommendation about how to deploy digital ID without running afoul of money-laundering, counterterrorism, know-your-customer and financial-inclusion rules, along with navigation aids when it comes to the use of such technologies as blockchain in such efforts. The draft report also pushes home the point that effective deployments of digital ID in the financial sector must include strong cybersecurity protections. If digital ID can get consumers past the use of relatively weak passwords, the thinking goes, that will further serve to boost growth and acceptance of digital ID in all areas.
As such, financial institutions and payment services providers are likely to at least loosely adhere to whatever final guidelines are set — and that will help shape the financial standards for digital ID in the daily lives of consumers and citizens.
Collaboration key to financial standards for digital ID
The report from FATF sets out the stakes involved — including from the governmental side.
“Digital ID standards, technology and processes, have evolved to a point where digital ID systems are, or could soon be, available at scale,” the report states. “Some of these relevant technologies include: a range of biometric technology, artificial intelligence/machine learning (e.g., for determining validity of government-issued ID), and distributed ledger technology.”
According to the FATF, digital payments are growing nearly 13 percent year over year. That translates into some 700 billion transactions annually at this point. And as one analysis of these new FATF guidelines put it, “similarly, digital ID systems are evolving rapidly and often go hand in hand with regulated electronic payments. The group has now issued guidelines for authorities on combining the two.”
The report also encourages what amounts to more collaboration between the private and public sector when it comes to digital ID efforts. “The FATF suggests that government agencies considering adopting ID systems should take a risk-based multi-stakeholder approach, involving standards bodies (such as the ISO), technical partners, and cybersecurity authorities,” the analysis says.
No matter what happens with this draft guidance, it will set the table for many digital ID discussions in 2020.
