The Financial Action Group has published a guide to digital identity

The Financial Action Group (FATF) wants financial institutions to prepare for the global expansion of digital identification systems.

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1 Financial action group request to the authorities

1.1 Related posts:

The Supervisory Authority has published a guide on digital identity from the perspective of anti-money laundering (AML) and terrorist financing (CFT) regulations.

FATF aims to address the emerging issues of security and transparency, in the context of processing financial transactions entering the digital age. The guide specifically lists distributed ledger technology (DLT) as a tool that can help grow digital identification networks. A number of blockchain companies have already started developing solutions in this area, such as Civic.

The 77-page project details many issues related to digital identification systems, including their reliability and independence. It also highlights how digital identity can be used to perform customer checks.

Financial action group request to the authorities

The intergovernmental organization has posted on its website a series of questions to which it expects feedback by e-mail until November 29, 2019.

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Areas of interest include the specific risks that the digital ID can present for the application of AML / CFT. Also, digital identity could support financial inclusion and help monitor transactions. Some questions address the potential impact on the implementation of FATF record keeping requirements.

FATF also requested the authorities

“To develop clear guidelines or regulations that allow the proper use of reliable and independent digital identity systems.”

The organization has been increasingly active in the blockchain space this year. In June, the organization published its guidance for crypto exchanges and other service providers. They need to implement strict KYC protocols around digital asset transfer.