The Financial Action Task Force (FATF) is seeking public consultation on their draft guidance
regarding digital identity and its benefit to customer due diligence (CDD). FATF hopes that their guidance will "...help governments, financial institutions and other relevant entities apply a risk-based approach to the use of digital ID for CDD." In the guidance, FATF explains that the growth of digital financial transactions is an impetus for clarification of what digital identity technologies are currently utilized to identify and verify individuals in digital financial services. Effective authentication of consumer identity is critical for anti-money laundering and counter financing of terrorism (AML/CFT) efforts.
The areas of focus for the consultation are:
- Specific money laundering / terrorist financing risks that arise from the use of digital identity systems for CDD, other than those already mentioned in Section IV of the guidance;
- The role of digital ID systems in ongoing due diligence or transaction monitoring;
- How digital ID systems can support financial inclusion;
- The use of digital ID systems for CDD and whether it raises distinct issues for implementing FATF record-keeping requirements.
FATF's request for public consultation on digital identity can be found here