On 31 October 2019, the Financial Action Task Force (FATF) launched a consultation on draft guidance on digital identity (Digital ID). The purpose of the consultation is to develop guidance to clarify how Digital ID can be used for customer due diligence (CDD). The FATF intends to use the guidance to assist governments, regulated entities and other relevant stakeholders apply a risk-based approach to the use of Digital ID for CDD.
Section II of the guidance sets out a brief summary of the key features of Digital ID systems. Section III summarises the main FATF requirements for customer identification and verification and ongoing due diligence. This section also explains how non-face-to-face customer-identification and transactions that rely on reliable independent Digital ID systems, may present a standard level of risk. Section IV describes the potential benefits and risks of Digital ID systems for anti-money laundering and counter-terrorist financing. The final section provides guidance on how to apply a risk-based approach to using Digital ID systems for customer identification and verification and explains how to leverage Digital ID assurance frameworks and standards for assessing reliability/independence.
The key questions that FATF wants stakeholders to consider are:
- Are there any specific money laundering / terrorist financing risks that arise from the use of Digital ID systems for CDD, other than those already mentioned in the guidance?
- What is the role of Digital ID systems in ongoing due diligence or transaction monitoring?
- How can Digital ID systems support financial inclusion?
- Does the use of Digital ID systems for CDD raise distinct issues for implementing the FATF record-keeping requirements?
The deadline for comments on the consultation is 29 November 2019.