On 6 March 2020, the Financial Action Task Force (FATF) published guidance on digital identity (digital ID).
The FATF guidance is intended to assist governments, regulated entities and other relevant stakeholders in determining how digital ID systems can be used to conduct certain elements of customer due diligence under FATF Recommendation 10.
Section II of the guidance briefly summarises the key features of digital ID systems that are explained in further detail in Appendix A. Section III summarises the main FATF requirements addressed in the guidance, including the requirement to identify and verify customers’ identities using ‘reliable, independent’ source documents, data or information. The guidance clarifies that non-face-to-face customer identification and transactions that rely on reliable, independent digital ID systems with appropriate risk mitigation measures in place, may present a standard level of risk, and may even be lower risk. Section IV covers the benefits and risks of digital ID systems for anti-money laundering / countering the financing of terrorism compliance and related issues. Section V provides guidance for government authorities, regulated entities and other relevant parties on how to apply a risk-based approach to using digital ID systems for customer identification and verification consistent with FATF Recommendation 10(a) and to support ongoing due diligence in Recommendation 10(d). The recommended approach is technology neutral. Section V also explains how to leverage digital ID assurance frameworks and standards for assessing reliability / independence.
The guidance is non-binding. It clarifies current FATF standards, which are technology neutral.