Digital ID technologies are no longer limited by airports checks or government paperwork. Today, digital ID is actively pursued by private companies. Research shows that digital money wiring volumes grew 13% last year, and we are talking about 700 billion transactions annually. This move was noticed by regulators and state watch-dogs, resulting in what we know as FATF, aka Financial Action Task Force on Money Laundering. This international government body aims to establish a set of measures against money laundering and to ensure safety and efficiency of digital money and value transfers. FATF’s influence in on global scale, thus its most recent digital identification initiative is worth looking at attentively.
The organization’s last report contains technical and other valuable recommendations on establishing digital ID systems. However, every time blockchain technology comes up, terrorism financing and money laundering topics arise. FATF believes that applying digital ID in the financial sector must include full protection from internet threats. Statistics shows that 81% of all breached in private finance were caused by stolen passwords. That is why there must be severe rules imposed when it comes to passport data checks and verifications. If financial institutions and remittance systems follow those rules, new standards in digital ID for individuals will be created supporting development of digital identification in other areas.
FATF report also speaks about deeper cooperation between the private and public sectors. Government institutions that consider launching identification systems are invited to collaborate with other standardization bodies, like ISO, and cyber security and technology actors. This will give more room for effective tracking of transactions. It is worth noting that FATF mentions digital ID as one of the ways to reduce human mistakes in banking and other related sectors.
Discussion on digital ID is not finished, and FATF will return to this question in its February 2020 meetings to propose further amendments.