Photo: EJ Casanova

How Can We Trust And Regulate Digital ID Systems?

– Forbes Middle East

Writing for Forbes Middle East, Hala Bou Alwan reviews benefits and risks of digital identity in financial technology and guidelines, released by the Financial Action Taskforce (FATF)

The FATF guidelines relevant to digital service providers were released in early 2020 and apply to both government and financial institutions.

“The FATF recommended a risk-based approach to implementing digital ID systems for customer identification and verification. The process is divided into two phases. Phase 1, identify the assurance levels of the digital ID system’s reliability and independence based on its technology, architecture, and governance. And phase 2, make a risk-based determination of whether the digital ID system is appropriately reliable, independent in light of the potential money laundering, terrorist financing, fraud, and other illicit financing risks.”

Bou Alwan notes that the United Arab Emirates was the first nation to implement a digital identity and signature solution in UAE Pass, and is now encouraging local businesses to leverage anti-fraud, laundering and other financial technologies to prevent illicit activities.

Indeed, digital Identity helps a lot in conducting due diligence of customers, and if the steps mentioned in the FATF guidelines are followed on an ongoing basis, the system can initiate a huge transformation, especially in tackling money laundering and terror financing activities

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