FATF encourages digital onboarding, UK regulator allows selfies as proof of ID to keep funds moving
The Financial Action Task Force (FATF) is encouraging government to work with financial institutions and other businesses to take advantage of the flexibility built into the organization’s risk-based approach to combatting money laundering and terrorism financing, and also encouraging “the fullest use of responsible digital customer onboarding and delivery of digital financial services in light of social distancing measures.”
According to an official statement from FATF President Xiangmin Liu, criminal fraud and scams are proliferating to target organizations or people who relax their vigilance, and exploit gaps that appear in anti-money laundering (AML) and counter-financing of terrorism (CFT) checks.
The use of fintech provides an opportunity for people to manage some of the issues presented by COVID-19, but depends on the establishment of trustworthy digital identity, as outlined in FATF’s recent “Guidance on Digital ID,” which allows transactions identified as lower risk to meet FATF standards with simplified due diligence.
The organization also notes that FATF standards do not require all non-profit organizations to be considered high-risk, and that the aim of the standards is not to prevent financial transactions in areas with high risks of money laundering and terrorism financing, but simply to direct them through legitimate and transparent channels.
Governments and regulators should provide clarity to the private sector on how AML and CFT laws will be maintained during the crisis to ensure an appropriate response keeps funds moving as needed. Efforts to adapt standards and rules as necessary to deal with the pandemic, meanwhile, remain ongoing.
“At the international level, the FATF is working with the Committee on Payment and Market Infrastructures and the World Bank to help ensure coordinated policy responses for the continued provision of critical payment services against the backdrop of the COVID-19 crisis.
The UK’s Financial Conduct Authority (FCA) has followed the FATF’s advice by adapting its regulations, allowing bank customers to accept selfies taken on smartphones and documents scanned and sent by email as proof of identification for AML purposes, The Telegraph reports.
The FCA says it received hundreds of requests to make the rule change from trade bodies, though it characterized some as “opportunistic.” One-time passcodes (OTP) are also acceptable under the new rules.
Portfolio management services are required to inform customers when their holdings drop by 10 percent or more, but in a volatile market in which the usual methods of proving who the customer is are not possible, this process has become a burden, firms say.
Socure will hold a webinar along with SoFi, Varo Money, and Lili to explore fraud mitigation and a potentially increased role in the financial system on Thursday, April 2, from 2:30 PM to 3:30 PM EDT.
According to the announcement, the webinar titled “Challenger Banks Weigh In: Fraud, Growth, and Innovation in Turbulent Times” will include insights on how fintech business models are built for uncertain times, preparing digital identity verification and fraud prevention strategies for stimulus fund disbursement, educating customers and preparing internally for pandemic-related scams, and aligning strategies for fraud, growth, and innovation.