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Private sector advances digital identity for fraud prevention while governments struggle


digital identity KYC security

SmartSearch has launched a new solution for digital identity verification in the U.S., while Nok Nok Labs and ForgeRock are trumpeting digital ID successes, and Veridas and Infosys are calling for governments to do more. The launch and blog posts have come out just as editorial calling for the digital identity framework in the U.S. to be overhauled has been published, and another noting the gap between the private sector and governments on fraud prevention.

The stakes are high, as the global market for digital identity infrastructure and services is forecast to grow at a 24.9 percent CAGR to $50.76 billion by 2026, from just over $16 billion in 2021, in a report from Mind Commerce. The report tabs government as one of the five main verticals for digital identity, along with financial services, telecom and IT, insurance, and healthcare.

SmartSearch brings biometric AML solution to U.S.

SmartSearch has launched a multi-level biometric identity verification solution to help make anti money-laundering (AML) compliance easy for customers in the U.S. market.

The new TripleCheck from SmartSearch combines three identity verification processes. SmartSearch’s familiar digital identity verification solution with sanctions and politically exposed persons (PEP) screening is Level 1, while Level 2 consists of a biometric ‘Selfie Liveness Video’ and ID document scanning. Level 3 combines digital signals to ‘triangulate’ a composite digital identity with a technology the company calls SmartSearch TripleCheck.

SmartSearch U.S. Vice President Martin Cheek notes incoming legislation may significantly increase how much businesses need to know about their customers for compliance.

Government falling behind banks, needs to act on digital ID

The struggles of the U.S. CARES Act, both to get payments to intended recipients and to avoid pouring public money into fraudulent accounts, is highlighted by legal and policy experts with Georgetown Law and PayPal for The Regulatory Review.

Fifteen years after the passage of the REAL ID Act, the last attempt by the U.S. Federal Government to address identification, 99 million Americans do not have ID that complies with the legislation, they point out. The authors go on to point out the benefits for of digital ID for “access, inclusion, participation, and innovation in a digital economy,” and point to initiatives such as Singapore’s national digital ID system, which adopted iProov face biometrics last year, and the Better Identity Coalition’s Blueprint as examples U.S. policy-makers can follow.

LexiNexis Risk Solutions Government Division CEO Woody Talcove writes in a Forbes Council Post that the COVID-19 relief payments fiasco in the U.S. also shows how far the government has fallen behind private sector organizations that have already had to adjust to deal with fraud risk and AML regulations.

The current approaches used have resulted in fraud rates between 25 and 30 percent for CARES payments, but new solutions being adopted often include creating honeypots of personally identifiable information (PII), which the Reg Review editorial authors warn also warn against.

Talcove urges U.S. federal, state and local governments to follow banks by putting digital identity technologies, and provides four steps to digital transformation they can take.

Digital identity providers tout successes

Digital identity technology providers are thinking along similar lines, with Nok Nok Labs, ForgeRock, Veridas and Infosys each writing about how methods for improving financial inclusion and reducing fraud with digital identity are ready for implementation.

Nok Nok writes about how banking giant BBVA is using FIDO authentication to secure user accounts against fraud with biometrics. ForgeRock, meanwhile, interviews Standard Chartered Bank Executive Director and Head of Technology Alan Chiew in a blog post about how it chose to give customers a choice of authentication methods when setting up its digital identity and access management (IAM) system, but with the same identity across different channels.

Veridas CEO Eduardo Azanza made the case for digital identity reform and the use of biometrics to support digital transformation in Spain’s Senate, the company announced.

Azanza put his argument in the context of the EU’s work on regulating AI, noting that biometric identification or verification do not involve emotion or demographic analysis, and the difference between 1:1 and 1:N processes.

Infosys President Mohit Joshi writes for the World Economic Forum that government should follow the lead of India and Estonia, and provides examples of countries following suit.

Joshi notes that BBVA Chairman Carlos Torres Vila has suggested an international panel of regulators for digital ID, much as the Financial Stability Board grew out of the financial crisis of 2008.

Pakistan working on digital ID policy

The Securities and Exchange Commission of Pakistan (SECP) is developing a comprehensive regulatory policy to promote the growth of fintech in the country, The International News reports.

Speaking during a webinar on the second cohort of the SECP’s regulatory sandbox, Chairman Aamir Khan said the fintech sector is growing rapidly in Pakistan, but is creating challenges for regulators. The sandbox initiative is part of SECP’s attempt to come to terms with those challenges.

For the regulatory sandbox’s second cohort, preference will be given to digital identity, AML and KYC innovations, among several other categories.

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