Solidify UK digital ID rules to boost AML, techUK urges Treasury

Digital identity has a critical role to play in combating money laundering, and the UK government’s Digital Identity and Attributes Trust Framework (DIATF) urgently needs legal backing, according to trade association techUK. The group was responding to HM Treasury’s (HMT’s) consultation on enhancing the Kingdom’s anti-money laundering regulations.

On March 11, 2024, HMT launched a consultation to improve the effectiveness of the Money Laundering, Terrorist Financing, and Transfer of Funds (Information on the Payer) Regulations 2017. These regulations are crucial for businesses in identifying and preventing money laundering and terrorist financing. The evolving landscape of technology and persistent global threats from economic crime necessitate advanced tools for businesses to combat these issues effectively.

Baroness Vere of Norbiton, Parliamentary Secretary at HM Treasury, highlights the importance of a robust anti-money laundering (AML) and counter-terrorist financing (CTF) regime. She stresses that such a regime protects the UK’s reputation as a secure business hub and maintains the financial system’s integrity.

In its consultation response, techUK expresses satisfaction with the focus on digital identity’s role in aiding government, regulators, and law enforcement in combating money laundering. Key recommendations from techUK include strengthening understanding of digital ID, reference to the trust framework in AML regulations, enshrine the trust framework in law and governance by the trust framework.

techUK says HMT should explicitly incorporate the DSIT Trust Framework for digital ID into the regulations, and should work with DSIT to ensure the Trust Framework is urgently enshrined in law.

A recent study by Juniper Research found that by 2028, total spend on third-party AML systems will have grown by 80 percent; up from $28.7 billion in 2024.

Biometrics is fuelling growth across many key areas of banking security, including AML protections and compliance. Banks are also using biometrics for preventing fraud in the form of account takeovers, false new-account openings and synthetic identity attacks, according to the International Banker.

techUK also addresses the growing influence of digital assets, such as cryptocurrencies, in the financial ecosystem. Despite their benefits, cryptocurrencies pose challenges due to anonymity and ease of wallet creation, which complicates regulation and control.

The Financial Conduct Authority (FCA) has spearheaded initiatives to address these challenges. techUK members advocate for a proportionate approach to revising the AML regulations, ensuring new requirements add value and align with desired outcomes. Additionally, techUK recommends facilitating greater information sharing across sectors and enhancing real-time risk analysis beyond National Risk Assessments.

Article Topics

AML  |  biometrics  |  fraud prevention  |  KYC  |  regulation  |  UK digital ID