Bermuda holds consultations on new regime for digital ID service providers

Work is underway in Bermuda for the introduction of a new regulatory framework for all entities providing digital identity services (DISPs).

The Bermuda Banking Authority (BMA) held consultations with key stakeholders in this regard recently to get ideas on what factors to incorporate into the draft legislation being worked upon. The BMA called for feedback on the licensing framework last November.

The BMA said in a statement after the recent consultations that they were aimed at discussing how best to establish a robust and flexible regulatory system for DISPs to help function in ways that enhance innovation, data protection and cybersecurity, and alignment with global standards.

DISPs in Bermuda have as principal role the facilitation of customer onboarding for financial services, but under the new framework, they’ll have an extended scope to include identity proofing, primary authentication, issuing electronic credentials, and enrollment services among others.

According to officials, the objective of the new framework is to put in place a streamlined, secure, and innovative atmosphere where DISPs can operate optimally and for the best interest of users. It also aims to spur up the adoption of digital ID in the British Island territory.

Stakeholders made wide ranging proposals on several specific areas relating to the scope of the framework, outsourcing and responsibilities, vetting responsibilities for issuing digital IDs, assurance, portability and interoperability, the licensing approach with many stakeholders proposing a tiered model instead of an opt-in method, physical presence requirements for DISPs, as well as public-private partnership factors.

Among other things, the stakeholders suggested that the new framework should ensure support for outsourcing with clearly defined responsibilities for DISPs, the inclusion of all DISPs in the licencing framework, limiting the role of DISPs to identity verification and not Know Your Customer (KYC) screening, ensuring that all operations align with internation standards, and being flexible about the aspect of physical presence for licensing.

The BMA thanked the stakeholders for their invaluable inputs, and vowed to conduct further consultations in efforts to refine the ideas that will form the draft regulatory framework to be presented to state authorities for eventual approval.

The banking authority also reiterated its commitment to strong stakeholder engagement in the course of the regulatory framework drafting process.

Stakeholders that were involved in the consultations included cybersecurity and digital ID industry experts, DISPs, financial institutions and relying parties, recognized financial institutions, regulatory and compliance bodies, as well as those advocating public-private partnerships to drive digital ID adoption.

Article Topics

Bermuda  |  digital identity  |  government services  |  identity proofing  |  Identity Service Providers (IDSP)  |  trust framework