Official UK approval for AML with digital identity coming soon

Financial institutions in the UK will soon be able to use digital identities to carry out AML checks, so long as they are trusted.

Work on new Money Laundering Regulations (MLRs) has been announced by HM Treasury and the Department for Science, Innovation and Technology’s (DSIT’s) Office for Digital Identity & Attributes (OfDIA). The guidance implements the changed status of digital identities under the Data (Use and Access) Act.

The new MLRs will define trusted digital identities as those from providers certified under the Digital Identity and Attributes Trust Framework (DIATF), which certification process is recognized by the UK Accreditation Service (UKAS).

The guidance follows a public consultation process on how digital identity verification could be used in anti-money laundering during which Treasury received more than 200 responses.

The announcement notes the impact digital identities can have on the efficiency of fraud and compliance checks, referring to the Financial Services Growth and Competitiveness Strategy’s argument that the sector could take one of the largest shares of a hoped-for “£4.3 billion in economic efficiencies” from the DUA.

The announcement also notes that 27 percent of those surveyed for OfDIA’s Digital Identity Sectoral Analysis had used digital identity to open a bank account, and 75 percent saying digital identity verification was quicker than the equivalent process with a physical document.

A blog post from Yoti suggests the guidance will also offer practical guidance for integrating digital identity with risk-based customer due diligence (CDD), such as when onboarding high-risk clients, and how to handle overlap between attributes, like being old enough to open an account, and the AML requirements.

The company goes on to expound the benefits for businesses using digital identities, like better fraud prevention with biometrics and liveness detection, and facilitation of ongoing risk monitoring.

Article Topics

AML  |  DIATF certification  |  digital ID  |  digital identity  |  fraud prevention  |  OfDIA  |  UK digital ID