On November 29, BPI submitted a response to the Financial Action Task Force’s (“FATF”) public consultation on its Draft Guidance on Digital Identity, which is aimed at clarifying “how digital ID systems can be used to conduct certain elements of customer due diligence” (CDD) at regulated entities under the FATF’s anti-money laundering/countering the financing of terrorism (AML/CFT) recommendations. BPI affirmed banks’ commitment to preventing illicit financial activity and expressed support for the FATF’s view that digital ID has the potential to strengthen AML/CFT and CDD controls, increase financial inclusion, improve customer experience and reduce costs for regulated entities. BPI stated that fundamental components will need to be addressed by both the public and private sectors before adoption for AML/CFT and sanctions compliance, including information collection expectations necessary to confirm identity, verification mechanisms, procedures for updating and retaining information, consumer privacy and data security protections, audit processes, expectations for using digital IDs in ongoing monitoring and, as necessary, the ability to rely on third-party or other providers. Furthermore, it stated that regulated entities should be included in all government-sponsored digital ID assessment discussions, so as to ensure harmonized and consistent global approach to digital ID standards.
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