Brian Sims

Digital ID “key to global compliance efforts” outlines ACAMS-RUSI survey

THE BEST uses of digital ID for anti-financial crime purposes, which regions are most prepared to deploy the technology and whether local data privacy laws could impact its roll-out are some of the key findings from a new global survey commissioned by ACAMS and the Royal United Services Institutue (RUSI) in partnership with YouGov.

No less than 86% of the survey’s more than 300 participants (a group that includes representatives from multinational banks, Government bodies and academic organisations) view digital ID as a positive innovation, though respondents remain split as to whether they face legal barriers to its widespread use.

Although approximately 85% of respondents suggest that digital ID would most benefit customer onboarding, the survey identifies differences in opinion between those from jurisdictions where such tools are already in use and those in countries where that isn’t the case. Less than half of the survey participants from jurisdictions where the technology is currently available believe it can make onboarding cheaper and more effective, while two-thirds of respondents from nations where it’s not in use believe it could improve efficacy and lower the costs of bringing new clients on board.

When asked which compliance hurdles digital ID could help to overcome, 74% of respondents cited labour-intensive manual checks to verify and authenticate customer identities, 71% focused on the use of forged documents and/or identity theft and 67% identified customer friction and costs.

Fight against financial crime

Views of the technology’s potential impact on the fight against financial crime are also positive, with 62% of participants citing the provision of consistent customer ID data as the most important advantage conferred by digital ID and 57% indicating that it would enhance the ability of institutions to identify red flags and typologies of illicit finance. In short, steps that would ultimately allow compliance professionals to better detect criminal networks when taken alongside analyses of geolocation data and other information.

According to survey participants, the global deployment of digital ID faces potential hurdles when it comes to national legislation and technical standards. Respondents in the Middle East strongly believe that existing data privacy legislation permits the use of digital ID, whereas respondents in South America were much more hesitant, with most from this region expressing the opinion that present laws would hinder their adoption of digital ID.

A plurality of 49% cited the lack of standardisation of digital ID across the globe as the biggest hurdle to integrating the technology in every market in which their institution operates, while insufficient guidance and cyber crime concerns were cited by 41% and 38% of respondents respectively.

Reflection of optimism

“The findings of the ACAMS-RUSI Digital ID Survey reflect a great deal of optimism among financial institutions, law enforcement agencies and other vested parties that technological tools that help match potential clients to their official online identities can play an important role in detecting money launderers, fraudsters and other illicit actors,” observed Rick McDonell, executive director at ACAMS.

“However,” continued McDonell, “before that potential can be fully realised, more work needs to be done on a global scale to ensure legislative and regulatory compatibility in using digital ID to tackle the international nature of cyber crime and fraud.”

Isabella Chase, research Fellow at RUSI’s Centre for Financial Crime and Security Studies, responded: “These results show that digital ID certainly has an important role to play in the fight against financial crime. Although more cautious than we were expecting them to be, it appears the financial crime compliance community are ready to adopt this tool once regulatory hurdles have been overcome. In the long run, this will likely lead to a much more sustainable use of digital IDs.”

Of the 304 respondents who took part in the survey, 74% said they work in the private sector, with 38% of those indicating that they’re employed by international banks and the remainder citing other financial institutions, FinTech firms, technology providers or companies not in the financial sector.

A further 15% said they work in the public sector, while the remaining 11% said they were employed in academia, by charities, non-Government organisations or Think Tanks. Nearly two-thirds of the survey’s participants were located in either Europe or the US.

This is the third survey to be conducted jointly by ACAMS and RUSI on this subject since 2019.

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