Digital IDs Becoming Useful for Fighting Financial Crimes
The use of digital IDs has proved to be advantageous for fighting financial crimes. Research has been conducted by ACAMS, RUSI, and YouGov disclosing the findings regarding the financial crime compliance community and the use of digital IDs.
This research is conducted after FATF (Financial Action Task Force) published its guidance on the use of digital IDs.
The survey revealed that 86% of the 300 participants showed positive response towards the use of digital IDs. 85% of the respondents also claimed that the use of the Digital ID improves the customer onboarding process.
“These results show that Digital ID certainly has an important role to play in the fight against financial crime,” said Isabella Chase, Research Fellow at the Centre for Financial Crime and Security Studies at RUSI. “Although more cautious than we were expecting 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 the much more sustainable use of Digital IDs.”
The participants were asked about what types of problems the use of digital IDs could eliminate. They answered that labour-intensive manual checks for customer’s identity verification and capturing forged or stolen ID documents could be overcome with digital IDs. The customer friction and the cost could be reduced as well.
When talking about financial crime, 62% of the participants claimed that consistent customer ID data would be an important benefit of digital ID while 57% of the participants responded that digital IDs would certainly help the institutions with the identification of red flags and typologies of illicit financial activity.
The survey also revealed that 76% of the participants who are not already using digital ID for complying with the financial crime regulations would like to adopt it.
However, the digital IDs may be accepted as most beneficial in fighting financial crimes, it does not come without the risks. The major risk of the use of digital IDs is data breach and an increase in cybercrime. Even after some risks, digital IDs are still considered the best approach compared to paper-based IDs, which are more vulnerable to fraud risks than digital IDs. Most of the respondents also said that they would trust the government-issued Digital ID only.