Digital ID Perceived As Beneficial in Combatting Financial Crime

ACAMS and RUSI, in partnership with YouGov, have released the findings from a global survey to explore how the financial crime compliance community views the utility of Digital ID.

The survey comes a year after the FATF (Financial Action Task Force) released its guidance on Digital ID.

Some 86% of 300 participants surveyed view Digital ID as a positive innovation, though respondents remained split on whether they face legal barriers to its widespread use.

Approximately 85% of respondents say that Digital ID would most benefit customer onboarding.

However, less than half of the participants from jurisdictions where the technology is currently available said it can make onboarding cheaper (48%) and more effective (44%). Two-thirds of respondents from nations where it is not in use said it could improve the efficacy (65%) and lower onboarding costs (67%).

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

In the context of financial crime, 62% of participants cited the provision of consistent customer ID data as the most important advantage conferred by Digital ID, while 57% indicated that it would enhance the ability of institutions to identify red flags and typologies of illicit finance.

According to the survey, 76% of respondents who do not currently use Digital ID for financial crime compliance would like to do so, however the most commonly stated barriers were a lack of standardisation (49%), followed by a lack of guidance (41%) and cybersecurity concerns (38%).

While Digital IDs are perceived to be beneficial for the fight against financial crime, the survey highlighted that they may also present risks to users and to the institutions that accept them.

The greatest risks of Digital IDs are perceived to come from data breaches (69%), the exploitation of the vulnerable (67%), identity theft (58%), increased cybercrime (57%), and increased fraud (43%).

Respondents also expressed concerns about inadequate technology and controls to maintain and regularly update the records of a Digital ID (70%) and individuals selling their Digital ID credentials to organised crime groups (63%).

Still, despite the perceived risks, respondents that paper-based IDs are still more vulnerable than Digital IDs.

“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.”