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Digital identity plays a crucial role in the fight against money laundering, and techUK, a leading trade association, is calling for the UK government’s Digital Identity and Attributes Trust Framework (DIATF) to receive urgent legal backing. This plea comes in response to HM Treasury’s (HMT) recent consultation aimed at bolstering the UK’s anti-money laundering regulations.
On March 11, 2024, HMT initiated a consultation to enhance the Money Laundering, Terrorist Financing, and Transfer of Funds (Information on the Payer) Regulations 2017. These regulations are essential for businesses in identifying and preventing money laundering and terrorist financing. Given the rapid advancements in technology and the persistent global threats from economic crime, businesses need sophisticated tools to combat these issues effectively.
Baroness Vere of Norbiton, Parliamentary Secretary at HM Treasury, emphasized the significance of a robust anti-money laundering (AML) and counter-terrorist financing (CTF) framework. She highlighted that such a regime is vital for protecting the UK’s reputation as a secure business environment and maintaining the integrity of its financial system.
In its response to the consultation, techUK welcomed the focus on digital identity’s role in assisting the government, regulators, and law enforcement in combating money laundering. Key recommendations from techUK include enhancing the understanding of digital ID, explicitly incorporating the DIATF into AML regulations, and ensuring the trust framework is enshrined in law and governance.
techUK urged HMT to work closely with the Department for Science, Innovation and Technology (DSIT) to ensure the DIATF is rapidly enshrined in legislation, reinforcing its importance in the regulatory framework.
A recent study by Juniper Research projected that by 2028, spending on third-party AML systems would increase by 80%, rising from $28.7 billion in 2024. Biometrics is a significant driver of growth in banking security, including AML protections and compliance. Banks are increasingly using biometrics to prevent fraud, including account takeovers, false new account openings, and synthetic identity attacks, as reported by the International Banker.
techUK also highlighted the rising influence of digital assets, such as cryptocurrencies, within the financial ecosystem. While these assets offer benefits, they also present challenges due to their anonymity and ease of wallet creation, complicating regulation and control.
The Financial Conduct Authority (FCA) has led initiatives to address these challenges. techUK members advocate for a balanced approach to revising AML regulations, ensuring that new requirements add value and align with desired outcomes. Additionally, techUK recommends enhancing information sharing across sectors and improving real-time risk analysis beyond National Risk Assessments.
By solidifying the legal foundation of the DIATF, the UK can better equip itself to tackle money laundering and terrorist financing, ensuring a secure and trustworthy financial environment for businesses and consumers alike.
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