Anti-money laundering (AML) and know your customer (KYC) regulators have released the hounds, with billions in fines leveled by governments worldwide against financial institutions (FIs), online marketplaces and other entities in recent months for various violations.

Penalties are a motivator, as is evident from reading the March 2020 AML/KYC Tracker® done in collaboration with Trulioo. The European Union’s Fifth Anti-Money Laundering Directive (5AMLD) went into full effect in January of 2020, as a slew of new American data privacy laws delivered a pincer-like movement to the commercialization of data.

Solution providers, government agencies and financial consortia are innovating like mad to meet strict new identity standards – ahead of the other strict new specs coming next year.

The Real You

Biometrics are a major focus of the AML/KYC activity, as it digitally captures people’s identities. That’s the ambitious objective, and it even helps bridge issues of inclusion around those without formal identification, as well as the unbanked. Even with the interruptions to global travel and supply chains caused by the COVID outbreak, cross-border trade and tourism will go on.

That fact keeps pointing in the direction of global trusted identities that are founded on biometrics and able to cross borders and transact. “In order to quickly adapt AML efforts, payment processing companies should consider flexible, scalable and interoperable technology that can easily be reconfigured for many in-market conditions coincidingly,” Zac Cohen, chief operating officer of identity solutions firm Trulioo, told PYMNTS.

“Additionally, for identity verification, a layered approach that applies the correct screening and onboarding workflows for the right customer at the right time is the way to go if these companies want to obey the ever-evolving laws and regulations around AML globally,” he said.

The Digital Identity Tour

Onboarding is where many AML/KYC problems begin, and regulators are scrutinizing account origination in their efforts to stem the flow of illicit dollars and straight-up theft.

The March 2020 AML/KYC Tracker® details the drama still unfolding in India over a year after the Supreme Court there struck a credentialing blow to digital banks and FinTechs. It’s a bit of a mess, with an estimated 200 million verified users requiring reauthentication under the ruling.

Meanwhile, in Thailand, six financial institutions (FIs) have linked up to use new eKYC biometric remote scanning to meet verification requirements. It’s an experiment that others around the banking sphere are watching, as it leverages the collective strengths of FIs. Similar tests are underway from the United Arab Emirates to Uganda, the inner workings of which can be found in the latest AML/KYC Tracker®. It’s all part of the move to trusted digital identities.

“Digital identities can help, as the credentials can be accessed online from anywhere and are not dependent on individuals finding and retaining physical documents,” the report states. “Organizations must be careful to ensure data security and consumer privacy when creating online IDs, however. Countries have already taken different privacy issue approaches: Some are eagerly collecting residents’ biometric information, while others are more cautious about gathering such sensitive details.”