Financial Services and AML/CFT

Description

Overview: 

Digital Identity offers the promise of greater efficiency, security, interoperability, and trust in a variety of settings.  From the provisioning of financial services to government payments and access to citizen services, digital ID can enable improved customer identification and verification in the digital age.  However, the development of a digital identity ecosystem touches on issues that cross sectors and industries, such as anti-money laundering and combating the financing of terrorism (AML/CFT) policies and regulations.  To prevent the financial system from abuse by money launderers, terrorist financiers and other illicit actors, AML/CFT regulations implemented under the Bank Secrecy Act (BSA) require covered financial institutions to comply with the Customer Identification (CIP) Rule and the Customer Due Diligence (CDD) Rule.  The CIP Rule requires financial institutions to identify and verify the identity of their customers that open accounts.  The CDD Rule, which went into effect on May 11, 2018, requires financial institutions to identify and verify the identity of individuals, or beneficial owners, who own or control their legal entity customers that open accounts.  

This session will outline the potential uses of digital ID to support compliance with AML/CFT regulations.  Participants will engage with a panel from the public and private sector to discuss the challenges and opportunities associated with digital ID and the requirements of the CIP and CDD Rules. The session will also include a discussion of potentially viable applications of digital ID technologies that may support financial institutions with the identification and verification of their customers and the beneficial owners of their legal entity customers.  

Federal Fireside Chat
A discussion with Treasury leadership on the regulatory and U.S. government landscape on AML/CFT efforts and government innovation.

• Ross Nodurft (moderator), Principal, One World Identity (OWI)
• Jeremy Kuester, Deputy Associate Director, Financial Crimes Enforcement Network (FinCEN) Policy Division
• Anne Wallwork, Senior Counsel for Strategic Policy, U.S. Treasury’s Office of Terrorist Financing and Financial Crimes (TFFC)

Panel: Use of Digital Identity to Identify and Mitigate Money Laundering and Terrorist Financing Risks

A discussion with government and industry leadership on government and industry efforts and challenges in AML/CFT and their intersection with emerging technology and digital identity, including current and emerging trends as well as potential decision points and opportunities for industry and government in shaping their direction.

• Carole House (moderator), Cyber and Emerging Tech Policy Specialist, Financial Crimes Enforcement Network (FinCEN) Policy Division
• Jeremy Kuester, Deputy Associate Director, Financial Crimes Enforcement Network (FinCEN) Policy Division
• Anne Wallwork, Senior Counsel for Strategic Policy, U.S. Treasury’s Office of Terrorist Financing and Financial Crimes (TFFC)
• Garrett Gafke, CEO, IdentityMind Global
• Phil Lam, Vice President of Risk Product Strategy, Early Warning Services
• Marco Piovesan, CEO, InfoMart
• Joseph Stuntz, Principal, OWI

Workshop: AML/CFT Digital Identity
Speakers and session participants will organize around four table groupings to discuss core issues regarding gaps, challenges, and areas of uncertainty in leveraging and developing digital identity solutions and infrastructure to combat money laundering and terrorist financing.  The four workshops include the following:

1. RISK VS. COMPLIANCE MANAGEMENT: How can regulators and industry shift culture, policies, and technological innovation from compliance management to actual risk management?
   • POC: Jeremy Kuester, Joseph Stuntz
2. ROLE OF GOVERNMENT VERSUS ROLE OF INDUSTRY: What are the distinct, mutually supporting, or contrasting roles of government versus industry in supporting development and adoption of digital identity solutions and standards for use by the financial sector?
   • POC: Anne Wallwork, Garrett Gafke
3. SHARING COST AND SHARING INFORMATION: What opportunities and challenges exist for the financial sector to share the cost of compliance burdens through implementation of shared or reciprocated digital identity and AML/CFT solutions?  How can digital identity solutions facilitate sharing of information to combat money laundering and terrorist financing.
   • POC: Phil Lam, Carole House
4. TECHNOLOGICAL TRENDS AND USE CASES: What are the emerging trends in advanced analytics and artificial intelligence in supporting AML/CFT efforts?  How will technology change what compliance and combating financial crime looks like over the next thirty years?
   • POC: Marco Piovesan, Ross Nodurft

The goal of this workshop session is for each group to articulate the nature of and factors contributing to the key challenge areas, as well as discuss what potential industry and government initiatives or solutions in digital identity could better enable AML/CFT efforts and regulatory compliance.  Workshop POCs will foster conversation and friendly debate, with a volunteer notetaker at each table to keep track of the key issues discussed.

Wrap Up
At the end of the workshop, each group will select one presenter to share and summarize the main points raised by the participants, including key challenges, contrasting views, potential next steps, and new questions raised.