G20 Digital Identity Onboarding THE ROLE OF DIGITAL IDENTITY IN THE FINANCIAL SECTOR Agriculture Sector The agriculture sector remains the backbone of the Rwandan economy in terms of contributions to national gross domestic product (GDP) and employment and income generation for the majority of households. Agriculture contributed nearly one-third (32.7 percent) to national GDP in 2015, and it continues to be a critical driver of economic growth (4.8 percent during the 2000–16 period). Further, it contributed an estimated 35 percent to the decline in poverty over the past decade (World Bank 2017b). In 2014, the sector was the largest contributor to total employment in the country (more than 70 percent of 5.6 million total employment) and was the fourth largest contributor to nonfarm private sector jobs in the economy (contributing 7.4 percent of the estimated 351,000 jobs). The agriculture sector has an estimated 3.65 million have contributed substantially to the agricultural sector’s agricultural operators, and most cultivate extremely growth in general and productivity gains in the targeted small plots of land. Of these agricultural operators, an crops. Rwanda is among the few African countries with estimated one million are women (Seasonal Agriculture close to 10 percent public spending on agriculture. Survey, NISR 2016). Although agricultural land plots A major policy reform particularly relevant to agriculture are generally very small (often divided into three to four finance has been the land tenure regularization program plots), this masks a wide range. About 30 percent of (ADB n.d.). Rwanda is one of the few African countries households cultivate less than 0.2 hectares (accounting that have undertaken major land tenure regularization for about 5 percent of total arable land), while about 25 programs. During the program implementation in 2009– percent cultivate more than 0.7 hectares (accounting for 13, more than 10 million parcels of land, accounting 65 percent of the national farmland). for 97 percent of the total land, were demarcated. The Rwanda Natural Resource Authority issued titles for the Smartcrds 83 percent of the parcels that had claimants. Following A key component of the PSTA is the Crop Intensification these efforts, the majority of rural households report using Program (CIP). In 2007, the GoR launched the Crop their land as collateral for loans. In the fourth round of the Intensification Program with the goals of increasing Integrated Living Standards Survey (EICV4) undertaken agricultural productivity of priority food crops, achieving during 2013/14, among rural households who reported food security, and increasing rural households’ income. having a loan in the past 12 months from a formal or The CIP had four main components: farm land use semi-formal source, 54 percent reported having used land consolidation, access to affordable farm inputs through as collateral. Rwanda is among the few African countries government subsidies, proximity extension services, and with close to 10 percent public spending on agriculture. post-harvest handling and storage. The CIP’s design and Rwanda is among the few African countries with close to implementation approach has evolved over the years; 10 percent public spending on agriculture. particularly relevant is that subsidy levels have fallen The draft National Agricultural Policy 2017–30 (NAP) over time. Notwithstanding the need to strengthen the identifies key priorities for further development and design and implementation further, the CIP is estimated to © 2018 The World Bank Group 1818 H Street NW Washington, DC 20433 Telephone: 202-473-1000 Internet: www.worldbank.org All rights reserved. This volume is a product of the staff and external authors of the World Bank Group. 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Photo Credits: Shutterstock TABLE OF CONTENTS ACKNOWLEDGEMENTS V GLOSSARY VII ABBREVIATIONS AND ACRONYMS XI EXECUTIVE SUMMARY XIII INTRODUCTION 1 Objective 1 Background and Definitions 1 Methodology 4 THE ROLE OF DIGITAL IDENTITY IN THE FINANCIAL SECTOR 7 The Importance of Identity 7 Important Characteristics of ID for the Financial System 9 Risks and Challenges in Implementing Digital ID 11 Exclusion Risks 11 Privacy and Data Protection 11 Cost and sustainability 12 APPROACHES TO INTEGRATE ID INTO THE FINANCIAL SECTOR 13 Using Existing Legal IDs 13 Private Sector Initiatives 14 Social Data for Identity Proofing 14 Blockchain and Digital ID Identity 15 G20 DIGITAL IDENTITY ONBOARDING I APPLICATIONS OF IDENTITY IN FINANCIAL SERVICES 19 Account Opening 21 Customer Authentication 21 Personal Identification Number (PIN) 22 Smartcards 23 Mobile SIM Authentication 23 Biometric Based Authentication 24 Payment Systems and Services 26 Combining ID and Payment Applications 26 Using the Digital ID Infrastructure for Authentication 26 Using the ID Credential as An ‘Address’ 27 Government To Person (G2P) Payments 28 Role in Humanitarian Assistance 28 Credit Reporting 31 Record-Keeping, Document Management and Digital Signature 32 Small Businesses 33 Insurance 34 KEY FINDINGS 37 POLICY CONSIDERATIONS 41 ANNEX 1: LEVELS OF ASSURANCE 45 ANNEX 2: THE IDENTITY LIFECYCLE 47 ANNEX 3: UNHCR ID SYSTEM 51 ANNEX 4: REFUGEE DIGITAL ID CASE STUDIES 53 ANNEX 5: COUNTRY CASE STUDIES 55 Canada 55 Mexico 57 Nigeria 59 Norway 59 Pakistan 60 Peru 61 United Kingdom 62 II TABLE OF CONTENTS 65 ENDNOTES LIST OF BOXES Box 1: G20 High-Level Principles for Digital Financial Inclusion 1 Box 2: Defining Digital Identity 3 Box 3: Digital Identity and Gender Equality 5 Box 4: Historical Evolution of the Concept of Customer Due Diligence 8 Box 5: Case Studies Highlighting the Benefits of Digital ID to Governments 10 Box 6: Legal IDs: NADRA, Peru ID, Aadhaar, SPID 13 Box 7: Private Sector Initiatives: FIDO, BVN, Gov.UK Verify, BankID 15 Box 8: Case Study: India ‘JAM Trinity’ 21 Box 9: Case Study: Peru ‘Modelo Pero’ 22 Box 10: Near Field Communication (NFC) and Radio Frequency Identification (RFID) 23 Box 11: GSMA’s Mobile Connect 24 Box 12: Cross Border Systems 25 Box 13: Biometrics 25 Box 14: Case Study: Singapore ‘SingPass’ 27 Box 15: Case Study: Pakistan ‘NADRA’ 27 Box 16: Case Study: Pakistan ‘NADRA’ 31 Box 17: Case Study: Norway ‘Bank-ID’ 32 Box 18: Case Study: Canada ‘BN9’ 33 Box 19: Case Study: Serbia ‘UBI Digital ID’ 33 Box 20: Legal Entity Identifier (LEI) 34 Box 21: Case Studies: Estonia 34 Box 22: Case Study: Mexico ‘CURP’ 39 Box 23: eiDAS 49 LIST OF FIGURES Figure 1: Universal Financial Access by 2020 2 Figure 2: Document Type Needed for Account Opening 2 Figure 3: Representation of Digital and Legal IDs and the Overlaps 4 Figure 4: Acceptance of Simplified Customer Due Diligence Requirements 8 G20 DIGITAL IDENTITY ONBOARDING iii Figure 5: Dimensions of ID System Type 9 Figure 6: Lack of Appropriate Identity Characteristics and Its Impact on the Financial System 11 Figure 7: Assessment of Authentication Robustness of Blockchain 17 Figure 8: Financial Service Stages and Phases 19 Figure 9: Benefits of Digital ID 20 Figure 10: Overview of Humanitarian Assistance 28 Figure 11: Digital Identity Lifecycle and Key Roles 47 LIST OF TABLES Table 1: Comparisons of Different ID Systems for Refugees 29 Table 2: Comparison of ID Registration Processes 30 Table 3: Principle on Identification for Sustainable Development: Towards the Digital Age 40 Table 4: Identification When Signing on Products (Accounts, Loans and Transactions) 58 IV TABLE OF CONTENTS ACKNOWLEDGEMENTS This report was written and coordinated by a diverse range of stakeholders across the World Bank Group (WBG) – with specific thanks to the WBG’s Identification for Development (ID4D) initiative; the Global Partnership for Financial Inclusion (GPFI) and G20 countries. The WBG, as an Implementing Partner for the Subgroup on Regulation and Standard-Setting Bodies, took leadership on this paper, with involvement from Subgroup members including CGAP (Consultative Group to Assist the poor), DFID (Department of International Development) and other implementing partners. The WBG core team was led by Harish Natarajan and consisted of team members: Sharmista Appaya (lead author) and Sriram Balasubramanian. Vyjayanti Desai, Seth Ayers, Julia Michal Clark, Jonathan Daniel Marskell, Emile De Willebois, Fredesvinda Montes and Margaret Miller (all WBG) provided inputs all through the process and Lauren Kaley Johnson supported on the graphics and publication. Mahesh Uttamchandani provided managerial oversight. Loretta Michaels (WBG), Minita Mary Varghese (WBG) and a Consult Hyperion team led by Paul Makin contributed to the development of the outline, early drafts and research. We are grateful for the leadership and support from the Argentinian G20 representative Gabriel R. Bizama and Francesca Brown (DFID) who chaired the discussions, as well as the GPFI committees, namely the Subgroup on Markets and Payment Systems, the Subgroup on Financial Consumer Protection and Financial Literacy, the Temporary Steering Committee on Forcibly Displaced Persons and the Subgroup on Regulations and SSB, and to the heads and team members of member countries such as Germany, Italy, India, Norway, Mexico, Canada, and the UK, among others. These include Rajesh Kumar Sharma (India), Monika Sethi (India), Hege Rottingen (Norway), Dr. José Luis Negrín (Mexico), Alexandra Rudolph (Germany), Francoise Felipe Dube (Canada), Joni Brennan (Canada), Tim Bouma (Canada) inter alia. We would also like to thank the following WBG staff and (Bill Gates Foundation) and Yannis Theodorou (GSMA). consultants and G20 country representatives for research Lastly, we thank Aichin Lim Jones and Amy Quach for support and peer review: Anita Mittal (ID4D), Joscha overall design and production services. Albert (Germany), Ricardo Settimo (Italy), Fabio Teramo The findings, interpretations, and conclusions expressed (Italy), Sonia Guida(Italy), Angela Caporrini (Italy), in the paper and case studies are entirely those of the Edgar Cortes (Mexico), Diego Lombardo (Argentina), authors. They do not necessarily represent the views of Nadezhda Prasolova(Russia), Paul Nelson (US AID), the World Bank Group and its affiliated organizations or Timothy Lyman (CGAP), Nadine Chehadi (CGAP), those of the Executive Directors of the World Bank or the Antonio Navarro (CGAP), Laura Ellison (DFAT), Maria governments they represent. Do Ceu Pereira (WBG), Matei Dohotaru (WBG), Kuntay Celik (WBG), Emilie Van der Does (WBG), Himanshu G20 DIGITAL IDENTITY ONBOARDING V GLOSSARY Attribute: A named quality or characteristic inherent in or ascribed to someone or something. In identification systems, common personal identity attributes include name, age, sex, place of birth, address, fingerprints, a photo, a signature, an identity number, date and place of registration, etc.1 Authentication: The process of proving that a person Credential: A document, object, or data structure is who they claim to be. Digital authentication generally that vouches for the identity of a person through some involves a person electronically presenting one or more method of trust and authentication. Common types of “factors” or “authenticators” to “assert” their identity— identity credentials include—but are not limited to—ID that is, to prove that they are the same person to whom cards, certificates, numbers, passwords, or SIM cards. A the identity or credential was originally issued. These biometric identifier can also be used as a credential once factors can include something a person is (e.g., their it has been registered with the identity provider.6 fingerprints), knows (e.g., a password or PIN), has (e.g., Customer Due Diligence: FATF Recommendation 10 on an ID card, token, or mobile SIM card), or does (e.g., CDD is based on four pillars, requiring: 1) identification their handwriting, keystrokes, or gestures).2 and verification of customers, 2) identification and Biometrics: Physical or behavioral attributes of an verification of beneficial owners, 3) understanding the individual, including fingerprints, irises, facial images, nature and purpose of transactions, 4) monitoring the gait, signatures, keystrokes, etc.3 clients and their transactions on an ongoing basis. Biometric identification: Digital biometric identification Customer On-Boarding: The process of a financial involves comparing a template generated from a live services provider establishing a business relationship biometric sample to a previously stored biometric in with a customer. order to determine the probability that they are a match. De-duplication: In the context of identification systems, One-to-one (1:1) matching is a comparison against a it is a technique to identify duplicate copies of identity single template (e.g., one stored on an eID card) and is data. Biometric data—including fingerprints and iris typically used for authentication and verification. One- scans—are commonly used to de-duplicate identities in to-many (1:N) matching is a comparison against all or order to identify false or inconsistent identity claims and a subset of templates stored in a database, and can be to establish uniqueness.7 used for identification (e.g., a criminal record search) or deduplication (i.e., ensuring that each individual Digital identity: A set of electronically captured and exists only once in the database). In principle, 1:N stored attributes and/or credentials that uniquely identify deduplication allows identity providers to establish a person.8 statistical uniqueness in a population.4 Digital identification (ID) system: An identification Blockchain: A ‘blockchain’ is a particular type of data system that uses digital technology throughout the structure used in some distributed ledgers which stores identity lifecycle, including for data capture, validation, and transmits data in packages called “blocks” that are storage, and transfer; credential management; and connected to each other in a digital ‘chain’. Blockchains identity verification and authentication.6 employ cryptographic and algorithmic methods to Distributed Ledger Technology: refers to a novel and record and synchronize data across a network in an fast-evolving approach to recording and sharing data immutable manner.5 G20 DIGITAL IDENTITY ONBOARDING VII across multiple data stores (or ledgers). This technology KYC Registry: A KYC Registry refers to a centralized allows for transactions and data to be recorded, shared, repository of CDD records of customers in the financial and synchronized across a distributed network of different sector. It allows inter-usability of the CDD records across network participants.5 the sector with the objective to reduce the burden of Foundational identification system: An identification producing CDD documents and getting those verified system primarily created to provide general each time the customer creates a new relationship with a identification and credentials to the population for public financial entity. administration and a wide variety of public and private Legal Entity Identifier: A 20-character, alpha-numeric sector transactions, services, and derivative credentials. code, to uniquely identify legally distinct entities that Common types of foundational ID systems include civil engage in financial transactions.12 The organizational registries, national IDs, universal resident ID systems, structure of the LEI consists of a federated group of and population registers.9 registrars, Local Operating Units (LOUs); a central Functional identification system: An identification operational body, the Global LEI Foundation (GLEIF); system created to manage the identity lifecycle for a and a regulatory body charged with oversight of the particular service or transaction, such as voting, tax LEIs, the Regulatory Oversight Committee (ROC). The administration, social programs and transfers, financial GLEIF is a Swiss foundation inaugurated in June 2014 services, and more. Functional identity credentials— and founded by the Financial Stability Board (FSB). It such as voter IDs, health and insurance records, tax ID is overseen by 70 global regulators in the Regulatory numbers, ration cards, driver’s licenses, etc.—may be Oversight Committee (ROC). commonly accepted as proof of identity for broader Legal identification (ID) system: Identification purposes outside of their original intent, particularly systems that register and identify individuals to provide when there is no foundational ID system.9 government-recognized credentials (e.g., identifying Identification: The process of establishing, determining, numbers, cards, digital certificates, etc.) that can be used or recognizing a person’s identity.7 as proof of identity.13 Identification (ID) system: The databases, processes, Levels of Assurance: The ability to determine, with technology, credentials, and legal frameworks associated some level of certainty or assurance (LOA), that a claim with the capture, management, and use of personal to a particular identity made by some person or entity can identity data for a general or specific purpose.10 be trusted to actually be the claimant’s “true” identity. Each LOA is broken down into three component parts Identity: A set of attributes that uniquely identify a that are scored individually. Please refer to Annex 1 person.10 Protocol: Set of rules and formats, semantic (meaning), Identity lifecycle: The process of registering, issuing, and syntactic (format), that enable information systems to using and managing personal identities, including exchange information.14 enrollment of identity data; validation through identity proofing and deduplication; issuing credentials; Relying Party: An individual or organization that relies verification and authentication for transactions; and on another party to verify the identity of the user; the updating and/or revoking identities and credentials.6 validity of the public key, associated algorithms and any relevant parameters; and the user’s possession of the Identifiers: Unique data used to represent a person’s corresponding private key.15 identity and associated attributes. A name or a card number are examples of identifiers.11 Revocation: The process of permanently ending the binding between a certificate and the identity asserted in Interoperability: The ability of databases, devices, or the certificate from a specified time forward.16 systems to talk with each other, exchanging information or queries. In some cases, interoperable databases or Self-Sovereign Identity: The concept of a lifetime systems may be directly connected, allowing for the portable digital identity, completely controlled by the real-time exchange or updating of information; in others, individual, that does not depend on any central authority databases or systems may be interoperable via a trusted and can never be taken away.17 third-party exchange layer that facilitates communication across disparate systems.4 VIII GLOSSARY Unique ID number (UIN): In the context of Verification: The process of confirming or denying identification systems, a number that uniquely identifies that a claimed identity is correct by comparing the a person—i.e., each person only has one UIN and no two credentials (something you know, something you have, people share the same UIN—for their lifetime. UINs are something you are) of a person requesting access with typically assigned after validating a person’s identity and those previously proven and stored and associated with statistical uniqueness through a process such as biometric the identity being claimed.18 deduplication. User: Individual or (system) process authorized to access an information system.14 G20 DIGITAL IDENTITY ONBOARDING IX ABBREVIATIONS AND ACRONYMS AI Artificial Intelligence AEBA Aadhaar Enabled Bank Accounts API Application Programming Interface AML Anti-Money Laundering APB Aadhar payment bridge system BVN Bank Verification Number CBN Central Bank of Nigeria CDD Customer Due Diligence CFT Combating the Financing of Terrorism CNIC Computerized National Identity Card CRS Credit reporting systems CTF Combating Terrorist Financing; an alternative acronym to CFT DBT Direct Benefit Transfer DFS Digital Financial Services DLT Distributed Ledger Technology eCIB Electronic Credit Information Bureau eIDAS electronic Identification, Authentication and Trust Services EU European Union FATF Financial Action Task Force FIDO Fast Identity Online (Alliance) FinTech Technology application to finance FSB Financial Stability Board FSP Financial Service Provider G20 Group of Twenty G2P Government to Person GPCR General Principles for Credit Reporting GSMA Groupe Spéciale Mobile Association GPFI Global partnership for Financial Inclusion ICAO International Civil Aviation Organization ID Identity ID4D Identity for Development G20 DIGITAL IDENTITY ONBOARDING XI ICCR International Committee on Credit Reporting IIN Institution Identification Number ISO International Organization for Standardization ITU International Telecommunications Union KRA Know Your Client Registration Agency KYC Know Your Customer LEI Legal Entity Identifier LOA Levels of Assurance MF-CIB Microfinance Credit Information Bureau MMO Mobile Money Operator MNO Mobile Network Operator MSME Micro, Small and Medium Enterprises NADRA National Database and Registration Agency (Pakistan) NFC Near Field Communication NIMC National Identity Management Commission NIRA National Identification and Registration Agency NIST National Institute of Standards and Technology, US Department of Commerce NPCI National Payments Corporation of India PASA The Payments Association of South Africa PIN Personal Identification Number PoS Point of Sale RAIS Refugee Assistance Information System RBI Reserve Bank of India RENIEC National Registry of Identification and Civil Status (in Spanish, Registro Nacional de Identificación y Estado Civil) Regtech Technology as applied to regulation RIMS Refugee Information Management System RFID Radio frequency identification RSD Refugee status determination SCA Strong customer authentication SDG Sustainable Development Goals SEBI Securities and Exchange Board of India SIM Subscriber Identity Module SSID Self-sovereign identity UFA Universal Financial Access UIDAI Unique Identification Authority of India UIN Unique Identification number UNHCR United Nations High Commissioner for Refugees UNRWA United Nations Relief and Works Agency for Palestine Refugees in the Near East XII ACRONYMS AND ABBREVIATIONS EXECUTIVE SUMMARY A unique, legal identity is necessary to allow all individuals to participate fully in society and the economy. The ability to prove one’s identity underlies the ability to access basic services and entitlements from healthcare through to pensions and agriculture subsidies. This is especially true for marginalized segments of society such as women, poor rural farmers, refugees and also extends to MSMEs (micro, small and medium enterprises). The importance of legal identity has been acknowledged by the international community through agreement of target 16.9 of the Sustainable Development Goals, which calls for all UN member States to “provide legal identity for all, including birth registration” by 2030. National and subnational governments play a primary supporting the provision of humanitarian aid. A legal role in the registration and recognition of a legal identity. digital ID for those forcibly displaced not only provides Without such official recognition, the authenticity of them with a sense of identity but also supports efficient an identity may lack a formal or legal basis (referred benefit distribution reducing fraud and duplication while to as legal ID in this document). However, a number allowing them to participate in the real economy. Another of developing countries have no robust official legal vulnerable population especially bolstered by a digital ID system that is universally available. The inability to ID is women; while a legal ID is seen as increasingly credibly prove one’s identity can be a source of economic, essential to both men and women to drive socio-economic political and social exclusion. In the financial sector, it development, of the 1 billion20 people without access to hampers access to basic services such as bank accounts an ID, a disproportionate number are women and girls. and loans. The 2017 Global Findex survey found that the poorest According to the 2017 Global Findex Survey, the lack 40 percent of women in low income countries are less of documentation was the primary barrier to access at least 30 per cent less likely to have an ID than men in to financial services cited by 26 percent of unbanked the same wealth quintiles. The absence of ID documents individuals in low income countries. Beyond extending is both, an effect and the cause of gender inequalities. A legal ID in order to address these gaps, the introduction universal ID with digital capabilities will enable women of a legal, digital ID could potentially increase the to open accounts at low cost and will also substantially adoption of financial services, furthering the financial reduce the cost for the financial services providers (FSP). inclusion agenda and supporting development goals. Digital ID also has clear benefits for small businesses. Digital ID lowers barriers by: a) making it easier for the This is relevant at both the level of the company directors unbanked to open a transaction account19 in conjunction and senior management as well as at the level of the with simplifying documentation requirements, b) entity, helping reduce costs and time for registration as enabling more cost-effective customer onboarding well as introducing efficiencies in conducting financial that can be conducted remotely and c) contributing to transactions. financial sector embedding by supporting the delivery of This report analyzes the role that robust, inclusive and additional services to the individual. responsible ID systems can play in enhancing financial Governments are adopting electronic means of cash access and inclusion. With a focus on digital ID, this transfer to streamline processes and prevent leakage. paper is intended to guide interventions at country level Digital IDs can substantially strengthen the efficiency and outlines some key policy considerations. Building and effectiveness of the state in providing critical services on previous work by the Global partnership for Financial such as Government to Person (G2P) payments and Inclusion (GPFI) and World Bank Group, adhering to the G20 DIGITAL IDENTITY ONBOARDING xiii mandate set by the Group of 20 (G20), the report looks benefits of identification responsibly. Foremost among at how financial services can leverage digital ID systems the risks that arise, is the issue of data privacy and the to increase efficiency, enhance effectiveness and enable potential for leakage, theft or misuse of personal data and new ways of conducting existing business processes the risks that arise from non-regulated players outside the in the financial sector. The analysis is underpinned by traditional financial system. It is of vital importance to the ‘G20 High-Level Principles of Digital Financial secure the data while at rest and in transit. The appropriate Inclusion’21 (HLP) and the ‘Principles on Identification classification of data and adherence to data governance for Sustainable Development’22 developed by the World rules and procedures are the main ways that this can be Bank Group and endorsed by over 20 international contained. Data classification and its associated rules organizations and development agencies since 2017. ensure that the more sensitive the data, the more stringent Principle 7 of the G20 HLP specifically refers to ID and the security controls and the rules regarding the access will form the guiding principle for this report. and sharing of the data; hence, the process of classifying Three characteristics of an identification system that matter and categorizing data is imperative to maintaining a most for financial services are a legal basis, uniqueness robust digital ID framework. While the high initial and the ability to exist in a digital format. Digital IDs infrastructure cost is a hurdle that must be crossed, the are important to broaden public policy, especially for importance of having a robust and effectively functioning financial inclusion and can help bring more MSMEs system instead of several suboptimal initiatives cannot into the formal financial sector. It needs to be noted that be stressed enough. Another important challenge that there are several other implicit aspects that are essential, merits consideration is the rapidly evolving nature notably that the ID should be robust and secure. In many of the technologies, and it is important that central jurisdictions, not all IDs have all the attributes, and even authorities and public bodies consistently incorporate those that possess them might not have universal coverage new technologies and business models while protecting in the jurisdiction. The analysis points out, that while the the financial sector and its customers. absence of any form of legal ID impacts all access to Digital ID has immense potential and it is important basic financial services, a lack of unique ID obscures a that country’s financial service supervisory framework reliable view of customer activity and can impact access recognizes this. Financial sector regulations, specifically to the full range of financial services, especially credit those related to AML/CFT, have longstanding and insurance. Meanwhile, the lack of a unique digital requirements related to identity validation, authentication ID increases the costs of providing financial services to and retention of records, to ensure the safety and integrity certain segments of society, thereby impacting financial of the financial system, based in large part on the inclusion. Finally, for financial inclusion and inclusion Financial Action Task Force (FATF)24 recommendations. more broadly, universal coverage of legal ID in a given Furthermore, of the ten Principles on Identification for jurisdiction is paramount. Traditionally, countries have Sustainable Development,25 three specifically focus two types of ID systems: foundational ID systems, which on the issue of governance, including of the regulatory are typically the source of ‘legal identity documents’ framework. and provide proof of legal identity in accordance with Seven policy measures, that governments should consider national law- these can include civil registries and unique in order to have an identity effective ID system that meets national IDs; and functional ID systems, which cover the needs of the financial sector, have been identified: population subsets and are introduced in response to a demand for a particular service or transaction such as 1. Ensure an integrated identity framework; voter registration and can, in some cases, provide proof 2. Consider the appropriateness of the regulatory of legal identity including serving as a de facto national framework to capture the challenges related to digital ID when a national ID system does not exist.23 On the ID, and risks to its appropriate implementation; proviso that an identity has uniqueness and a legal basis, deliberate updates to the regulatory framework with universal coverage (either at an individual level or including the issuance of new regulations where collectively across all IDs in the jurisdiction) then, there necessary; is potential for the government or private sector entities 3. Establish a reliable oversight model to include to overlay them with digital features. stakeholders beyond the traditionally regulated Digital IDs however, come with risks which need to be financial institutions who can introduce risks to managed and mitigated to build trust and harness the digital identity systems; XIV EXECUTIVE SUMMARY 4. Build authentication and service delivery systems to the G20 HLP and the Principles on Identification. Next, that protect user privacy, and provide individuals the paper delves into the approaches of how ID could be with the right to access rheir data and oversight successfully integrated into the financial sector from the over how their data is shared; use of government issued ID to private sector initiatives 5. Establish clear and well-publicized procedures as well as social ID proofing and the role of blockchain. for citizen redress, including defining where the We then move onto the applications of digital ID and the onus of responsibility lies in the event that errors different authentication techniques available from the emerge or that the security of a person’s identity is traditional to the more advanced. The aim of this section compromised; is to provide a comprehensive perspective of the several authentication techniques and the varied applications of 6. Support and empower development of private digital ID which include payments systems and services, sector led services to leverage the legal ID credit reporting, insurance, document management and infrastructure for building out digital layers. In digital signatures, ID for small businesses as well as the doing so, the public authorities should ensure that role of ID in humanitarian assistance. The paper seeks these services are safe, reliable and efficient; these to showcase the multifaceted nature of applications for services are interoperable; and that the market is digital ID in the financial sector with strong emphasis competitive; on examples from country specific case studies. The 7. New approaches to ID are constantly emerging last two chapters focus on the synthesis of key findings and public authorities should closely monitor these from public and private sector initiatives in digital ID and developments with a view to share knowledge and finally key policy recommendations for consideration. establish common legal frameworks at both the The process of showcasing the fundamentals of digital ID domestic and international level. and applications in both private and public enterprises, The report is divided into four broad sections; first, the with country specific case studies examples throughout, section on the role and need for digital ID focusses on helps the authors identify specific policy interventions the importance, principles, characteristics, risks and which can boost implementation and usage of digital ID challenges of digital ID in the financial sector as related and positively impact the financial sector. G20 DIGITAL IDENTITY ONBOARDING XV INTRODUCTION Objective The G20 recognizes the key role of financial inclusion in supporting the move towards an Innovative, Invigorated, Interconnected and Inclusive World Economy.21 The World Bank Group was requested by its G20 partners under the 2018 Argentine presidency, to produce this report as part of the Global Partnership for Financial Inclusion (GPFI) forum- an inclusive platform to carry forward work on financial inclusion. The primary objective of this paper is to analyze the just seven developing economies: Bangladesh, China, role of a robust, inclusive and responsible digital India, Indonesia, Mexico, Nigeria, and Pakistan.26 The identification system in financial sector development; in World Bank Group in partnership with public and private particular, the role it plays in furthering global financial sector institutions set an ambitious target to achieve inclusion commitments. This paper will provide insights Universal Financial Access (UFA) for adults globally to a and recommendations for country-level implementation have access to a transaction account27 to store money and by policymakers in line with Principle 7 of the G20 HLP send and receive payments by 2020 as a stepping stone to developed by the GPFI. broader financial inclusion.28 This report is neither intended to inform nor interpret A transaction account is a foundation for financial the work of the global financial sector standard-setting inclusion because it serves as a gateway to other financial bodies. services including savings, insurance, and credit. One of the primary barriers to opening a transaction account is Background and Definitions the ability to prove one’s identity. The GPFI, the Alliance for Financial Inclusion (AFI) as Proof of identity is required for the financial service well as several other multilateral forums have advocated provider (FSP) to verify who the customer is. As such, and launched initiatives for furthering financial inclusion. the lack of trusted IDs remains one of the chief obstacles Financial inclusion is one of the critical drivers of poverty to financial inclusion across the world. The 2017 Global reduction and economic growth in emerging markets Findex data shows that in the developing world, the and developing economies. Currently, an estimated 1.7 share of adults with a transaction account varies from billion adults globally do not have access to the formal about 15 percent in parts of Sub- Saharan Africa, going financial economy. Virtually all these unbanked adults up marginally to 20 percent in Cambodia, Mauritania live in the developing world. Indeed, nearly half live in and Pakistan. Of those individuals without an account, Box 1: G20 High-Level Principles for Digital Financial Inclusion Principle 7: Facilitate Customer Identification for Digital Financial Services Facilitate access to digital financial services by developing or verifiable and accommodate multiple needs and risk levels encouraging the development of customer identity systems, for a risk-based approach to customer due diligence. products and services that are accessible, affordable, and G20 DIGITAL IDENTITY ONBOARDING 1 Figure 1: Universal Financial Access by 2020 How to Get There? Implication for Banks Sa vings Microfinance providers: Institutions Cr edit Large volume of low Mobile Network value transactions Operators SERVED UNSERVED ay ments • Have a transaction • Have no basic bank account P account Transaction Sustainable provision account • Use broad range of services will • Have no (or restricted) c of financial require a high degree uran e access to financial Card Companies services of automation and Ins services Postal Networks nc itta es straight-through • Rely on a cash processing Rem economy Financial Cooperatives Source: UFA2020 Overview- World Bank 26 percent for unbanked adults in low income countries, in validating to the appropriate degree, identity and 19 per cent in developing countries cited the lack of documents constrain FSPs in expanding access to finance documentation as the main barrier.29 30 percent reported and hence, stunts financial inclusion. When the identity that financial institutions are too far away. This has been authentication can be carried out automatically using to some extent mitigated by opening the market to non- technology, this reduces costs for FSPs and enables the bank players; however, this will only be successful and use of agents, which also reduces distance. reduce financial services barriers only if such non-bank The following graph depicts the different documentation players have lower/different identification requirements. requirements required for opening a transaction account Beyond access to documentation, the high cost incurred as based on data collected from 124 separate jurisdictions. Figure 2: Document Type Needed for Account Opening % of responding jurisdictions that require documentation type to open an account at a Commercial Bank 100% 80% 90 75 60% 69 40% 44 32 35 20% 22 0% Government Any Form Proof of Proof of Proof of Proof of Other Documentation Issued ID of ID Nationality or Address Income Employment Requirements Legal Status in Must Be Met to Country Open an Account Source: 2017 Global Financial Inclusion & Consumer Protection (FICP) Survey, WBG. 124 jurisdictions participated in the survey 2 INTRODUCTION Many jurisdictions require customers to provide documentation, for example by enabling system based additional information beyond basic identification in online validation including validation at agent locations. order to open an account. Identity includes not only the original acquisition of However, the ability to securely validate and verify a identity credentials, but also the many aspects of how and customer’s details against a reliable database remains why that identity is used and maintained. imperative, and a large portion of those in the developing As the issuance of identity grows in importance for world lack basic IDs. The ability to prove one’s identity policymakers, regulators and the private industry, various is increasingly recognized as the basis for participation in reports use different terms and definitions. It is therefore social, political, economic, and cultural life. Yet, the World important to clarify the terminology used in this report. Bank estimates that more than 1.1 billion individuals do As mentioned previously, traditionally, countries have not have any form of officially recognized ID.30 This two types of ID systems: foundational ID systems, problem disproportionally impacts rural residents, poor which provide general identification covering the entire people, women, children, and other vulnerable groups.31 population these include birth certificates, identity cards, Furthermore, poor identification systems mean that states unique identity numbers or digital certificates,33 and have difficulty collecting taxes, targeting social programs, functional ID systems, which usually cover population and ensuring security. Achieving inclusive development subsets. Moreover, a non-public authority issued identity, therefore requires a sustained effort to address the world’s if recognized as valid by the government as a proof of identity gap. These goals have been recognized in the identity, would be included in the definition of legal ID. 2030 Sustainable Development Goals (specifically SDG It is important to note that under this inclusive definition, 16.9) and by other multilateral bodies. legal ID need not be linked with nationality or citizenship. Globally, various efforts have been undertaken to address The uniqueness of the ID (i.e.) the ability to relate an ID the inability to access the financial system, from less to a singular person (or entity) and one person receiving arduous requirements regarding customer identity - such only one such ID is paramount to ensure the usefulness as only requiring a functional ID such as a paper-based of the ID. voter’s registration card or an introduction from a respected While this report considers identity as a whole and its role member of the community-, to separate categories in financial inclusion, particular focus has been placed on of transaction accounts with lower documentation digital ID and the emerging areas in the financial sector requirements and opening up the market to non-bank where identity systems can be leveraged to increase players to expand the pool of suppliers. However, a efficiency, enhance effectiveness and enable innovative sizable portion of those in the developing world lack ways of conducting existing business processes. Notably, basic IDs, and the ability to securely validate and verify digital ID is increasingly becoming central to the a customer’s details against a verifiable database remains effectiveness of technology innovations like open banking imperative. The introduction of a unique, reliable—and and marketplace lending; both of which have impacts on particularly—digital ID could provide universal coverage financial inclusion by enabling customers to securely while enabling more efficient processes for validating ID share their banking data with trusted third parties, giving Box 2: Defining Digital Identity32 A digital identity is a collection of electronically captured more broadly related to what the person does or something and stored identity attributes that uniquely describe a someone else knows about the individual. When these data person within a given context and is used for electronic are collected and verified, they can be used to identify a transactions. It provides remote assurance that the person is person by answering the question “who are you?”. These who they purport to be. A digital identification system refers attributes, along with credentials issued by the service to the systems and processes that manage the lifecycle of provider (e.g., unique ID number, eDocument, eID, mobile individual digital identities. ID) can then also be used as authentication factors to A person’s digital identity may be composed of a variety answer the question “are you who you claim to be?”. The of attributes, including biographic data (e.g., name, age, attributes and authentication factors used in a digital identity gender, address) and biometric data (e.g., fingerprints, may vary from one context or country to the next depending iris scans, hand prints) as well as other attributes that are on the type of identity system. G20 DIGITAL IDENTITY ONBOARDING 3 Figure 3: Representation of Digital and Legal IDs and the Overlaps Functional Paper-based Nigeria BVN Ration Card Most University IDs Non-digital Mexican Voter ID e-Passport passport Foundational Peru eID NIMC (Nigeria) Legal Lao PDR Peru Birth Birth Certificate National ID Certificate NADRA Civi Registration Universal Resident ID Aadhaar Digital Source: Adapted from ID4D glossary, WBG May 2018. rise to a new generation of tools that will help individuals Methodology make better decisions based on their data. Analysis of developments in different country settings, Digital ID, combined with the extensive use of mobile current views on best practices and dialogue with key devices in the developing world, offers a transformative stakeholders have informed this report. Country specific solution to this global challenge and promotes efficiency case studies have contributed to the understanding of gains, financial savings, social inclusion and access the application and role of ID in the financial sector. to basic services and rights. However, they come with Interpretation of international practices, specifically the their own unique set of challenges especially that of data FATF Recommendation 10, has strongly influenced the protection, privacy and a sustainable business model. policy considerations put forward. It should be noted, These are elaborated further in the document. however, that case studies have been chosen to showcase Moreover, digital ID has been instrumental in playing and to compare and contrast market practices, and that a key role in reducing gender gaps in various societies, their inclusion does not necessarily endorse them as especially in emerging markets and developing countries. examples of best practice. The following box item provides an overview of This report also discusses some private sector led digital its benefits: initiatives, including those by FIDO (Fast Identity 4 INTRODUCTION Box 3: Digital Identity and Gender Equality The widespread lack of official identification in developing For example, in Pakistan, the use of biometric IDs is a countries disproportionality affects women and girls due precondition for accessing cash transfer programs, ensuring to higher barriers they face for obtaining an ID. The 2017 that payments to female beneficiaries are delivered directly Global Findex 27 report indicates that women in developing to them rather than to their husbands or brothers- as economies remain 9 percentage points less likely than men was traditionally the case. Not only did this boost their to have a bank account. While lack of sufficient funds is the social standing, it also served as trigger for greater social most commonly cited reason reported by more than half of freedoms within their societies.34 unbanked adult women, a large proportion also cite the lack The use of these digitized G2P payments together with of documentation as another key reason. The other barriers the integration with mobile platforms holds great promise include distances involved, along with the restrictions on for the achievement of financial independence for women. the freedom to travel, opposition from family members, More than 80 percent of women in Kenya now have access financial cost, time constraints and illiteracy combined with to a mobile account which is being increasingly leveraged the lack of awareness. An efficient digital ID system has the to reduce the gender gap.26 Through the integration of ability to overcome the most common barriers to opening digital ID and mobile money (M-Pesa), substantial progress a bank account. has been made in enabling women to gain access to social In combination with simplified CDD, digital ID enables protection and financial saving schemes.35 women to more easily open transaction accounts and when As an additional benefit, the use of a digital ID can help combined with agent models also enables easier access authorities better monitor gender targets via the use of to account services. A digital ID can also empower women electronic databases and the collection of transaction data to register to vote, claim inheritance rights, register the remotely, supporting the ability to provide better oversight ownership of business and land and access government and monitoring of national targets. benefits and services. With the use of digital ID, governments can transfer G2P payments, intended for women, directly into their accounts. Online) Alliance – created by a consortium of private The use of digital ID in the humanitarian context and sector players to achieve interoperability between the operational efficiencies it provides is also studied. authentication mechanisms, Mobile Connect - a GSMA In addition, developments on the horizon such as social initiative and Digital Identification and Authentication data derived identity and applications of innovative Council of Canada (DIACC). The paper delves into technologies including distributed ledger technologies in the identity solutions that leverage these private sector identity management are briefly discussed. initiatives and looks at the fundamental dependence on This note builds on previous work by the World Bank, an individual’s ability to present a legal ID on which basis specifically the note on Technology Landscape for the digital ID is created. Digital Identification published by ID4D,36 which This report covers digital ID as applicable to all financial explores the technology linkages between unique IDs, services provided by banks and non-banks including the permeation of digital IDs, digital onboarding and e-money services and microfinance institutions, with a customer identification in the financial sector,37 the G20 focus on those areas most pertinent to financial inclusion. HLP and discussions with GPFI membership. G20 DIGITAL IDENTITY ONBOARDING 5 THE ROLE OF DIGITAL IDENTITY IN THE FINANCIAL SECTOR The Importance of Identity In 2016, the G20 endorsed the High-Level Principles for Digital Financial Inclusion which specifically asked that ‘Governments worldwide acknowledge the importance of identity as a fundamental necessity for daily life. For approximately 1.1 billion people,38 the majority of them living in Asia and Africa, the inability to prove their identity prevents them from accessing basic services, enjoying their full rights, and participating in the formal economy. Evidence shows that individuals who lack official forms Accessible, robust, and verifiable ID systems can help of identification are typically the most vulnerable people service providers carry out Customer Due Diligence in the poorest countries. The recent Global Findex (CDD) requirements and expand the use of financial Report26 cites that 26 percent of unbanked adults in low services. One of the key components of financial inclusion income countries, and 19 per cent in developing countries strategies in many countries is to introduce a basic without an account at a financial institution reported account—offered by either banks or non-bank entities— lacking the documentation needed to open one. Lack of with very stringent limits on number of transactions ID was an even more commonly-cited barrier in countries and value of transactions. The main objective behind like Zambia (35 percent), the Philippines (45 percent), introducing this type of account is to prevent identity and Zimbabwe (49 percent). Inclusive, robust, and theft, financial fraud, money laundering and terrorist responsible legal ID systems are needed to close this gap. financing, while at the same time enhancing access to Beyond paper-based legal ID systems, however, digital transaction accounts. A digital ID enables an efficient IDs have additional benefits, including the potential to means of meeting the CDD needs for a basic account provide entities with new and efficient ways to reach and further it enables enforcing transaction limits and and serve their populations, especially the poorest and monitoring how many accounts a person has. most disadvantaged. Identity systems that have universal The Reserve Bank of India has permitted the Entities coverage, have a legal basis and ensure uniqueness— regulated under it to accept Aadhaar identification number as noted previously—also play an important role in the issued by the Government of India as proof of identity as improvement of government efficiency, accountability well as address to meet the regulatory CDD requirements of and transparency. Further, through online transactions opening accounts. Including the Jan-Dhan40 basic savings and other e-services, digital capabilities of these systems accounts.41 In Pakistan, the national ID cards allowed reduce operational costs and the corruption and theft that opening bank accounts and reliably enforcing transaction can occur in paper-based systems, such as entitlement limits, which coupled with growth of branchless banking payments siphoned off from their intended recipients.39 agents, contributed to an increase in financial inclusion. As countries increasingly rely on digital networks for Incidentally, the agents were also leveraged to register delivering important public and private services, the all cellphone SIM cards as part of a national ability of consumers to remotely access those services security initiative. through digital identification becomes acutely important. G20 DIGITAL IDENTITY ONBOARDING 7 Box 4: Historical Evolution of the Concept of Customer Due Diligence The Financial Action Task Force (FATF) 40 recommendations, clients, their transactions, and beneficial owners. The CDD which constitute the international standards on anti-money concept has been maintained by the current version of the laundering and counter-terrorist financing, were first issued FATF Recommendations (2012) with further refinements. in 1990. The first version of the FATF 40 Recommendations Currently, FATF Recommendation 10 on CDD is the included a section on ‘Customer Identification and Record most comprehensive and elaborate among the 40 Keeping’. The section had a limited scope that focused on Recommendations. It is based on four pillars, requiring: 1) identifying and verifying the customers and the beneficial identification and verification of customers, 2) identification owners of the legal persons and financial transactions. and verification of beneficial owners, 3) understanding the The FATF Recommendations have gone through major nature and purpose of transactions, 4) monitoring the clients revisions in 1996, 2001*, 2003, and 2012. The limited and and their transactions on an ongoing basis.        relatively static scope of customer identification in the 1990 The term “Know Your Customer” has been used widely by version was expanded during these revisions, evolving some government authorities and the private sector since towards a much more comprehensive and dynamic set of the 1990s to express the broader set of requirements that requirements. FATF introduced the concept of “Customer go beyond identification and verification. However, this Due Diligence” (CDD) in the 2003 Recommendations term has never been officially used or defined by the FATF to define the full range of requirements that aims to Recommendations. There fore, the meaning attributed to understand, know, and monitor all natural and legal person KYC can differ based on users and national contexts.  *In 2001, with the addition of 8 (later 9) special recommendations the mandate of the FATF Recommendations has been expanded to counter-terrorist financing. The graph below shows that a significant amount of percent of jurisdictions indicate that similar simplifications exceptions are made to CDD requirements in the 120 exist. A digital ID can provide a unified CDD regime. different jurisdictions sampled. While all responding This means that once a CDD check is conducted for a jurisdictions in the South Asia region report that FSPs— person linked with a digital identity, the identity and mainly banks- have simplifications or exemptions in its corresponding check can be held on a KYC registry place; in the Middle-East and North Africa region, only 22 (see glossary). Later, should that individual wish to Figure 4: Acceptance of Simplified Customer Due Diligence Requirements % of Responding Jurisdictions That Have Simplifications or Exemptions to Customer Due Diligence Requirements, by Income and Regional Group 100% 100 80% 60% 61 57 56 53 55 40% 50 44 40 41 20% 22 0% All High Upper- Lower- Low Europe & East Asia Latin Middle East South Sub-Saharan Income Middle Middle Income Central & America & & North Asia Africa Income Income Asia Pacific Caribbean Africa Source: 2017 Global Financial Inclusion & Consumer Protection (FICP) Survey, WBG 8 THE ROLE OF DIGITAL IDENTITY IN THE FINANCIAL SECTOR subscribe to a new financial product or service, they Even if the verification is done in person, the digital will not need to go through the burdensome process of process can reliably prove that validation was completed. submitting various documents to prove their identity again. Furthermore, efforts to enhance flexibility on where It is important to note here that information collected and who can open an account can be accelerated with a and verified for CDD purposes can be extensive and reliable digital ID system. Thus, a digital ID can empower a KYC registry might not have all the required or up- financial sector regulators and public authorities to to-date information highlighting the need for effective simplify the CDD requirements and thus removing one supervision and oversight of KYC registries and third- of the enduring barriers to expanding financial inclusion. party identity services by the financial sector authorities and FSPs to conduct their own due diligence. KYC Important Characteristics of ID registries can enforce transaction limits for individuals for the Financial System across all FSPs and this has been illustrated through the There are three main characteristics of an identification use of mobile money platforms in Jordon (JoMoPay) system/credential that matter most for financial services and Peru. This mitigating measure can provide financial and transactions: (1) legality, (2) uniqueness and (3) sector authorities with a great degree of confidence in the ability to be in a digital format, each of which has mitigating risks from AML/CFT measures. implications on the quality and utility of the identity Simplifying CDD however, does not do away with within the financial sector. These characteristics are not physical, in person applications and verification of an mutually exclusive, and an ID credential can possess one acceptable form of ID. Paper records will often still need or all of these characteristics to varying degrees. to be maintained to provide a document trail for audits. Legal: National and local governments play the Both the verification and paper records add additional primary role in issuing legal identity documents— costs to the process. Further, there is also the risk of those recognized as providing proof of legal identity fraudulent documents and the ability to evade controls in accordance with national law. Without such official if there is no assurance of a customer’s unique identity. recognition, the value of an identity credential may lack a The introduction of a digital ID solves both the issue formal or legal basis, and therefore be unreliable for CDD of costs as well as the security and reliability concerns. checks in the financial sector. However, as mentioned Figure 5: Dimensions of ID System Type Dimensions of ID System Type Purpose + Recognition + Technology + Uniqueness FOUNDATIONAL LEGAL DIGITAL UNIQUE General/multiple purpose: Provides proof of legal Digital technology used Uniquely identifies the • Civi registration (CR) identity in accordance with throughout the identity population—i.e., each • National ID (NID) national legislation. lifecycle. person only has one identity • Population register (PR) and no two people share the • Universal resident ID same identity. FUNCTIONAL Specific/limited purpose: • Voter register • Tax ID number • Social security number • Driver’s license • etc. Source: ID4D Glossary: Definitions and Usage, May 2018. G20 DIGITAL IDENTITY ONBOARDING 9 previously, sometimes an ID issued by a private entity transformative solution the global challenge of inclusion can become a legal ID if the government recognizes the by offering countries the ability to leapfrog the validity of it. development of paper-based systems and rapidly establish Generally, jurisdictions require an individual to have robust identification infrastructure. As described, in the a form of legal ID to open and operate a transaction section on authentication of the technologies, extensive account, the most basic of financial services. A lack of use of mobile devices in developing countries can be suitable legal identity restricts this access and as such leveraged for this purpose. Moreover, digital IDs can access to the wider financial ecosystem contributing to have benefits beyond the financial sector, such as in financial exclusion. enhancing gender equality as noted previously. Uniqueness: FSPs prefer to use an identity credential These three characteristics highlight varying levels that has the characteristic of being ‘unique’—i.e., that no of quality and sophistication, and have important individual (or entity) will have the same identifier, and that implications on access to financial services, customer there is only one identifier associated with one individual. oversight, and the efficiency of financial service The utility of uniqueness is significantly enhanced when provision. As policymakers consider how they approach it is also universally available. An example of a common identification systems within their jurisdictions, it is ID with the ‘unique’ and ‘universal’ characteristics useful to have a sense of the trade-offs and cost/benefit would be the Aadhaar system in India. The characteristic implications of the options being considered. of uniqueness in an ID allows for a particular financial Each of these characteristics impacts the sustainability, institution to have a single view of the customer in affordability and reach of financial services affecting their internal system and also across the entirety of the financial inclusion objectives. The lack of legal, unique ID financial ecosystem. This is also valid for legal entities captured consistently across institutions impedes efforts as recognized by the G-20 adoption of the establishment to gain a complete view of the customer hence limiting the of an LEI in June 2012, to be able to better identify services available to the individual. From the perspective counterparty and contagion risks, particularly those of the regulators, the lack of a unique, digital ID, limits related to cross border exposures to over-the-counter the ability to gauge household credit exposure. This lack (OTC) derivatives. can add inefficiencies and costs as all verifications must Digital: When an individual’s attributes can be captured be done manually along with maintaining paper trails. It and stored electronically and issued on digital credentials is important that policymakers keep these characteristics that can uniquely identify a person, the identity is referred and the utility they offer in mind during the design phase to as digital ID. A digital identity provides a potentially of planning their own identity programs. Box 5: Case Studies Highlighting the Benefits of Digital ID to Governments In 2015, Nigeria began a biometric verification pilot for all The Sistema de Identificación Nacional Tributario y Social civil servants in an effort to get an accurate record of the (SINTyS) system in Argentina enabled individual records personnel and ensure that ‘ghost’ salaries were not paid to be linked across 13 databases covering employment, out. The Central Bank of Nigeria, required that all customers pensions, electoral roll, social beneficiaries, as well as enroll with their banks to get their unique Bank Verification registries for the deceased, real estate and auto ownership. Numbers (BVN), operated by the Nigeria Inter-Bank This resulted in savings of USD $187 million in reduced Settlement System (NIBSS). In early 2016, they announced leakage and tax evasion.43 the removal of 24,000 (ghost) workers,42 and that number has since doubled – saving the tax payer equivalent of USD $74million. 10 THE ROLE OF DIGITAL IDENTITY IN THE FINANCIAL SECTOR Figure 6: Lack of Appropriate Identity Characteristics and Its Impact on the Financial System Lake of Appropriate Characteristics Legal Unique Digital • Financial exclusion • No clear view of customer • High costs for both customers • Inhibits accounts to add-on and provider financial services • Low scale of access to (i.e. credit/insurance) financial services • Issues of fraud Risks and Challenges in Privacy and Data Protection Implementing Digital ID A key consideration are the privacy and data protection Despite the numerous benefits of an inclusive, robust, issues, including ethical concerns, that are inherent in and responsible digital ID system, governments are the collection of personal and biometric information. faced with challenges, such as those mentioned below. The (most likely) centralized nature of sensitive data To ensure that trust is maintained in the system, storage also exacerbates the cybersecurity concerns and governments should consider and work to mitigate privacy risks associated with digital IDs. It is vital that these risks. governments set out a robust governance procedure including for data management systems, and that this Exclusion Risks be maintained and consistently updated. It will be the Demographics, culture and ethical considerations responsibility of the government to define data protection all require attention when defining a digital Identity. policies, including rules around the collection, use, An effective digital ID is inclusive, but there might management and disclosure of the data. Governments be certain segments of the population from whom may also think about mechanisms to minimize the amount collecting biometric information is difficult, inaccurate or of personal data which is collected and how data systems impossible. will be maintained, especially to safeguard against data leakages and (cyber) attacks. Such populations might include vulnerable populations (including tribal and ethnic populations or those with Preservation of the confidentiality and integrity of unclear migration status) as well as those with low digital the data should be the primary responsibility of the literacy or lack of connectivity. Infants or those affected data collector; although the data processor and others by skin or eye diseases might have unformed or disfigured involved in accessing, storing and using personal data features which might make fingerprint and iris capture also have a role to play. There should be appropriate of sufficient detail and quality, problematic. Advances mechanisms to ensure that consent from individuals is are being made using a mixture of anatomical studies, obtained which covers the basis on which the data will artificial intelligence (AI) and deep learning algorithms be collected, maintained, used and disclosed. Individuals to overcome these hurdles.44 Other considerations are should be aware of who holds and has access to their religious beliefs or conflicts with one’ values against personal data and have an opportunity to inspect the capturing of biometrics leading to self-exclusion. Such data held about them and to ask for corrections for any reasons need to be carefully measured when designing errors or out of date (or incomplete) data. Regimes a digital ID for an entire population sample especially in should also provide for expungement or deletion of the context of personal freedom and democratic rights. specific data if the original purpose for the data collection has expired. Moreover, suitable independent oversight G20 DIGITAL IDENTITY ONBOARDING 11 and enforcement mechanisms should be available to It is vital that economic feasibility, and infrastructure individuals who have complaints regarding misuse or constraints are adequately evaluated and that systems other non-compliance with rights guaranteed under the are future proofed to keep up with the changes so the privacy and data protection regime. resilience of the system is not compromised. The EU has recently introduced the General Data Governments should: Protection Regulation (GDPR) to deal with this challenge • Design digital infrastructure appropriate for the and harmonize data privacy laws across Europe. GDPR context, including strategies to reach remote areas requires companies that collect data on EU citizens to and ensure ‘last mile connectivity’. Off-line solutions comply with strict rules on consumer data and rights can complement the absence or loss of on-line regarding their data. The implementation of the law connectivity.46 has had to address a number of contentious issues from data portability – the ability to transfer data across • Develop robust procurement guidelines and interoperable applications – as well as how to define data contemplate open design standards to promote controllers and the associated designation of a dedicated innovation and allow for greater flexibility, efficiency Data Protection Officer.45 and functionality of the system both within and across borders. Misuse of data and breaches in security can result in identity theft, physical harm, discrimination, and • Ensure the technical capacity of government agencies, emotional distress to individuals causing them to lose private sector and other stakeholders in the digital trust in the system. Organizations also suffer considerably, identity ecosystem (including end-users) to operate causing both financial and reputational damage. and maintain new systems and devices. • Consider opportunities for savings and revenue Cost and Sustainability generation for both the public and private sector that The infrastructure required to build a digital ID system and may offset some of the costs of implementing a robust registration of the eligible population can be a costly and digital ID system. time-consuming process that is likely to require extensive • Ensure that the ID system meets the needs of a wide investment in building or updating infrastructure and variety of users, including both public and private technology, buy-in from key stakeholders especially entities, in order to drive demand for the system. consumers, adequate knowledge and understanding of the system. 12 THE ROLE OF DIGITAL IDENTITY IN THE FINANCIAL SECTOR APPROACHES TO INTEGRATE ID INTO THE FINANCIAL SECTOR Using Existing Legal IDs In many countries, as a matter of general practice, all FSPs collect a specific ID which is in generally considered reliable and universal. In general, the financial sector relies on existing legal IDs, traditionally based on physical interactions and physical exchange of documents,- between the user and the relying party, to allow access to services (public or private) such as healthcare, education, financial services. With the rapid development in technology, FSPs in many countries have access to identification systems to help validate credentials. In the case of digital IDs, the validation and subsequent verification can be conducted in real-time at the time of account opening, either in-person or even remotely. (Please refer to Annex 2 for details of the validation and verification process) The box below highlights examples that show the sector and the significant benefits that are accrued from potential of using legal ID’s to integrate with the financial this integration. Box 6: Legal IDs: NADRA, Peru ID, Aadhaar, SPID Peru ID as a repository of the CDD records obtained and uploaded The National Registry of Identification and Civil Status by the Regulated Entities (REs) across the financial (Registro Nacional de Identificación y Estado Civil, or sector. CKYCR has been set up through an amendment RENIEC) is the premier national digital ID system in Peru. in the relevant Prevention of Money Laundering (PML) RENEIC has been used as a form of identification for a wide Rules: specifically, those regarding the maintenance of range of public and private services. For example, RENIEC records which mandate financial sector entities to upload serves as the core verification database for e-money the customer information onto a common database of the platform called ‘Modelo Peru’ serving millions of customers proposed registry. This database aims to facilitate inter- across Peru for e-money transactions. In addition, a new usability of the CDD records across the sector(s), with one service using RENIEC known as Billetera Movil (BiM), was of the objectives to reduce the burden for both individuals launched in February 2016, which provides services such and the RE of obtaining and verifying CDD documents as cash in/cash out at agents, the ability to check balances, each time a customer creates a new relationship with a conduct P2P payments and top-up airtime credit.47 financial entity. 48 Aadhaar NADRA In the case of India, its universal digital ID named Aadhar (a Pakistan’s CNIC (Computerized National Identity Card), a 12-digit number issued by Unique Identification Authority of core product of NADRA (National Database and Regulation India (UIDAI)), provides biometric verification for a variety Authority), is the legal digital ID card for Pakistani citizens. of services through CDD/e-KYC authentication platforms. CNIC provides legal ID verification services across a The Central KYC Records Registry (CKYCR) is envisaged number of platforms and sectors. For example, the G20 DIGITAL IDENTITY ONBOARDING 13 Box 6: Legal IDs: NADRA, Peru ID, Aadhaar, SPID (continued) PTA (Pakistan Telecom Authority) and MoIT (Ministry of SPID Information Technology) collaborated to introduce a SIM The Italian Public System of Digital Identity (SPID) is the registration system called Biometric Verification Systems Italian solution developed under the EU eIDAS Regulation. (BVS) program. The program made it mandatory for all It is a public open system allowing public and private cellphone owners to register each new SIM and have their entities (Identity Providers), accredited by the Agency for identity biometrically verified against the NADRA digital ID Digital Italy (AGID), to offer registration services and the database. As part of this process, PTA developed a SIM digital ID verification for access to services for citizens registration information system, which links a customer’s and businesses. CNIC with several SIMs. SIMs can only be activated after the purchaser’s biometrics (finger impressions) have been The acceptance of SPID is mandatory for the public sector verified against NADRA. In addition to the verification and is optional for private and financial sectors. SPID requirement, a limit was placed on each person obtaining envisages different levels of authentication, consistent SIMs, and a cap enforced. The SIM verification program with standard ISO-IEC 29115, according to the level of has been a success due to the lower operations costs security of the services required by the users. Launched in enabled by the digital ID integration.49 2016, SPID reached about 2.5 million digital identities by March 2018.50 Private Sector Initiatives such as: where the person lives (based on, for example, shipment of e-commerce purchases and taxi rides); where In a few countries with reliable and universal coverage the person works (based on geolocation co-ordinates of legal ID, banking and other industry consortiums during typical business hours); the social life of the have developed digital capabilities that are built on individual; professional connections (via channels such top of these legal IDs and leverage the value of them. as LinkedIn) which can be used to also judge general Moreover, in the recent past, dedicated general-purpose reputation in the industry; the marketing of tailored digital features and solutions have been developed as an products and services (such as insurance); and also the overlay on legal ID. These services seek to offer an open general demographic characteristics based on what the and general-purpose authentication which can be used person reads, buys and listens to. It is possible to glean to avoid the need for dedicated passwords and security all this information without even knowing the person’s credentials. These general-purpose services are now also name, age or date of birth from any registered website or being targeted at the financial sector. Examples of this official database. include FIDO alliance and Mobile Connect and other services based on federated architectures that are being While potentially useful, this has several cons, such developed. In this model, a diverse set of underlying legal as breach of privacy and data protection as well as the ID and information held with private sector institutions exclusion of those who need services (such as insurance) could be used and the individual choses which underlying most, by eroding the principle of risk pooling. Moreover, legal ID or private sector information source is used to not all the above information is usually available from assert one’s identity in a given context. one institution. There are emerging signs of institutions collating and sharing information through APIs to Some examples of these initiatives are highlighted in the potentially commercialize this along the lines of a credit boxes next page. reporting system, causing further concerns about the data privacy standards being adhered to. Social Data for Identity Proofing Several firms have started to use big data as either a The increasing use of online social and professional complement to traditional sources of information or networks, e-commerce platforms, and use of connected rely solely on it to conduct identity checks before the devices (IoT) that can track location and service usage provision of services. Notable examples include peer-to- data, generates a vast amount of data points about an peer (P2P) lending platforms, which use captured social individual. These data points can be aggregated to media data to assess credit worthiness of individuals who determine, with some degree of confidence, information do not have a credit history. 14 APPROACHES TO INTEGRATE ID INTO THE FINANCIAL SECTOR Box 7: Private Sector Initiatives: FIDO, BVN, GOV.UK Verify, BankID Fast Identity Online (FIDO) Alliance nationwide. The features captured include fingerprints and The FIDO Alliance is a non-profit, industry alliance facial images providing customers with a 11-digit number. nominally formed in July 2012 to address both the lack Customers were required to enroll with their bank to get a of interoperability among strong authentication devices, unique BVN which would then be valid across the entirety of as well as the problems users face when creating and the Nigerian banking sector. Each customer is only allowed remembering multiple usernames and passwords. to have one BVN and the adoption of this ID was made a Headquartered in California, the members have developed mandatory requirement for access to all banking services.53 technical specifications that define an open, scalable, GOV.UK Verify interoperable set of mechanisms that supplant reliance on GOV.UK Verify is an identity assurance system being passwords to securely authenticate users of online services. developed by the UK Government Digital Service (GDS) The FIDO Alliance currently has over 260 members.51 that facilitates a marketplace of trusted third parties to BankID identify and authenticate users of online services. The BankID is an electronic identification for Swedish citizens system works by behaving like a platform so that those issued by a consortium of Swedish banks with an estimated companies who are registered on the platform (currently 7.5 million active users currently. First issued in 2003, seven54) such as the post-office and Barclaycard can ‘verify’ it can be used by members of the public, authorities and the information submitted by individuals. companies. Citizens can use their BankID for identification Once verified, the registered company lets the government as well as a means of digital signature for signing know the identity of the individual and the verified individual transactions and documents remotely. It has been adopted can access up to 15 government services such as benefits, by the government, municipality, banks and companies to driving license, the ability to file tax returns or check your validate identity. In accordance with Swedish law as well state pension. The GDS set a target to reach 25 million as within the European Union, a signature via BankID is registered users by 2020 and wants it to become the default legally binding.52 system for all those accessing public services. Bank Verification Number (BVN) Verify was first launched in 2014 but had some trouble The Central Bank of Nigeria (CBN) in conjunction with the gaining traction finally going live in only 2016. To register, Bankers Committee launched a project in 2014 to develop a valid UK address is required and by late 2017 1.5 million a single biometric database for all banks’ customers Verify accounts had been set up.55 The system remains in its beta phase and is hence not open to all users. Aggregation services and P2P lenders in some markets Despite the potential opportunities that arise in using ask users to share their access credentials with various social media data for identity proofing there are several websites, primarily financial, and then aggregate the data challenges that emerge, particularly around privacy and from the user’s various financial services relationships. In consent. Under the terms of the forthcoming GDPR the process of aggregating the information, predictably, directive, user consent must be freely given in the form a lot of underlying information like the address of of either a statement or a clear affirmative action that the individual, phone number(s), periodic incoming signifies agreement to personal data being processed. payments (like salary and expenses), could become It is highly likely that its approach will influence the visible to the aggregation service. The use of social development of data protection laws globally.56 data thus aggregated is increasingly being considered as part of the identity validation and is used as a basis Blockchain and Digital ID Identity for decisions on creditworthiness. A few firms are Federated authentication could potentially provide the now moving one step further to offer so-called ‘social solution to be able to trust unknown identities across identity’ verification services. This type of data could organizations or even borders. This is illustrated by have potential in addressing the challenges of identity blockchain – a distributed ledger technology which is validation for individuals with limited traditional essentially a shared ledger between network participants biographical footprints in official records. G20 DIGITAL IDENTITY ONBOARDING 15 and the use of ‘tokens’ as a way to incentivize participants to be stored in blockchains, secured, and encrypted.58 In for running the network in the absence of a central actuality, what will be stored in the distributed ledger authority. This allows exchange of information among is not identity itself but an identity ‘transaction’ or multiple parties in what essentially is trust-less system. attestation of an identity. This technology is being trialed for various financial Some argue that blockchain could be used to empower sector applications including funds transfers, payment an individual to have complete control over their identity settlement and regulatory oversight, and due to its including where, when and what parts of their identity decentralized and transparent nature57 also increasingly they wish to share. Essentially, when a person presents in identity management as well. The immutable nature their digital identity to a third party, they will do so by of the ledger ensures that dispute resolution is embedded proving that they have control over the private key that and enforced by computer protocol. Moreover, the corresponds to the relevant linked identity transactions transparency, resilience and replication at each node allowing the individual to divulge only that information offered by the shared ledger is a useful tool for tracking that needs to be shared with authenticating body and not and maintaining the integrity of the information. the entirety of the digital ID. Moreover, this is possible It should be noted that although blockchain and distributed without data storage. For example, if a user wanted ledger technologies were not built with identity in to access a service that was only available to people mind, there are use cases identified in supporting the who lived in a specific region, the attestation could development of self-sovereign identity (SSID) – (i.e.) provide proof that the user’s home address is within the a mechanism for an individual / entity to assert its own required region, but does not need to provide the actual identity without having to rely on any third party. This address itself. term (SSID) is increasingly being contested, as the basis There have been recent developments on blockchain for the identity is often some form of underlying legal based digital identity and associated CDD. However, ID which is first validated by the issuing authority before many of these developments are still in early stages and being managed by an individual / entity on their own. have not yet produced results at scale, making it difficult Hence, in that sense, it more of a ‘self-managed’ rather to evaluate their feasibility. It’s also important to note that than ‘self-sovereign’ ID. For example, the Government despite the progress, concerns remain around the legal of Dubai recently announced a plan to use blockchain standing of blockchain-based applications, the standards technology to verify all information on an Emirates used, and the interoperability of shared ledger systems as ID card. Details related to a resident would be stored evident from the assessment in the figure below along the on the card, including insurance documents, passport dimensions of Maturity, Ease of Adoption, Affordability, information, and health data, and by 2020 it is expected Performance, Security and Scalability.59 16 APPROACHES TO INTEGRATE ID INTO THE FINANCIAL SECTOR Figure 7: Assessment of Authentication Robustness of Blockchain60 Integration Longev e ept l Acc ultura ope anc Inteability ity r r- C ng f ini ty o Da labil Sc Tra plici a ta ity S Sim Co impl Matu mp icit ity Re uta y of plic rity sou tio im rce nal on UI S s Sca opti Simplic ity of lab ility Ad f Netwo Ease o g Infrastr rk Learnin ucture Circurvention Time Cost Resistance Savings rity Secu Aff ord R ce abi Opp evenue ilien lity ortu Res nitie s ance ion miss y Aff SW ord ns rit Perform Tra Secu ab ility Aff t pu HW abili ord gh Time se rou Stab on Accuracy Th ty Resp ility High Medium Low N/A Blockchain G20 DIGITAL IDENTITY ONBOARDING 17 APPLICATIONS OF IDENTITY IN FINANCIAL SERVICES Identity is integral to providing and obtaining financial services, and is needed at various transaction points when using financial services. The role ID plays at each of these transaction points and for different services will vary (see Figure 6 below). These distinctions are subtle but have important implications for policymakers, regulators, service providers and consumers alike. Identity is also vital for ensuring the safety and integrity of the financial system. During account opening, a customer is required to issued (for example a debit card and PIN), to be used provide credentials to establish identity so that the FSP for authentication in future transactions or access to can carry out CDD procedures. These credentials then other services. need to be validated and allows the FSP to link and match The information collected during account opening—for information gathered from other sources of information example, address, other contact details, and employment such as credit bureaus to validate the information status—can change over the customer lifecycle. Hence, provided and assess the suitability of the product to the periodic re-validation is required to ensure that key data individual. Once complete, a transaction identifier maybe underpinning CDD continues to be valid. The frequency of this varies according to local regulatory requirements, Figure 8: Financial Service Stages and which are often at least once every 3 to 5 years, Phases depending on risk profile of the customer. Finally, there are occasional product-specific events, such as the re- issuance of an internet banking password and returning Account mortgage documents, which require the re-validation Opening of identity documents to ensure that the information is being provided to the rightful owner of the account relationship. The specifics will depend on local regulatory requirements and industry standards and codes. Product- Customer Due Specific Event Diligence The subsequent sub-sections below describe the (CDD) applications and utility of ID within specific financial sector services and processes associated with provision of services and products. The different processes described in Figure 6 can be broadly grouped into three: account opening; ongoing authentication and customer consent; and back-office processes. Digital ID has applications in each of these three areas and are described in the sections Periodic Transaction below. This includes a focus on (1) account opening, (2) Re-validation Authentication customer due diligence, (3) authentication. In addition, digital IDs have the potential to (4) transform payment G20 DIGITAL IDENTITY ONBOARDING 19 Figure 9: Benefits of Digital ID USES Better Customer Due Consumer E-signatures Authentication Diligence Consent PUBLIC AUTHORITIES RELYING PARTY INDIVIDUALS Better AML/CFT Controls Easier Account Opening Identity Theft and Fraud Prevention G2P, G2B & G2P Payments Better Credit Scoring Greater Transparency G2P Payments Streamlined Access to: Credit, Tax Collection Savings, Insurance BENEFITS Easier Tracking Reduction of Potential for Interoperability Gender Gap More Efficient The Ability to Leverage Reduction of Social Value of Legal IDs Gender Gap Programs Reduced Cost and Increased Efficiency Integration with Mobile Platforms Improved Document Management and Recording Role in Humanitarian Improved Customer Service Assistance Increased Single Customer View Access to Social Programs Frictionless Transactions 20 APPLICATIONS OF IDENTITY IN FINANCIAL SERVICES services for FSPs and also government-to-person (G2P) Dhan Aadhar Mobile) approach has enabled more than and humanitarian assistance. Further, digital IDs have a 80 percent of the population to have bank accounts61 critical impact of effectiveness of (5) credit reporting (see Box 8 below). In Peru, the digital ID system enabled systems and facilitates (6) digital signatures and (7) rollout of an interoperable mobile money service and insurance schemes. Finally, a strong digital ID system platform. can also help (8) small business development by improving identification of firms and employees. The Customer Authentication list is not exhaustive but is aimed at those elements of After account opening and customer due diligence, financial services that are most pertinent to financial FSPs need the ability to authenticate customer identities inclusion. The role of digital ID on each of these areas for a variety of services and transactions. Secure, is described below and illustrated through relevant digital authentication mechanisms based on attributes case studies. and credentials established during account setup are necessary to ensure that only legitimate customers to Account Opening access services and to prevent identity theft and fraud. One of the important applications of digital ID in the Furthermore, digital ID technology can help FSPs financial sector is that of account opening. According to implement automated methods of authentication that do the Global Findex Survey recently released by the World not require the costs and manpower needs of face-to-face Bank Group, 515 million adults worldwide opened an interaction. This section highlights some of common account at a financial institution or through a mobile authentication mechanisms and draws attention to money provider between 2014 and 2017. This means developments in this area. that 69 percent of adults now have an account, up from Currently, the provision of credentials for use in 62 percent in 2014 and 51 percent in 2011. However, authentication are often tied to a specific financial only 63 percent of adults have an account in developing product they service, such as a user ID and password for countries, compared with 94 percent in high-income online transactions and/or a payment card and PIN. There countries. The survey also finds that the digitization of is however, a trend towards de-coupling authentication government payments, which is supported by digital ID, credentials from a specific financial product and making could help to reduce the number of unbanked people by it available as a service on its own. One example is the 100 million globally. growing use of token-based authentication to access Countries such as Peru and India have already used one’s accounts at an institution. The general concept digital ID to rapidly increase account opening in recent behind a token-based authentication system is simple: years. Specifically, India has pioneered the JAM (Jan they allow users to enter their username and password Box 8: Case Study: India ‘JAM Trinity’ In India, the foundation of financial inclusion strategy has with the reporting entity in real time. Furthermore, as the been based on the Jan-Dhan, Aadhaar, and Mobile (JAM) KYC data is released directly to service providers only trinity. The JAM trinity integrates the ID system and payment upon the consent of the customer, his/her privacy remains applications with a view to becoming more cost effective and protected provided robust data protection measures are in efficient to open an account and for accessing them. place. So far, a total of 4.9 billion e-KYC transactions have The Aadhaar ID system includes an electronic KYC (e-KYC) been conducted through Aadhaar. service to expedite the verification of a client’s identity. The Banks and payment network operators have embedded e-KYC enables an individual with an Aadhaar number to allow Aadhaar authentication into micro-ATMs to provide branch- Unique Identification Authority of India (UIDAI) to disclose less banking anywhere in the country in a real-time, scalable his/her personal information to service providers who wish to and interoperable manner. From the FSP’s view point, it instantly activate services such as mobile connections and offers tremendous benefits in terms of near elimination of bank accounts. paperwork and the consequential burden of keeping records e-KYC is paperless, consent-based, private and and facilitating audit and forensics through the electronic instantaneous. As a result, reliable62 CDD data is shared storage of information.63 G20 DIGITAL IDENTITY ONBOARDING 21 Box 9: Case Study: Peru ‘Modelo Pero’ The Peruvian Bankers’ Association (ASBANC) announced of Peru lives in an area with mobile broadband coverage and an initiative to develop a shared e-money platform in 2014 at least 70 percent of the population have a mobile phone called ‘Modelo Peru’. This quickly grew into a collaboration connection.64 This enabled provision of services such as between the country’s financial institutions, government, cash in / cash out at agents, balance check, P2P payments telecommunications companies, large payers (salaries) and and airtime top-up across large sections of the population, payees (billers), leading to the establishment of a dedicated whilst being able to enforce the specific transaction and entity in July 2015 the Peruvian Digital Payments (PDP) to account balance requirements across all the accounts an develop and offer a new payment service. This new service individual held. is known as Billetera Movil (BiM), and was launched in It is expected that other services such as ATM integration, February 2016, reaching around 80,000 subscribers in its utility bill payments and merchant payments would be first three months of operation. enabled by end-2018. Important characteristics of this Through the successful integration of Peru’s national system include: being able to sign up without a bank Digital ID system (RENIEC) and payment applications via a account; ability to send or receive money without the use of mobile phone, a successful ID backed payment system was mobile data or a pre-paid plan; and withdrawal/transaction developed. The digital ID is linked to all accounts, enabling limits up to USD $300 a day and USD $1200 per month. If enforcement of various transaction and account balance this payments system is scaled up, it has the capacity to limits. According to the GSMA, 95 percent of the population bring more than 60 million people into the formal economy. to obtain a token which allows them to fetch a specific card services worldwide particularly for ATM cash resource. Users can then use this token to access the transactions. A PIN differs from a password in that it specific resource for a specific time period.65 is transformed into a reference value using encryption There can be several approaches for authentication, keys which is then stored on the authorization systems depending on the assessment of risks associated with of the FSP while the PIN itself is transient in nature. The unauthorized access. As policymakers push the sector security relies in having a robust transformation process to expand financial services into underserved and often that provides a high degree of confidence that the PIN rural areas, a key consideration should be to identify cannot be derived from the reference value. A PIN is methods that offer secure and reliable authentication for intended to be remembered by the user and when used FSPs, while also being convenient for users. The concept safely and as required by prevalent standards,67 provides of Levels of Assurance (LOA), for example, takes a a good degree of protection and certainty. graduated approach to security and matches the LOA However, there is a commonly held view that some needed to the specific class of service to be provided. customer segments cannot use PINs reliably, due to While the purpose of this report is not to go into a detailed illiteracy, innumeracy or lack of familiarity with the analysis of the LOA levels, it is important to note that technology and other issues. The security of the PIN service providers always face a cost-benefit tradeoff in lies in being able to commit it to memory. However, seeking to achieve higher LOAs. Specifically, a tradeoff low frequency of use forms a tenuous link with memory, between the perceived risk of a transaction versus the cost since many of these customers access financial services of authenticating that transaction. For example, a face-to- infrequently, perhaps as little as once every 3 months or face manual authentication process will incur a relatively even less. Further, the infrequency of use leads people to high cost but will likely result in lower risk and thus write their PINs down, often on the back of the card or higher LOA. Conversely, a username and password type mobile phone they are using, leading to PIN compromise. of authentication system will incur much lower costs to In addition, PINs can and often are easily be shared with service providers but entails much higher risk of fraud.66 others, which can presents a security risk. For example, More detail on the LOA provided in Annex 1. national and global fears around terrorism are beginning Personal Identification Number (PIN) to influence PIN use. The 2015 terrorist attacks in Paris were reported to have been financed using prepaid cards. The Personal Identification Number, or PIN, is the This reflects a broader issue with payment cards in that authentication technology used by almost all payment one person, who passes the necessary CDD checks can 22 APPLICATIONS OF IDENTITY IN FINANCIAL SERVICES acquire the card and top it up, whilst another person uses contact cards, although some including Germany’s ID the funds. The PIN is forwarded by post or text message card (Personalausweis) and Malaysia’s MyKad use or even word of mouth making it increasingly difficult contactless technology. to track. In addition to using smartcards as standard IDs, some Regulatory authorities in several countries have concerns emerging cases have attempted to combine identity that a PIN is not secure enough, for at least some financial and payment capabilities on one smartcard potentially transactions. For example, in India, online biometric offering great convenience to users and service authentication for bank transactions is becoming providers alike. available. The diminishing reliance on solely PIN use For example, the Government of Maldives, in for security, is further evidenced by the announcement collaboration with Mastercard, has recently launched a that the Payments Association of South Africa (PASA), biometric smartcard-based national ID called the ‘Passport in partnership with Visa and MasterCard, is seeking to Card’ for its citizens. The card contains 10 fingerprints introduce biometric authentication of payment cards in for secure verification and a unique combination of dual- South Africa.68 interface chip for contactless and contact card reading. This card functions as the passport, driving license, and Smartcards national ID of the cardholder, and can be used to provide A Smartcard is a card that has embedded integrated circuit health and e-services by the government. It also functions or chip. Smartcards can be used to store attributes and as a payment card to make payments.70 credentials such as PINs or biometric data (see next However, like most innovative technologies, integrating section) and with the appropriate application, can enable identification and payments also introduces a layer of interaction with recorded data. For example, a smartcard complications and risks, such as: data privacy; dilution can be used to verify that a fingerprint sample collected by of data ownership; liability between state identity a connected device is the same as a template stored in the authorities, payment service providers and banks; and Smartcard. Smartcards can either be “contact” cards that general risk and fraud management. In addition, while are read when in direct physical contact with a reader, or smartcards are more secure than non-chip-based cards, “contactless” card that uses Near Field Communication they are only as secure as the features installed onto them (NFC) or radio frequency identification (RFID) technology at the time of production. Estonia, for example, had to (see Box 10). In general, “contact” smartcards also have re-issue 750,000 national e-ID cards because of a security capability of requiring a pin for identification. risk found in the chips of those cards.71 Smartcards are most commonly used for payments, public transport, or access to office buildings. Many countries Mobile SIM Authentication also issue national ID cards and other credentials that With the ubiquity of mobile phones, there is increasing use smartcards. Digital ID cards in global circulation interest in using the unique identification numbers are expected to increase from 1.75 billion in 2013 to associated with mobile subscriber identity modules or 3.3 billion in 2021. Of this, a total of 3.2 billion national SIM cards. The algorithms contained in the SIM card ID smart cards will be issued by 103 countries.69 As of allow for encrypted communication between the user early 2017, 82 percent of all countries issuing official ID and the network. For authentication, the authenticating cards have implemented programs that depend on smart body generates a random sequence of numbers that is cards or plastic cards and biometrics. These are typically sent to the user’s mobile- this is the user’s public key. Box 10: Near Field Communication (NFC) and Radio Frequency Identification (RFID) Although distinct, NFC and RFID both employ radio signals transferred, security and cost. They are embedded into to tag and track data. Simplistically, NFC is the newer retail products to help stores keep tabs on inventory; technology and—unlike RFID technology that is only automatically note the identity of a cars on a toll road and passive — an NFC device can also exchange data with the sometimes manage the control of luggage on some airlines. tag, hence it can be both a reader and a tag. Tags are, also in SMART passports. Tags are based on a number of parameters including the reading distance, speed and amount of data to be G20 DIGITAL IDENTITY ONBOARDING 23 Box 11: GSMA’s Mobile Connect Mobile Connect is a secure universal log-in solution that While the SIM information itself can act as a form of digital works by matching a user to their mobile phone using a identity, the GSMA is focusing its efforts on using the phone number as the identifier and the mobile phone as platform as an add-on element to existing ID programs, to the authentication device. It is a portfolio of mobile-based provide additional authentication. Developers can access secure identity services driven by mobile network operators the ecosystem of operators who have partnered with GSMA globally and delivered as a federated identity framework. for Mobile Connect and their corresponding user base.72 It leverages the reach and inherent trust in the mobile network The GSMA is also working to align Mobile Connect with other and combined with a unique PIN for more secure use cases, identity standards and regulations, such as Gov.UK Verify in it is used to verify and grant online access where a Mobile the UK, as well as technical standards produced by bodies Connect logo is displayed. Mobile network operators give such as (International Organization for Standardization) users control over their own data and enable end users, ISO, International Telecommunication Union (ITU) and businesses, and governments to interact and access online International Civil Aviation Organization (ICAO). services in a convenient, private, and trusted environment. The public key together with the user’s private key and However, it is important to note that mobile authentication authentication algorithm contained in the SIM, verifies is more viable when used in combination with other the user. authentication methods, rather than a standalone The Mobile Connect solution created by mobile industry technique due to practical challenges such as sharing of association GSMA (see box below) enables customers to mobile phones between individuals.74,75 create and manage a digital ID via a single log-on on their Linked to this and a relevant point to be aware of, is that mobile phone. many countries now require that pre-paid SIM cards only Countries that have adopted cryptographic SIM cards be activated when registered with a proof of identity; include Estonia, Moldova, and Finland. Norwegian those who lack this ID could be denied access to mobile mobile operators offer their subscribers secure mobile communication, further exacerbating digital, social and authentication through a local BankID solution to financial exclusion. provide secure online user identification and user digital Biometric Based Authentication signature verification. In 2012, Bank of Mexico issued regulation establishing that banks in Mexico must allow Biometrics are physical and behavioral attributes of a their deposit account holders to associate their cellphone person and are increasingly used as a means of proving number to their accounts, in order to facilitate electronic one’s identity. There is increasing interest around the world transfers of funds across bank accounts.73 Each cellphone in exploring biometrics for authentication, as a response number can be associated to only one account in a given to (amongst other matters) AML and CFT concerns. bank, but to multiple accounts, each from a different Authentication services in India and Pakistan are built bank. Once the association is established, a customer on biometrics and Bangladesh as well as South Africa can provide her cellphone number as an identifier to (as previously mentioned) is expected to follow suit.76 receive transfers. 24 APPLICATIONS OF IDENTITY IN FINANCIAL SERVICES Box 12: Cross Border Systems Advances in technology are enabling digital identification Once data to be authenticated are collected at the systems to operate across borders. Individuals holding a immigration point, depending on the IT architecture in valid ID from one country can use their credential to conduct use, the data are validated through a central database a transaction in another country (such as filing their taxes) maintained on site or remotely validated if the database or to identify and authenticate themselves at checkpoints or is located in a separate location. A secure information border crossings in other countries. exchange channel is achieved using SAML (Security In the European Union, eIDAS (electronic Identification, Assertion Markup Language) for single sign on, error Authentication and Trust Services) is a regulation on handling, and communication. Endpoint security is ensured electronic identification and trust services for electronic using TLS (Transport Layer Security) — a cryptographic transactions in the European Single Market. Under eIDAS, protocol that provides communication security over a individuals can carry out secure cross-border electronic computer network. transactions that require them to authenticate their identity, The eIDAS regulation also includes rules for trust services such as enrolling in a university, opening a bank account providers—companies that handle electronic signatures, and authorizing access to their electronic medical records. time stamps, electronic seals, and other methods for There are three major stakeholders in the eIDAS network: verifying documents—and it governs the use of trust individuals seeking access to a service or establishing their services by consumers, businesses, and agencies to identity in another country, the server providing access to manage electronic transactions or access online services. a secure application or service, and the provider of the services an individual is looking for. Box 13: Biometrics Biometric recognition uses an individual’s unique to bodies, like height or weight. It also includes behavioral physiological and behavioral attributes to identify and characteristics and mannerisms such as gait, keystroke authenticate his or her identity. The type of attribute patterns, and mouse usage; while the hidden modalities, collected and matched is called modality.77 also referred to as intrinsic, are based on medical data In biometrics, there are three main types of modalities: or X-rays.78 It is only the first two that are generally used hard, soft and hidden. The hard or traditional modality in the identity system, with the former being the far more includes iris scans, fingerprints or signatures; the soft -are prevalent, while the latter is often used to understand related to faces, skin color, hair color or measurements and patterns and trends and hence detect anomalies or unauthorized transactions. When considering which biometric to use for enables a range of biometric solutions, from fingerprint authentication, jurisdictions should consider the accuracy verification to palm, voice, iris, or facial biometrics. (liability framework for false-positives and false- However, there are concerns that the uptake of this by negatives), universality (presence of the trait universally), traders will be low due to the high cost of replacing point- stability (permanence over time), the ease of collection as of-sale (PoS) devices. well as acceptability and cost components involved.79 Separately, a private sector initiative led by Zwipe Although the use of biometrics is inherently costly, due (a company providing biometric solutions) and to the cost of in-person capture and registration when an Mastercard circumvents the issue of high integration identity is issued along with authentication costs, there is costs to merchants by using an integrated fingerprint significant interest from international payment schemes. sensor within the card itself.80 The solution provides on- The Payments Association of South Africa (PASA) is card biometric authentication, hence removing the need working with Mastercard and Visa to design a solution for the acceptance device to have a built-in biometric that is interoperable in South Africa. The specification reader. While the card is unarguably more expensive than G20 DIGITAL IDENTITY ONBOARDING 25 a normal smartcard—and it is likely that the total cost of Payment Systems and Services implementation would be higher than that of deploying a few thousands or tens of thousands of PoS devices, Digital ID is enabling re-structuring payment services rather than millions or tens of millions of cards—such and processes, the major developments in this regard are decisions are often based on several factors, like speed described below: to market, and this could indeed be appropriate in some situations. Furthermore, the fingerprint matching taking Combining ID and Payment Applications place on the card rather than by a device that the card ID and payment applications can be combined in one form is inserted into adds an extra layer of security to the factor such as a mobile phone and its associated SIM card reference fingerprint data. or even a smartcard or other chip based token. If the basic digital ID credentials are unique and enable individuals Regardless of the format and approach, the adoption to reliably assert their identity without including other of biometrics as the preferred means of customer data attributes by default, this will spur developments to authentication across the world is attracting lot of minimize the disclosure of data. attention. Experts expect to see as many as 600 million devices with biometric authentication by 2021.81 By However, linking a payment application to a digital ID by 2020, 50 billion Internet of Things (IoT)82 devices are co-hosting the two applications on the same smartcard – forecasted to be in use, and 500 million biometric sensors in the way that was done on a limited scale by NIMC and will be deployed for IoT by 2018.83 Indeed, IoT will be Mastercard in Nigeria – can potentially be problematic. a major enabler for combining analytics and continuous Since Mastercard isn’t a bank, in order to function, the assessment to generate an adequate level of assurance, in application needed to be linked to a bank account not real time, that an individual is who he or she claims to be. under the control of Mastercard, presenting issues around consumer choice, data protection and simple practicality, According to new regulations in some jurisdictions beyond the challenge of having a particular commercial (e.g. China, the EU, Malaysia and Mexico) the brand being tied to a national ID system. It would initiation of transactions, as well as access to sensitive perhaps have been more straightforward to separate the payment data, should be protected by strong customer ID application and the payments service, and develop authentication (SCA). The general objectives are to financial services to be offered to NIMC registrants in a improve cybersecurity and reduce the risk of fraud. more established manner. SCA is the result of a customer authentication process based on three elements: knowledge (e.g. of a customer’s Using the Digital ID Infrastructure for own background information), ownership (e.g., of a Authentication physical token), and inherence (e.g. a customer’s unique biological characteristics). As regards the last of these Digital ID infrastructure can be used for authentication elements, financial firms are experimenting with the use in place of a dedicated authentication arrangement for a of biometrics as a technology able to reconcile a simple payment instrument. user experience with adequate security. Technological India’s transformational journey in its digital infrastructure improvements now allow for cheap and sound solutions in recent years provides a best representation of this embedded by default in a customer’s smartphone (e.g. application. As mentioned earlier in the case study on fingerprint, face or voice recognition). Financial firms account opening, India has spearheaded the financial can develop SCA solutions exploiting these smartphones’ inclusion exercise using the JAM platform. This serves as native services (e.g., ApplePay, Mastercard Selfie Pay). an important tool for the central authentication for a variety Biometrics are also an opportunity for customers: the of transactions, instead of a dedicated authentication use of modalities such as fingerprint scanning and facial arrangement for a single payment instrument. This recognition will not only offer a great deal of convenience potentially, increases the level of assurance without in general but also a new form of security and identity adding a corresponding decrease in usability. A total of verification, which may suit some customers better than 4.9 billion e-KYC transactions have been conducted via traditional tools. this platform. Banks and payment network operators have embedded Aadhaar authentication into micro-ATMs 26 APPLICATIONS OF IDENTITY IN FINANCIAL SERVICES to provide branch-less banking anywhere in the country Using the ID Credential as An ‘Address’ in a real-time, scalable and interoperable manner. The ID credential can be used in lieu of a bank account A further innovation in India, was to develop a mapping number to direct payments removing the need to reveal between the Aadhaar number and payment card/account the recipient’s account number to the payer agencies. number while using the fingerprint as an authentication This is accomplished by maintaining a mapping between mechanism. This allows an individual to pay, by simply the credential and payment related identifiers. providing a fingerprint at a participating merchant India’s Aadhar payment bridge system (APB) is an expelling the need to enter an account number or present example of such a service. It is a unique payment system a payment card. This service is called Aadhaar Pay. A implemented by National Payments Corporation of India variant of this is used for delivery of rations through (NPCI), which uses Aadhaar number as a central key for the public delivery system and at micro-ATMs for electronically channeling the Government subsidies and withdrawing cash. benefits in the Aadhaar Enabled Bank Accounts (AEBA) This approach of authentication has its challenges such of the intended beneficiaries. The APB system is used by as not being able to identify certain types of fingerprints the government departments and Agencies for the direct and requiring multiple attempts to capture the biometric transfer of benefits and subsidies under Direct Benefit accurately enough to enable validation. In the current Transfer (DBT) scheme launched by Government of state of development, this could limit the effectiveness India.84 This is also an example of the government to for routine transactions and those that need prompt person (G2P) benefits brought about by digital ID that authentication – for example while making a purchase in supports efficiency and aims to remove the fraud inherent a high-traffic merchant. in the benefits system. Box 14: Case Study: Singapore ‘SingPass’ ‘Singpass’ is a unique national digital ID which is being number of recipients. With the digital ‘MyInfo’ platform within used by 3.3 million people for speedy access to an array Singpass, the need for repetitive form filling is avoided. of government and financial services,85,86 It is recognized Launched in 2017, MyInfo pulls personal data such as and approved by government organizations as a formal names and addresses from public agencies. Consent credential of the individual and includes access to direct includes only a click of a button and online submissions payment systems, insurance and tax reporting systems are made to more than 17 different e-government agencies within the governmental setup. simultaneously. In addition, the government is working on The unique digital ID has been used as a credential which is a pilot project with four private banks to verify customer used to direct payments without having to know the account credentials online using Singapass and it is expected to be open to private financial players as well.87 Box 15: Case Study: Pakistan ‘NADRA’ The CNIC has been central to the delivery of G2P payments the beneficiary themselves is not a recipient of the money. in Pakistan. G2P payment schemes are organized into Moreover, the beneficiary does not require a high level of three categories: (a) social cash transfers, (b) government financial literacy to withdraw funds, requiring literacy levels salaries and (c) government pensions. In all these similar to that required for the usage of a debit card. 88 This categories, the role of CNIC has been integral in enabling supports reduction of the gender gap. In addition, the CNIC the payments to be transferred to the customer. also makes it less complicated with simpler security tiers All citizens are required to register for the CNIC once they for withdrawal; i.e. In order to verify her credentials before reach the age of 18. New CNIC’s are machine-readable making payments, a beneficiary only need present a CNIC. 89 and carry facial and fingerprint information. One of the CNIC has helped to promote growth and digitization of important attributes of CNIC is that it ensures the personal G2P payment systems which has triggered the annual 19 presence of the beneficiary at the time of withdrawal of percent growth in digital transactions in 2016-17. money contrary to the existing system where in most cases G20 DIGITAL IDENTITY ONBOARDING 27 Another example of account number-less transaction is as internally-displaced persons (IDPs) and refugees.90 This illustrated in the Singapore case study. section provides an overview of the sources of ID and the challenges of implementing digital ID in this context. Government to Person (G2P) Payments Of the USD $28 billion given out in humanitarian In many countries Government benefits and subsidies assistance per year, 94 percent are in-kind transfers, while are now increasingly being transitioned to being paid out 6 percent are cash. Of this 6 percent, a certain proportion as cash transfers, i.e., paying the benefit as a monetary are in the form of electronic transfers. Digital ID will value instead of as physical goods or services. This is help ensure that the assistance reaches the intended another key example where digital ID can be utilized recipient. The authentication91 of a beneficiary’s identity to support automatic and hassle-free payouts- as well is crucial to cash transfers for two primary reasons: the as to weed out payments made to fraudulent accounts. full potential and advantages of cash transfers over in- The same principle has been used for disaster relief and kind assistance are only realized if disbursements can be humanitarian relief payments made directly to transaction made remotely and digitally and backed by appropriate accounts as described in the next section. ID and authentication systems, funds traceability is a An important and successful example of enabling digital key government and donor requirement to scale up cash G2P payments is in Pakistan through the NADRA transfers given the high perceived risk of fund diversion (National Database and Registration Authority) who is for financing of terrorism. responsible for issuing the CNIC (Computerized National The table 1 provides an overview of the different identity card) to the citizens of Pakistan. sources of ID in the top ten refugee hosting countries. Importantly, mapping the ID of the individual to their Few governments have issued a formalized national ID eligibility records in the social benefit transfer systems system. However, it should be noted that birth registration enables government agencies to reliably ensure that by the government and provision of a United Nations only eligible individuals are receiving the transfers and High Commissioner for Refugees (UNHCR) ID is more no individual is able to avail the same services from persistent in the sample chosen. different locations or different points of time using a There are a number of challenges that hamper the creation different identity. This has substantial implications of a digital ID for displaced persons: for the public financial management systems and is • Insufficient evidence of their identity: Refugees and also critical for public sector employee salaries and asylum seekers may arrive in a host state without pension payments. reliable evidence of their claimed identity, such as Role in Humanitarian Assistance a passport, national ID or birth certificate from their country of origin. This may delay their registration by The digital ID initiatives have had significant impact the host state or by UNHCR and could even prevent on providing humanitarian assistance especially for it entirely. In Norway, Norwegian Refugee Council Figure 10: Overview of Humanitarian Assistance 94% In-Kind Transfers (incl. on Cards Majority or Mobile) Humanitarian Physical Assistance Cash Out Cash Cash $28 billion/year Transfers Digital Access & Use 6% of Financial Transfers Services Minority Source: ‘The Role of Financial Services in Humanitarian Crises’, WBG, 2017 28 APPLICATIONS OF IDENTITY IN FINANCIAL SERVICES estimates that 70 percent of Syrian refugees above the such as a paper certificate, to prove that they have age of 14 do not have their Syrian national ID card.92 submitted a RSD application. However this temporary ID may not enable them to access certain services, • National laws or policies preventing recognition such as purchase of a SIM card. of refugees: For legal or political reasons, a host state may not formally recognize the status of some A digital ID when rolled out effectively can mitigate the refugees, preventing governments from carrying out impact on host communities by providing an efficient registration themselves. In some cases, the government system to help host states and humanitarian partners may consider the refugees a responsibility of the evaluate the scale and type of assistance needed. It can international community or recognize refugees but also support the realization of durable solutions such as refuse to provide an ID for a real or perceived fear that voluntary repatriation, resettlement to another country, or this may prolong their stay. integration into host communities. • Lack of demand from the refugees: Refugees and UNHCR is one of the leading international agencies which asylum seekers may not register themselves with the is pioneering digital ID in many of the conflict countries, as host state, UNHCR and/or other agencies, possibly part of its mandate related to refugees. UNHCR will – on out of fear of extradition or even because they are invitation from and in collaboration with, the host state – unaware of the need to do so. Even when refugees step in where authorities lack the capacity, resources and/or register, should they fail to update their information on willingness to carry ID registration for refugees and asylum a regular basis, their ID becomes invalid (notably for seekers. In cases where the host state registers refugees use at third-parties). and maintains an ID system, UNHCR may also maintain a parallel system for its own operational purposes, from • Inadequate capacity: Some host States may lack the which the data – under appropriate conditions – could be human, financial or technical capacity to carry out shared with the host State. However, IDs cards issued by effective and timely registration and RSD (Refugee UNHCR are not always recognized as evidence of identity status determination). In many countries, registration or legal status and may not be accepted by service providers and the provision of an ID is linked with a positive outside of UNHCR-administered settlements. UNHCR- RSD. Authorities may have a backlog of RSD issued IDs (refugee cards & asylum-seeker certificates) applications that could lead to asylum seekers waiting tend to be widely accepted for authentication among weeks, months or even years for a decision. During humanitarian organizations. this time, they may be provided with a temporary ID, Table 1: Comparisons of Different ID Systems for Refugees Access to ID/Registration by Source Country (# of Refugees) Govt Issued National Govt Issued Standalone Birth Registration by UNHCR Issued ID System Refugee ID System the Govt Jordan (685,197 under UNHCR; Only some Palestinian Yes Yes Yes 2.2 million under UNRWA) refugees Turkey (2.9 million) Yes (as a Foreigner) No Yes Yes Pakistan (1.4 million)  No Only refugees who arrived No Yes before 2015 Lebanon (1 million under UNHCR; No Only Palestinian refugees Yes Yes* 463,700 under UNRWA) Iran (979,435) No Yes Yes Yes Uganda (940,835) No Yes Yes No Ethiopia (791,631)  No No Yes Yes Germany (669,482) No Yes Yes No DRC (451,959) No No Yes Yes Kenya (451,099)  No Yes Yes Yes G20 DIGITAL IDENTITY ONBOARDING 29 Table 2: Comparison of ID Registration Processes93 Host State-led UNHCR-led94 Decentralized Not Mutually Exclusive The Government registers refugees and With authority from the host State, A refugee or asylum seeker registers asylum seekers and issues an ID via (i) UNHCR registers refugees and asylum themselves into an online system that a standalone refugee ID system; (ii) a seekers and issues an ID. The registration stores the data in a distributed ledger refugee category in the national ID system; may be carried out jointly with the host (DLT) that does not have a central Process or (iii) integration into the resident ID state, but UNHCR manages the data. authority, and may be global in nature system. The government can be supported and not specifically targeted at refugees. by UNHCR or other agencies during A foundation needs to be present for registration. registration, once done it removes the need to revert back to the original source. • Dedicated refugee ID system: Pakistan, • In parallel with the host State: Jordan, • Civic Jordan, Uganda, Kenya Thailand • Sovrin Examples • Category in the national ID system: • In lieu of the host State: DRC, Egypt, Tanzania, Rwanda Ethiopia, South Sudan • Resident ID system: India • Likely to be the most widely-recognized • Accessible to anyone making a claim for • Not necessarily linked to a jurisdiction; and interoperable for authentication, and refugee status; • May—in theory—provide the refugee thus facilitates the greatest access to • Very efficient, especially to identify with the greatest control over their services and opportunities (e.g. banking and address special needs of women, identity data; and CDD requirements); children and other vulnerable persons, • Fully digitized and hence most portable; • Most useful for facilitating durable since UNHCR has high capacity and Advantages solutions; extensive experience; • Could be an effective complement or add-on to host-State led or UNHCR-led • Usually also involves RSD (except if • Recognized by UNHCR operations IDs a resident ID model), which is key to across different countries; facilitating protection and identifying • UNHCR allows host States to special needs. access data after signing a MoU with safeguards; • Trusted by resettlement destinations. • Lack of sufficient capacity and burden • May not be widely-recognized; • Does not address protection issues on host countries; • Carried out at the invitation of the host • As yet unproven method • High identity proofing threshold; State and thus could be discontinued • Heavy reliance on the Internet and anytime; mobile devices limiting accessibility, as • Dedicated refugee ID system may not be interoperable with the national ID system • Not sustainable as dependent on well as technical literacy and skills; or resident ID system; external financing; • Lack of universal recognition • Resident ID does not provide proof of • Assuming a responsibility that should by governments, international Disadvantages refugee status; ideally be the host State’s remit. organizations, or service providers; • Can be revoked or invalidated by the • Trustworthiness based on the reliability host State at any time. of the original identity documents presented to assert identity; • Immutable nature of DLT might mean that a refugee’s personal data cannot be removed, even when they cease being a refugee in most cases. • Global, publically-available platform has inherent security risks. 30 APPLICATIONS OF IDENTITY IN FINANCIAL SERVICES Table 2 draws comparisons on the providers of ID and the Credit Reporting pros and cons associated with each. Credit reporting systems (CRS) store data about The use of digital ID in humanitarian causes has been consumers’ repayment behavior of their financial expanding over the years. In countries such as Egypt, obligations, reliably linking all records collected from India, Uganda, Syria, the impact of digital ID through the different institutions to the relevant consumer and UNHCR systems or national ID systems have allowed building up a profile of the customer. When it comes refugees to secure aid in a more targeted and organized to credit products, lenders use risk management and manner. In Jordan, in collaboration with UNHCR, underwriting procedures that traditionally supplement World Food Programme (WFP) and IrisGuard, has their credit appraisal process with data pulled from this allowed 76,000 Syrian refugees to purchase food from credit reporting system. camp supermarkets and withdraw subsidies from iris authentication enabled ATMs, replacing cash, vouchers or The General Principles for Credit Reporting (GPCR) e-cards.95 The use of WFP’s biometric-based identity and issued in 201197 by the International Committee on Credit beneficiary management system – SCOPE – for refugees Reporting (ICCR) recognize the need for data included in Kenya enabled WFP to realize monthly savings of in the CRS to be unambiguously linked to the customer $1.5m by removing duplicate and ghost records.96 (‘data subject’). The ICCR also recognize that effective credit reporting for disadvantaged individuals remain The use of digital IDs in the humanitarian context a challenge. An effective credit reporting, they say, are has demonstrated its potential for efficiency, de- reliable mechanisms for identifying individuals and firms duplication and fraud assessment. However, although as well as for linking them unequivocally with their the advantages may outweigh the drawbacks, important financial obligations. questions and challenges must still be addressed regarding implementing organizations, data ownership There is a need to be able to uniquely identify the and security, and the ability to implement a solution individual or legal entity and use that unique identifier during the early stages of a crisis within the legal and to organize all the records in the database. This seamless infrastructure requirements of such solutions. integration or linking of a unique ID with the credit reporting systems is exhibited in the Pakistan case study. Box 16: Case Study: Pakistan ‘NADRA’ The Electronic Credit Information Bureau (eCIB)98 has In addition to the eCIB, (which is a more traditional credit facilitated linkage between a persons CNIC (computerized reporting on banked customers), Microfinance Credit unique national identity card) to their credit information Information Bureau (MF-CIB)’s microfinance institutions based on conducting NADRA online verification and can access the eCIB data. The country’s banks have authentication process. The eCIB has two types of credit access to this data and can assess consumer credit status, reports which are the consumer and corporate credit based on prior consent, for financial and credit reporting reports respectively. purposes. The common link between these organizations In the consumer credit report, individuals are mapped to (credit reporting systems, banks, microfinance institutions) their CNIC for their consumer credit and default history is that the CNIC provides the unique identity for every over the last 12 months. On the corporate credit reports, individual in terms of their credit histories. each corporate entity (listed and unlisted) is mapped to In addition, the Pakistan Credit Bureau Act of 2015 states a unique borrower code derived from the CNIC system. “credit bureaus would be legally empowered to collect and Member financial institutions are required to report all be answerable for trustworthiness of credit information their financial obligations under a unique borrower code about debtors of banks, financial institutions, non-banking assigned to each entity. The corporate credit information financial institutions (NBFIs), non-financial companies, report contains details of outstanding liabilities (fund and leasing companies, and microfinance institutions.” non- fund based), position of overdues, details of litigation, The law also provides access into bill payment history write-offs, recoveries and rescheduling and restructuring- (e.g. from utility companies) when it comes to establishing providing a financial map of the entity. a credit score.99 G20 DIGITAL IDENTITY ONBOARDING 31 The lack of a unique ID in a credit reporting system could Credit bureaus also provide fraud prevention services due lead to inaccuracies and create serious problems to the to the vast amounts of data on consumers from different integrity of the database such as duplication or the inability data providers they collect. They can detect errors and to match an individual to a credit score due to differently signs of potential fraud including identity theft through spelled names or addresses. This fundamentally impacts monitoring techniques based on data reporting patterns. the effectiveness of credit reporting systems. The credit reporting systems have developed various Record-Keeping, Document approaches to link records with different variations Management And Digital Signature of a name or address to a particular individual. These Once the required ID validation and verification checks however, are challenging in context of the financially have been completed, FSPs need to preserve the records excluded where an individual is new to the financial of the validation conducted, as required under the system and address details are not structured or do not jurisdictional regulations. This involves maintenance of have a dedicated address (for example using the address a significant amount of paper records. The use of a digital of another person - ‘care of’). A related point to note is environment supplemented with a digital ID allows for a that the architecture of ID systems and credit reporting more efficient method to record, store and retrieve - by systems can vary. In contexts where these systems both the FSP and external parties such as auditors and develop in parallel or where credit reporting systems regulators- these validations. precede the development of ID systems, it is important to compel the recording of the ID details of customers Consumer protection regulations in the financial sector in the credit reporting system. In particular, where there rightly require express consent from customers to is a unique ID, this can greatly enhance the reliability of provide them with a service or change the terms and the matching process within credit reporting systems. A conditions of a current service. Complying with this digital ID system will further enable the credit reporting requirement has often required physical interaction with system to correlate details between the two systems. the customer- which can be time-consuming, expensive and not always feasible. Digital signatures have been As FSPs become more sophisticated, data other than a solution to these concerns, however it has been a traditionally collected credit reports and scores could slow and expensive process to extend the service to potentially inform lending decisions or the provision of non-corporate customers. In addition, it involves risks investment services. An example is the use of social data regarding consumer protection and consent which need for evaluating credit worthiness and to provide a credit to be addressed adequately. rating in China (please refer to the section on social data within authentication techniques). Linking such data Digital IDs however, can offer simpler and more cost- also requires some form of mapping between existing effective means to provision digital signatures, in an easy identifiers used in the credit reporting systems and the to use user interface. They have opened up opportunities ones used in other non-financial systems. for supporting remote account opening as is depicted in the Norway BankID framework. Box 17: Case Study: Norway ‘BankID’ In 2004, through a collaboration between the Norwegian password and a one-time password (OTP) from their government and a group of cooperative banks, BankID physical code token. An electronic signature using BankID was created as a unique digital ID primarily for financial is just as binding as a handwritten signature on paper. By transactions.100 More than 7.5 million Norwegians the end of 2014, the long-awaited Java-free BankID 2.0 (75 percent of the adult population) now use BankID to project was complete and implemented by most banks. prove their identity and complete transactions online. Also, more than 600,000 Norwegians now use Mobile Access to internet banking and the digital signing of financial Bank ID,101 which uses the same secure technology but documents are services most commonly used by customers. generates and stores the security elements on a mobile The system is simple to use, requiring users to enter their phone’s SIM card instead of a physical token. personal identification number, their chosen personal 32 APPLICATIONS OF IDENTITY IN FINANCIAL SERVICES Access to digital signature infrastructure and allowing provide appropriate financial services to businesses and the customers to authenticate themselves digitally enables businesses in turn continue to operate in cash, with no recourse financial institutions to interact remotely with customers, to a line of credit due to a limited credit history and continue exchange agreements as well as terms and conditions and to be caught in a vicious cycle. A pertinent example that other confidential documents digitally. This can bring deals with the challenges of small and medium businesses is about significant cost savings for both individuals and Canada’s Digital ID for businesses as showcased in Box 18. the FSP by reducing the cost of paper based processing, Some other relevant country examples include: Aadhaar transmission and associated staff time; enabling faster turn- in India is being used to assert and confirm the identity of around times and automation with the internal systems participants in transactions, from opening a bank account, of a FSP. Digital IDs can help businesses streamline fund transfers, to trading in securities, and the ownership onboarding of new customers and allow legally-binding of businesses (through the Udyog Aadhaar registration contracts to be signed online. For example, Netherlands- process for MSMEs, where an Aadhaar number is based Rabobank has partnered with Norwegian digital associated with a company registration).102 ID provider Signicat to offer their customers a range of services like online login, identity, signature and data Bangladesh103 is following a similar path. For larger archiving services under the banner of Rabo eBusiness. businesses, they are recording the digital IDs of the board of directors and management team, which when Customer consent is gaining more prominence given combined with information on transaction patterns, could the strong focus on digitization being a core component have implications for validating beneficial ownership of fintech developments, notably to provide consent for of the business.104 Broader monitoring of this nature is collecting data from external sources and also the ability likely to significantly ease the task of the regulatory and to initiate transactions on behalf of the customer. enforcement authorities, though it is also likely to raise demands for the appropriate tools to trace the changing Small Businesses ownership of assets and funds, which could potentially be While this report focuses on identity verification for a significant opportunity for the developers of ‘regtech’ individuals, it is as important for MSMEs to establish the services. Other examples can be found in the ‘GPFI identities of staff and directors authorized to setup, operate report on alternative data transforming SME’s’105 besides and instruct changes for the business. Obtaining business the Serbia example Box 19. bank accounts or payment services often requires formal Where the ownership of an asset is with a company, business registration documentation, which can be costly rather than a private individual, then such controls are and cumbersome to obtain. Without such formal business limited to the availability of a corporate digital identity. identification, FSPs find it difficult if not impossible to The issuance and usage of corporate digital identities Box 18: Case Study: Canada ‘BN9’ A 9 digit BN (BN9) number, administered by the Canadian to get registered and moreover is more cost effective than revenue agency, is used to identify businesses at the traditional registration processes. The initiative has adopted national level. While the role of BN number is multifold, it has more than 100 program areas across Canada to enable helped to substantially reduce the amount of time required registration and business approvals. Box 19: Case Study: Serbia ‘UBI Digital ID’ Serbia106 has a unique 12 digit UBI digital ID which is divisions enabled Serbia to reduce time to register a mandatory for all businessmen as a form of identification business from 52 weeks to 5 weeks and then to 1-3 days. within the country. One of the key objectives of the ID There was a significant improvement on risk based tax was to reduce the number of days required to set-up a compliance due to accurate data, less administrative business and improve the ease of business ranking. A burden on entrepreneurs and overall improvement in robust unique ID which was connected to all government business functioning. G20 DIGITAL IDENTITY ONBOARDING 33 is well established, particularly in the financial sector, can link a driver’s license to a unique ID establishing a though there have been issues around recognition and unique link that has implications for insurance. acceptance by regulatory authorities. An issue that was For uses such as universal health care coverage which recently addressed in Singapore, when the government require large scale and integration, the importance of introduced the ‘CorpPass’- improving the ease of doing valid authentication and accurate records are being business for corporates and the government. considered by governments globally. The ability of A corporate digital identity is only useful if it can be digital ID systems to aggregate data and provide valid reliably and securely asserted, which requires access authentication and maintain accurate records is extremely by a ‘natural person’, who must assert and authenticate important and is more relevant in countries which are his/her own identity attributes, before being allowed to scaling up for universal health coverage. In Thailand,107 access and assert the corporate identity and associate it for example, the national population registry serves as the with a transaction. One example of this is Nigeria, where baseline list of beneficiaries for the universal healthcare the Bank Verification Number (BVN) of a Director or an scheme, allowing for rapid coverage and eliminating the authorized signatory of the company must be provided. need for a duplicative enrollment campaign. Importantly, health financing and insurance schemes also Insurance need complete and accurate records on service usage and A unique digital ID is an important asset in the insurance data on system performance to correctly bill patients and industry as well. A vital facet of this is the ability to care providers and to inform budgeting and management provide digital consent- which comes into play in a decisions. In a country like Republic of Korea, where number of service offerings. A digital ID offers the ability more than 97 percent of the population are part of a single to establish remote ownership of an asset; for example, it insurance scheme, this becomes all the more relevant. Box 20: Legal Entity Identifier (LEI) A LEI is a unique code made up of a series of letters and a substantial cost attached and needs to be renewed on numbers that can be requested by a legal entity. It was an annual basis. LEIs also record group structures – i.e. adopted by the G20 in 2012 and is intended for parties of a subsidiary -parent relationship. Although LEI is intended primarily cross-border financial transactions with a global to track counterparties of OTC derivatives, these could be governance framework to represent the public interest used in other sectors. For example, LEI could be used to and is related in the main to over the counter (OTC) ease the efforts of supervisors and regulated entities when derivative products. While there is no prohibition for identifying legal entities in compliance with CDD and similar legal entities in other sectors to request an LEI, there is regulatory requirements. Box 21: Case Studies: Estonia In Estonia,105 the linkage between the country’s health and doctors to conveniently check insurance information information system and population register— underpinned through online digital ID authentication. In addition, the by its unique eID and integration layer—has enabled every EHIF also relies on the integration layer to update its child to be automatically listed as a beneficiary in the health health insurance registry of beneficiaries. The registry is insurance fund from birth (World Bank 2015).105 Furthermore, updated daily with information on new births, deaths, and Estonia’s e-Services infrastructure allows patients and other changes. Newborns that enter the register through providers to instantly check insurance coverage online using birth registration are linked to their mothers’ eIDs and their national eID. automatically entered as new beneficiaries. All children Furthermore, the EHIF (compulsory national insurance are thus guaranteed coverage from birth, regardless program) uses the eID to facilitate e-Services related to of their parents’ work status or social contributions. insurance and benefits coverage, such as allowing patients 34 APPLICATIONS OF IDENTITY IN FINANCIAL SERVICES Korea’s NHI (National Health Insurance) system makes Besides the direct benefits to the insurance industry, the extensive use of administrative information sharing with implication on insurance through the ownership of an asset the CRVS system (the registration system) to identify via a digital ID is significant. For example, when a driver’s eligible beneficiaries and determine and collect insurance license is linked to a digital ID (as in countries like India, premiums. For example, determinations of health Peru, Estonia etc.), there is an indirect link to the insurance insurance premiums rely on the national ID number to bought by that the concerned person (e.g. car insurance). verify subscriber’s personal income, tax, and pension Digital consent, mentioned earlier in the digital signatures information. After birth, parents register their newborns sub-section, plays an important role in linking various at a local office, and the infant receives a unique number services through the digital ID ecosystem. It is crucial that (referred to as RR) which is entered into the CRVS the digital consent infrastructure is secure for the digital ID system. Parents must then apply for NHI coverage of to be successful in insurance-based applications. the newborn within 14 days, including the infant’s RR number and the parent’s ID numbers. G20 DIGITAL IDENTITY ONBOARDING 35 KEY FINDINGS Our review and analysis of ID requirements and its role in facilitating customer identification have led us to the following key findings. Digital IDs Are Important to Public Policy place, to ensure that eligible individuals are not denied and Service Delivery and Require Significant service due to the lack of a new ID. Likewise, there Support and Investment needs to be exception handling mechanisms to deal with situations where the digital ID system might be A nation-wide digital identity system is critically down or if someone cannot authenticate themselves for important to support public policy programs and should reasons beyond their control (e.g. worn fingerprints). be a key priority of policymakers, especially in the financial sector. In designing such systems authorities • It is important to carry out single robust identity should consider the following: proofing for each individual as part of the registration exercise, and rely on it repeatedly and across sectors, • Any such digital ID system must not be limited to citizens, rather than do it inadequately many times over. but it should be aimed at registering all residents (as well Registration and the issuance of a digital identity as citizens abroad). This can be problematic, however, if is an expensive process. Investment in a high quality registration is based on documents that are only available national foundational biometric digital identity service to citizens or if non-citizens are required to prove legal will derive the most benefit for the cost. status, which can be a challenge in some countries with porous borders, irregular migrants, displacement, and/or • National authorities must give careful consideration to stateless populations. charging fees and determining the pricing of identity verification services. While there is a natural desire to • Excluding non-citizen residents can have implications ensure that legal identity agencies are self-financing, that make it more expensive for banks to service non- this can serve as a disincentive financial and other citizens and could lead to their financial exclusion. service providers to link to these systems beyond the This is particularly relevant to vulnerable populations on-boarding process, resulting in duplicated systems like refugees and temporary work migrants. and additional costs. • The use of a digital identity system for verification and/or authentication must be made available to Digital Identity Can Be A Critical Enabler all authorized service providers, from health and for Financial Inclusion education through to the financial sector. The digital It is clear that where a national identity platform or ID information should also be linked to the reference service functions well, the financial sector is an active systems relied on by the financial sector like credit adopter of identity services. However, in cases where ID reporting systems, tax systems, business registries and systems are non-digital (traditional plastic or paper card), other forms of legal ID. even though useful, it does not allow for the full scale of • There are however political sensitivities around benefits to be realized. This is particularly important for mandating the use of such a service for the receipt of reaching previously underserved populations who may social benefits and for financial services generally. This have trouble accessing or using existing identity systems. suggests that transitional arrangements must be put in G20 DIGITAL IDENTITY ONBOARDING 37 The availability of a reliable, digitally authenticated Digital IDs Can Help Bring More MSMEs identity system can strongly support financial inclusion Into the Formal Financial Sector initiatives in several ways: Many of the unbanked are small entrepreneurs who face • Digital IDs, especially those linked with biometrics, the same financial exclusion challenges for their businesses should make it easier for the unbanked to obtain as do individuals, namely, valid identity documentation. financial accounts by simplifying the documentation Digital IDs not only help these individuals access requirements required at account opening. A digital ID personal financial services, but also help them validate is also easier and safer to replace if lost or stolen as and register their businesses which in turn gains them credentials can be centrally verified and updated. access to business services such as credit, working capital • Digital IDs can help financial institutions comply and payment services. Digital ID for individuals has with the customer identification and verification implications for larger businesses, as well, by connecting components of CDD. It also provides more cost- the digital ID of the board members, management team effective ways of onboarding new customers, which and authorized signatories to the ID of the businesses. could potentially be conducted by agents. Agents can use digital ID authentication to reliably record Digital IDs Can Support the Establishment customer’s identity and proof of validation which of KYC Registries can be verified and used to feed the information from The use of a digital ID system to build a centralized KYC the digital ID system for the required CDD checks. registry increases CDD onboarding and verification When coupled with simplified CDD norms for basic efficiency for both the customer and FSP. For example, transaction accounts, a significant portion of the India has a centralized repository of capital market customer onboarding process can be completed at investor’s CDD records, known as the Know Your the agent end itself, without the customer having to Client Registration Agency (KRA). Aadhaar is one of present themselves physically at the service provider the documents that can be submitted as proof of identity offices or for a personnel of the service provider to before the investor’s details are uploaded to the KRA. The travel to and meet the customer in person. However, uploaded information is then made accessible to all capital this is dependent to a large extent on the agents market intermediaries registered with the Securities and having biometric compatible technology linked to the Exchange Board of India (SEBI). The main purpose of main registry. a KRA was to eliminate duplication of CDD efforts that • The development of an identity infrastructure, and the a customer must undergo while dealing with multiple potential of basic transaction accounts linked to that market intermediaries like Mutual Funds, Private Equity infrastructure, are a necessary element of financial Funds, Brokers, and Depository Participants. There is inclusion. However this alone is not sufficient. Digital now an effort in India to expand this effort to the whole IDs can contribute to financial sector deepening by of the financial sector. Similar initiatives are proposed in supporting the adoption and delivery or more complex several countries – for example Russia and Mexico. services, such as credit and insurance with minimal additional verification. The ability of digital ID databases There May Be Gains from Decoupling to support the creation of credit histories for previously Identity Authentication from unserved customers will help service providers to Other Functions extend credit and better monitor customer behavior and Digital identity systems, specifically those that provide liabilities across multiple service providers. online verification of identity credentials to third parties, allow identification, authentication and authorization Digital IDs Help Financial Service Providers capabilities to be combined, which can simplify Streamline Their Business Operations operations for service providers, but can also inject Digital IDs help service providers streamline many of privacy concerns around having so much valuable data in their business processes, from customer registration one place. Balancing the tradeoffs between convenience and transaction monitoring to credit risk assessment, and privacy is an ongoing concern in the financial services compliance and reporting. Importantly for financial space, and one for which there are no defined answers as inclusion, such streamlining reduces the overall costs of yet. From the perspective of the government, uncoupling providing service which should in turn help lower fees. the provision of foundational identification from the 38 KEY FINDINGS Box 22: Mexico ‘CURP’ The Clave Única de Registro Nacional de Población (CURP) risk-tiered accounts were created in 2009 with related tiered is a key uniquely associated to each individual in the CDD requirements. Regardless of the ID presented to open country, including non-citizens. It is issued by the National an account or to obtain a loan, financial institutions need Population Registry (RENAPO). State-level Civil Registries to validate that the information they collect, including the provide RENAPO with birth-related information needed to CURP individuals report, match RENAPO’s records. This generate each individual’s CURP. However, one individual helps to reduce fraud. can have more than one CURP issued by the system. Birth Additionally, in 2017, regulatory adjustments to the certificates and the CURP serve as foundational IDs that identification process were introduced. These included enable individuals to obtain functional IDs that are used requiring financial institutions to collect and verify biometrics to vote and to access social security programs and public for opening higher-risk accounts and for obtaining loans, or health care services. for performing high-value transactions at bank branches. Low-income individuals may lack the standard documents These regulatory adjustments aid to reduce identity theft to satisfy KYC and AML/CFT requirements to open an and further mitigate fraud. account or to obtain a loan. In order to address this concern, responsibility for conducting a separate authentication by an example of such a collaboration, another example is an FSP has the potential to support the relatively rapid Canada’s Mobile Connect. It should be noted however roll out of basic digital identity credentials, with a that all these services rely on the individual’s ability to wide uptake but based on low assurance identity data. present a foundational or functional ID to complete the The quality of the digital identity can be enhanced over initial registration in the process. time, in part simply through a history of ownership and Other private sector initiatives like BankID in Sweden112 use or by incorporating additional data points. and Norway113 are examples of a secure solution to verify and authenticate an individual’s identity that other The Private Sector Can Build Digital Identity service providers, including government, can utilize. Layers Onto a Legal Identity System Multiple service providers, including those outside the Private sector solutions built on top of the legal identity financial sector, use this solution to successfully identify credential or system can greatly enhance authentication a beneficiary/ customer without having to burden both processes without jeopardizing the foundational identity parties with multiple document submissions or requests. role of the government system. Programs such as Gov. UK Verify108 and Canada’s Digital Authentication and The Principles on Identification for Identification Council of Canada (DIACC)109 provide Sustainable Development solutions and frameworks that offer users and service providers authentication services without having As policymakers pay increasing attention to upgrading or to revert back to the original source of the identity. establishing ID systems, they are realizing that the issue Services like the GSMA’s Mobile Connect,110 which of identity is a complex, multi-faceted topic that is being adds an additional layer of security via the SIM card, can asked to meet many varying national and social needs. augment authentication efforts and strengthen security. Furthermore, as these needs evolve over time, the design And the FIDO Alliance’s111 work on identification of digital ID systems needs to be future-proofed114 to protocols enable its member companies to produce reduce potential (and costly) failure or weaknesses in its products and services that adhere to common standards functionality, as well as to facilitate interoperability with and technologies around authentication, again without existing and new hardware and software technology. necessarily having to establish direct linkages to official With that in mind, the common Principles fundamental identity databases. These also illustrate the potential and to maximizing the benefits of identification systems for the ability to integrate such initiatives with a government sustainable development were developed facilitated provided ID. Using FIDO alliance in combination with by the World Bank Group and the Center for Global a one time validation using Government ID could be Development. G20 DIGITAL IDENTITY ONBOARDING 39 The management of personal identity can be seen as part (c) Identity authentication & verification for service delivery of a continuum or lifecycle that includes five fundamental or financial transactions, (d) Authorization and (e) Identity stages: (a) Registration, including enrollment and identity management. Please refer to Annex 2 for a description of the proofing, (b) Issuance of documents or credentials, various steps in the identity lifecycle. Table 3: Principle on Identification for Sustainable Development: Towards the Digital Age115 Inclusion: Ensuring universal coverage for individuals from birth to death, free from discrimination. Universal coverage Removing barriers to access and usage and disparities in the availability of information and accessibility and technology. Establishing a robust-unique, secure, and accurate-identity. Design: Creating a platform that is interoperable and responsive to the needs of various users. Robust, Secure, Using open standards and ensuring vendor and technology neutrality. Responsible and Sustainable Protecting user privacy and control through system design. Planning for financial and operational sustainability without compromising accessibility. Governance: Safeguarding data privacy, security, and user rights through a comprehensive legal and regulatory Building Trust by framework. Protecting Privacy Establishing clear institutional mandates and accountability. and User Rights Enforcing legal and trust frameworks through independent oversight and adjudication of grievances. 40 KEY FINDINGS POLICY CONSIDERATIONS Based on current experiences and the lessons learned from both national identity programs and private sector initiatives, the following policy considerations are presented as a basis for national policymakers, especially in the financial sector. The field of digital identity is rapidly evolving, so it is imperative that central authorities and public bodies consistently incorporate new technologies and business models while protecting the financial sector and its customers. Ensure an Integrated Identity Framework A biometric-based legal identity system can potentially support both compliance with authentication services A legal or foundational identity system is critical to and AML/CFT customer identification and verification reliably assign an identity recognized across Government requirements, upon which the service provider can further and the private sector. It forms the legal basis for develop authentication and authorization processes. identity validation for critical services and critically, However, wide-spread use of legal identity infrastructure governments should update existing privacy frameworks for multiple phases of financial services provision in the context of planned and potential future uses (e.g., onboarding and authorizing access to established of digital ID services. In the financial sector once the accounts) has implications at several levels, including the identity validation is done, the subsequent interactions of cost of replacing existing infrastructure established for the customer with the financial service provider can use these processes; the pricing of these services; a liability other approaches for authentication and authorization in framework for false-positives and false-negatives for the process of service delivery. biometric credentials; and the impossibility of replacing Policymakers should: authentication credentials in a centralized legal identity • Design digital infrastructure appropriate for the database if there is a compromise of biometric information. context, including strategies to reach remote areas There therefore needs to be careful consideration and ensure ‘last mile connectivity’. Off-line solutions of these and other potential issues relating to using can complement the absence or loss of on-line national foundational identity infrastructure for on- connectivity.116 going transactional authentication and authorization. • Develop robust procurement guidelines and should This includes whether to reserve the use of the national contemplate open design standards to promote foundational identity infrastructure for providing proof innovation and allow for greater flexibility, efficiency and of verified legal identity for customer identification/ functionality of the system both within and across borders. verification at on-boarding or if other well-established reliable, efficient and safe processes exist for • Ensure the technical capacity of government agencies, authentication/authorization functions. private sector and other stakeholders in the digital identity ecosystem (including end-users) to operate and maintain new systems and devices. G20 DIGITAL IDENTITY ONBOARDING 41 Consider the Appropriateness of the • the private sector managed third party authentication Regulatory Framework to Capture the services are recognized as legally equivalent to a bank Challenges Related to Digital ID, and doing identity identification and verification itself and if so, where regulatory liability lies with respect to any Risks to Its Appropriate Implementation; failures regarding customer identification/verification Deliberation on Updates to the Regulatory and authentication/access processes; Framework Including the Issuance of New Regulations Where Necessary • when there is universal coverage of a particular identity credential all bank customers should be required to The introduction of digital identity services can enable provide that. Preferably this identity credential should faster, more cost-effective means of meeting identity have the characteristics of being legal, unique and digital; validation, authentication and authorization requirements, as well as improve monitoring and oversight for both • consumer interests are protected when new digital service providers and regulators. In some cases, however, ID services are made mainstream, in particular regulations need to be introduced or updated to reflect ensuring that no segment of customers are placed at a the capabilities and risks of such new technologies. disadvantage; and Of the ten Principles on Identification for Sustainable • privacy considerations in the financial sector are Development,117 three specifically focus on the issue of protected when using third party services and governance, including the regulatory framework. alternative sources of data. Financial services sector regulations have longstanding requirements related to identity validation, authentication Establish a Reliable Oversight Model to and retention of records, to ensure the safety and integrity IncludeStakeholdersBeyondtheTraditionally of the financial system, based primarily on the FATF Regulated Financial Institutions Who Can recommendations. It is important that each country’s Introduce Risks to Digital Identity Systems financial services regulatory framework recognizes Financial institutions are subject to often rigorous the potential of digital identity services to support both supervision and must adhere to a number to measures trustworthy identification/verification for AML/CFT as dictated by governments. This is due to the compliance and financial inclusion. The regulatory significant financial stability and consumer protection framework should recognise that requirements for the use implications they have. This policy recommendation of digital identity services in the financial sector, including aims to specifically highlight that oversight needs to be for account opening, are risk-based and reflect both the maintained not only financial sector players but others potential benefits of digital identity technologies and within the ecosystem that contribute, collect, store or the risks associated with a particular customer, financial disseminate information related to digital ID. services, or whether the account opening and customer Oversight frameworks need to consider risks of identification/verification is remote or in-person. Among other things, the regulatory framework should authorize • data security and no compromise on protection of remote digital identification/verification and account privacy; opening at certain risk levels and levels of trustworthiness • robustness of the underlying technology, systems and provided by the identity service, particularly for financial processes used for digital ID; inclusion purposes where other risk mitigants, such as tiered account or transaction thresholds, are available. • ensuring that the technology and business model Any such regulatory reform must be done in a way that is is updated in keeping with the rapidly changing aligned with FATF recommendations. landscape; and The specific areas which may need to be addressed in • ensuring effective governance arrangements for the a regulatory framework include, but are not limited to, use of digital ID infrastructure in the financial sector, whether or not: particularly as it applies to non-regulated entities. • digital identity validation using digital means Many of these aspects may be covered in a general legal constitutes completion of identity verification under and regulatory framework for digital IDs, though there prevailing AML/CFT requirements; might be a need for some specific regulations related to their use for the financial sector. The prevailing FATF • legal certainty and equivalence between digital recommendations, in particular, Recommendation 10 signatures and physical signatures; and 17 relating to CDD and ‘reliance on third parties,’ 42 POLICY CONSIDERATIONS respectively have a bearing on outsourced identity services as having a democratic responsibility to build an identity and the ability to perform parts of the CDD process. But it infrastructure that allows users to control their identity also makes clear that where such reliance is permitted, the information- aiming towards a self-managed identity- ultimate responsibility for CDD measures remain with the it will promote accountability and trust. The identity financial institution relying on the third party. infrastructure should be built in such a way as to allow audits enabling records for local redress if needed. There Build Authentication and Service Delivery is arguably an ombudsman role for accountable officials Systems That Protect User Privacy, and to play in verifying that individual data, if shared without Provide Individuals with the Right to consent, receives proper treatment and is safeguarded Access Their Data and Oversight Over from subsequent misuse by downstream actors.118 How Their Data Is Shared Support and Empower Development of The adoption of Privacy by Design approach to ID systems Private SectorLed Services to Leverage could be considered: This process envisages building the Legal ID Infrastructure for Building Out privacy into all stages of the design and architecture of information systems, business processes, and networked Digital Layers. In Doing So, the Public infrastructure. The focus is on taking a proactive, Authorities Should Ensure That These preventive approach to the protection of privacy and the Services Are Safe, Reliable and Efficient; avoidance of privacy harms. The concept rests on the These Services Are Interoperable; and following seven principles: 1. Proactive, not reactive; That the Market Is Competitive preventive, not remedial 2. Privacy as the default setting National legal identity infrastructures can provide the 3. Privacy embedded into design 4. Full functionality— fundamental platform on which the private sector can positive-sum, not zero-sum 5. End-to-end security—full build solutions to meet the needs of the financial sector life-cycle protection 6. Visibility and transparency—keep and beyond. Authorizing private sector providers to it open 7. Respect for user privacy—keep it user-centric. leverage the national digital identity platform could This approach together with data minimization could potentially provide better digital identity products and mitigate privacy concerns. Even if the ID system stores services and faster roll out than the state alone can a considerable amount of data items, the systems should achieve. Two of the Principles on Identification, in fact, enable users to verify and validate identity accessing the specifically call for creating interoperable platforms using minimum possible data items. open standards for this very reason. However, enabling an Further, ID systems should be vested with security effective private sector role imposes requirements on the measures to protect the data. Given the nature of the identity platform, particularly in relation to requirements data stored in the systems, the security should follow establishing interoperability, open-source access, such as a tridimensional approach (logical, physical and through areas of open interfaces, and requirements for organizational) and should include not only the system sustainable charging models. where the data is stored but also the network enabling Countries with existing established foundational systems, its access, the back-up systems and any others linked to but with some weaknesses could potentially exploit the personal data of the individual including those third private sector led services to address the gaps, instead parties that perform any task related to the personal data of building additional new infrastructures. For example, included in the ID system. a country with a well-functioning, reliable and efficient paper based legal ID system with universal coverage Establish Clear and Well-publicized could leverage private sector services under a ‘broker’ Procedures for Citizen Redress Including model to offer digital ID services. These private sector Where the Onus of Responsibility lies, players conduct authentications based on the original in the Case of Errors or in the Event That legal ID, which various private sector players are already the Security of a Person’s Identity is doing as part of their ongoing activities. Compromised Even countries with comprehensive government led To maintain the integrity of the system and ensure that digital ID systems can allow third parties including the there is trust in the system policymakers should consider private sector to build out additional services that rely the need for resolution and regulatory redress systems. on the state’s digital ID. In some countries, there is a There is a suggestion that if policy makers see themselves noticeable effort by Government agencies responsible for G20 DIGITAL IDENTITY ONBOARDING 43 the ID systems to develop ancillary services. For example, New Approaches to ID Are Constantly in India, services such as e-Sign and Digital Locker Emerging and Public Authorities Should (DigiLocker) both rely on Aadhaar to offer additional Closely Monitor These Developments With services such as electronic signature and an on-line a View to Share Knowledge and Establish document storage service respectively. If unsuited to their needs, FSPs may aim to conduct their own authentication Common Legal Frameworks at Both the for transactions after initial account opening. This Domestic and International Level illustrates the need to carefully balance the role of the There are a number of emerging technologies and new Government agency to provide the foundational services combinations of existing technologies that have the in a sustainable manner on the one hand and the impact potential to leapfrog the need for a unique national identity of cost structure of using ID by the FSPs and other uses. platform, digital or traditional. These methods include using There are opportunities for private sector to develop distributed ledger technologies and social data. However, solutions on top of the foundational services. This these are currently in very early stages of development and removes the operational burden of operating ancillary do not represent a viable alternative for a comprehensive services from the government agencies. build out of a foundational legal ID infrastructure. A conglomeration of global entities, private and public As with any innovation the capabilities can dramatically entities, have collaborated into international alliances to increase and hence authorities need to closely monitor foster legal ID infrastructure among other services. An developments, use prevalent best practices and think in example is the FIDO alliance. The alliance hopes to provide terms of open interfaces and modular approaches in the a myriad of benefits to customers including stronger build out of legal ID platforms. account/transaction security, improved user experience, improved return of investment on authentication and reduction in fraud services. It also aims to enhance leveraging legal ID infrastructure in the ecosystem. 44 POLICY CONSIDERATIONS ANNEX 1: LEVELS OF ASSURANCE119 Identity Assurance Level (IAL) • AAL3 – Provides very high confidence that the claimant controls the authenticator; authentication • IAL1 – Self-asserted; no requirement to link the based on proof of possession of a key through a applicant to a specific real-life identity. cryptographic protocol; requires a ‘hard’ cryptographic • IAL2 – Evidence supports the real-world existence authenticator. of the claimed identity; either remote or physically- present identity proofing. Federation Assurance Level (FAL) • IAL3 – Physical presence is required for identity • FAL1 – Allows for the subscriber to enable the RP to proofing. Identifying attributes must be verified by an receive a bearer assertion. authorized and trained representative. • FAL2 – Adds the requirement that the assertion be encrypted such that the RP is the only party that can Authentication Assurance Level (AAL) decrypt it. • AAL1 – Provides some assurance that the claimant • FAL3 – Requires the subscriber to present proof of controls the authenticator; requires at least single- possession of a cryptographic key referenced in the factor authentication. assertion in addition to the assertion artifact itself. • AAL2 – Provides high confidence that the claimant controls authenticators; two different authentication factors are required; approved cryptographic techniques are required. G20 DIGITAL IDENTITY ONBOARDING 45 ANNEX 2: THE IDENTITY LIFECYCLE Figure 11: Digital Identity Lifecycle and Key Roles120 1. Registration (Identity Proofing) 2. Iss uan Vetting/Risk ce Resolution Validation Verification Issua (Cr Assessment nce ed Ma en inte na tia n lM an ce nt age ce eme nan Re men 5. Identity Manag voc Identity Mainte t) ation Identity Lifecycle 3. Identi Verific t n y a bu atio t A ion uth ttri imiz te (1: 1) en in M ti A c t en ati ssm p (a olicy on ss e A sk Ri Management Eligccess) Role ibilit y on izati 4. Author Registration (Identity Proofing) If an individual reliably identifies himself or herself, the authority can assert that identity with a certain level of The registration process involves an applicant providing assurance. In developing countries, and in cases like evidence of his or her identity to the issuing authority. The those of displaced persons or refugees (discussed in identity credential here can take a variety of forms and more detail later in the document), it is not uncommon its acceptance will be based on the specific regulations for applicants to lack fundamental documents (birth within the jurisdiction. The accuracy and reliability of certificate, passport, utility bill, driving license). In such each credential can vary based on variables such as the situations, identification systems may use an individual122 information recorded and the validation it was subject to. who is tasked with verifying the applicant’s identity Ideally, a digital identification system should be integrated and address. Once verification is completed, biometric with civil registration, which is the official recording of registration and de-duplication will bind the applicant to births, deaths, and other vital events including marriages, his or her identity claim, which will then be used during divorces and annulments.121 subsequent identity interactions. G20 DIGITAL IDENTITY ONBOARDING 47 Once individuals have an identification document, the confidence levels of the registration process? Clearly process of registration may start with Resolution,123 defining the scope of the population whose data will be the process of uniquely distinguishing an individual in collected and the attributes that will be collected will a given population or context. The applicant presents mitigate any future issues related to privacy and consent. biographic information, or documents such as birth certificates, marriage certificates, and social security Issuance (Credential Management) documents, as well as photographs which are then Issuance is the process of creating and distributing virtual validated and augmented by the registration authority as or physical credentials like e-passports, digital ID cards needed. A growing trend in recent years has been to use and driver’s licenses and a unique identifier (with central biometrics to ensure that an identity is unique. biometric authentication), such as the Aadhaar system in The next step is Validation, where the authority determines India. The other steps are Maintenance (the retrieval, the authenticity, validity, and accuracy of the identity update, and deletion of credentials) and Revocation information the applicant has provided, and relates it to (the removal of the privileges assigned to credentials). a living person. An ID with a digital characteristic could In some countries, primary legal identity credentials be provisioned digitally through a digital certificate or a also imply citizenship rights, in the sense that it legally smart card, it could also be provisioned in paper form, accords proof of residency or nationality. Examples of but with associated service infrastructure built around it this include Pakistan’s NADRA CNIC card and Peru’s to enable a digital authentication approach. When the ID DNI card. There are also examples of countries where validation process can be done digitally and the proof of primary legal identity systems do not accord citizenship validation recorded digitally, there can be a true seamless rights (e.g., Aadhaar in India). process for ID validation. Interoperability of these credentials for authentication This is followed by Verification, the establishing of a is becoming increasingly important for intra-country link between a claimed identity and the real-life subject and inter-country service delivery, as can be seen in presenting the evidence. The final step is Vetting/Risk the European Union (EU), East African Community Assessment, assessing the user’s profile against a watch- (EAC), and West Africa regions. In the EU, for example, list or a risk-based model. electronic identification (eID) and electronic Trust In advanced economies, information needed for Services (eTS) provide the interoperability framework registration is typically universally available. In other for secure cross-border electronic transactions of the countries, even if such identity credentials are available, Digital Single Market under the electronic Identification, they might not be universal or easily obtained. Members Authentication and Trust Services (eIDAS)124 (see key of marginalized groups such as the poor, the elderly, terms and definitions) regulation. women, and infants have a higher propensity of not being captured. Some individuals may have poor biometric Identity Authentication features (like poor fingerprint ridge structure) that make Authentication is the process of verifying an identity accurate enrolment difficult. Moreover, there are issues claim against the registered identity information. Such of the affordability and accessibility of the hardware and information could be a personal identification number software used for registration. (PIN), a password, biometric data such as a fingerprint, When considering the implementation of an ID system, a photo—or a combination of these. Challenges in this policymakers should ensure that the scope of the process phase include how to reduce processing time, improve must be clearly defined, including the population whose accuracy of matching for authentication, ensure a data will be collected, the attributes that will be collected, seamless experience for applicants, mitigate challenges and the corresponding performance of the registration with network connectivity, counter fraudulent behavior, system. For instance, will registration be for residents and find affordable hardware and software solutions. of that country only, or for visitors as well? Will the An important criterion around authentication in financial information required for registration include name, services is a concept known as a ‘Level of Assurance’, or birth details, or fingerprints? What are the accuracy and LOA. A Level of Assurance, as defined by the by ISO/IEC 48 ANNEX 2: THE IDENTITY LIFECYCLE Box 23: eiDAS There has been rapid progress across the world in adoption The Directive does not make digital identity (eID) mandatory, of statutory legal measures to give legal certainty and but does aim to greatly increase the mutual recognition of equivalence to digital signatures and physical signatures. eID between countries, in order to facilitate cross-border Regulation (EU) N°910/2014125 eIDAS is an EU regulation business as well as international administrative tasks for on electronic identification and trust services for electronic citizens. To this end it aims to ensure that both people transactions in the internal market that was adopted in July and businesses can use their own national electronic 2014. It is a set of standards for electronic identification and identification schemes (eIDs) to access public services in trust services for electronic transactions in the European those other EU countries where eIDs are available, and Single Market and is an example of providing explicit legal creates a new EU market for ‘electronic Trust Services’ basis for identity services. It seeks to establish a single (eTS) – namely electronic signatures, electronic seals, legal framework for recognizing electronic signatures and time stamps, electronic delivery services and website identities throughout the EU. authentication – by ensuring that they will work across borders and have the same legal status as traditional paper based processes. 29115 Standard,126 describes the degree of confidence in Provider (e.g., the National Identification Authority). In the processes leading up to and including authentication. more advanced authorization schemes the access rights NIST describes varying levels of assurance127 (LOA) are granted in a dynamic fashion. which have further been broken down into its component parts of identity proofing, authentication and the ability Identity Management and Maintenance to communicate authentication and attribute information. Identity management or maintenance is the ongoing Please see Annex 1 for the levels of assurance process of retrieving, updating, and deleting identity by component. attributes or data fields and policies governing users’ It should be noted that different LOAs might be required as access to information and services. Identity retrieval based on why the ID is being authenticated. For example, involves fetching a user’s identity attributes from the for the financial sector the additional registrations and specific database in which it is contained. Security validations required might require that a higher LOA is policies should be used to enforce access privileges to achieved to allow access. It provides assurance that the ensure that only authorized individuals can access, alter, entity claiming a particular identity is the entity to which or delete identity information, and to ensure that the that identity was assigned. actions are audited and cannot be repudiated. Credentials may be deactivated, revoked, or made dormant Authorization as a result of certain events, and identity information may Authorization takes place after an individual’s claim of be updated or deleted. Identity Management challenges identity is authenticated and access rights of a ‘relying include how to make system maintenance cost-effective, party’ are defined. These rights of a ‘relying party’ needs to use data analysis to improve the system’s performance be associated with the identity aligned to the relationship (including its efficiency), ensure that databases are between the individual and the relying party independent updated to reflect major life events (such as birth and of the identity provider (eg: National Identification death), and maintain privacy and security controls.128 Authority). Authorization typically takes place after While the specific terminology can vary across different an individual’s claim of identity is authenticated and organizations and reports, the fundamental processes are defines access rights (or grants) that a Relying Party has important to understand as they apply to different aspects associated with the identity aligned to the relationship of financial service provision and how identity is used at between the individual and the Relying Party (e.g., each step along the way. a financial institution)—independent of the Identity G20 DIGITAL IDENTITY ONBOARDING 49 ANNEX 3: UNHCR ID SYSTEM When UNHCR maintains a registration and ID system in a country, this will typically involve issuing refugees and asylum seekers with ID cards and other credentials, such as family or individual certificates, certifying their status and their eligibility to receive certain goods and services. UNHCR seeks to keep entitlement documents (e.g. ration cards) and its refugee ID cards separate in order to distinguish itself from other agencies providing assistance. UNHCR’s registration and case management software the world (4.4 million across 48 country operations as (proGres) was introduced in 2003. ProGres was initially of February 2018), which allows persons of concern designed provide and manage identification services to re-establish or continuously their identity as they on a national or sub-national basis. Cloud storage for travel across borders and encounter different UNHCR proGres was introduced in 2015. In addition, the Refugee country operations. Assistance Information System (RAIS) was established UNHCR follows standardized registration processes in 2009.129 RAIS is an Inter-Agency tool for tracking across all its country operations. These processes were assistance, referrals, and assessment information. It designed with recognition that refugees and asylum enables UNHCR and partners to share assistance records, seekers may not have official identity documents that cross-check beneficiaries lists, and host different types would enable the verification of their identity claim or of data. RAIS is synchronized with proGres, from that could support an initial needs assessment. Each which refugee data from all UNHCR field offices is refugee registered with UNHCR is provided with a updated daily. A data sharing agreement with UNHCR unique registration record and is issued with an ID is a prerequisite for accessing RAIS. RAIS assists in confirming their asylum seeker status. Once refugee status enabling reach, creating better coordination mechanisms is confirmed, UNHCR may issue a second, updated ID. (since many other organizations are doing the same These UNHCR-issued IDs may be the only that refugees relief work in similar geographical areas) and ensuring will have access to. better protection of beneficiaries’ personal data. Since June 2014, 150,000 home visits have been recorded on If certain conditions for refugee data protection and RAIS, and there are over 7 million assistance records identity management are met, UNHCR may give access corresponding to 1.5 million beneficiaries.130 to the relevant portion of its database to the host state. The data may then be integrated with the host State’s national Also in 2015, following successful pilots in Malawi and ID or standalone refugee ID system. Such data sharing Thailand, UNHCR introduced its Biometric Identity arrangements can save host states the time and cost Management System (BIMS) through which country associated with repeated data collection and registration operations can capture fingerprints, irises and facial photo and facilitate the provision of government-issued identity during registration. UNHCR today maintains a central documents to refugees and asylum seekers. These are and searchable database of unique records for all refugees often more widely accepted and allow for greater access and asylum seekers registered through BIMS around to host country services and opportunities. G20 DIGITAL IDENTITY ONBOARDING 51 ANNEX 4: REFUGEE DIGITAL ID CASE STUDIES Uganda – A Standalone Refugee refugee ID number was accepted. Likewise, the refugee Registration and ID System ID card is accepted to open a bank account. The refugee ID card enables refugees to access a range of special Uganda hosts over 1 million refugees who live in entitlements for refugees, including discounted education settlements and in and around the community, primarily and healthcare. While there have been some challenges from South Sudan and DRC. Uganda is a party to the with the implementation of RIMS, Uganda’s progressive 1951 Refugee Convention and is widely-recognized as policy and practices with regards to providing IDs to one of the most generous host States for refugees in the refugees and asylum seekers, and ensuring that these IDs world. The Government provides freedom of movement, are widely-recognized should be applauded. access to services and allocates plots of land for shelter and agricultural production. Lebanon, Jordan & Egypt In terms of RSD and registration, UNHCR and the These countries use extensively the RAIS system Government’s Office of the Prime Minister (OPM) (articulated in the previous Annex) to monitor and carried this out jointly, leveraging UNHCR’s proGres coordinate humanitarian aid. Today, UNHCR and WFP software, until 2014 when the OPM introduced its own (World Food Program) provide both direct assistance to system, the Refugee Information Management System beneficiaries as well as managing other NGOs operating (RIMS). RIMS is a web-based platform that includes as direct/indirect system users. registration, biometric capture, case management and The largest implementation is in Lebanon, where card production modules. Although RIMS captures two more than one million refugees now use either WFP’s fingerprints, it does not operate a biometric deduplication smartcard to buy goods at participating retailers, and/or or authentication and is not linked or interoperable with UNHCR-backed ATM cards to withdraw money instead the national ID system- maintained by the National of receiving physical goods. However, there is currently Identification and Registration Agency (NIRA) and no clear legal and regulatory framework for e-money covers all nationals and foreign residents. NIRA provides transactions. civil registration services to refugees and asylum seekers. In Egypt, WFP has adopted the store card of the Since assuming responsibility for refugee registration, supermarket Carrefour as a delivery mechanism. In the Government is in the process of registering131 over Jordan, branches of Cairo Amman Bank, refugees are 1 million refugees with RIMS. The refugee ID card and able to withdraw their cash entitlement from UNHCR by certificates that are issued is widely-recognized and placing their eye against an IrisGuard scanner – no card allows access to all services that a non-national is entitled required. The success of this program has encouraged to. In 2017, when the Government made it mandatory for WFP to pilot use of iris recognition technology to allow all SIM cards to be linked to a national ID number, the refugees to purchase food in participating supermarkets. G20 DIGITAL IDENTITY ONBOARDING 53 ANNEX 5: COUNTRY CASE STUDIES (adapted from country submissions) Canada Applications B.C. Services Card Introduction The B.C. Services Card is a security-enhanced photo ID Digital ID and financial inclusion has progressed through developed by three provincial government organizations a variety of Digital ID programs based on a national — the Ministry of Technology, Innovation, and Citizens’ framework that had evolved over the years. In 2014, Services (MTIC), the Ministry of Health, and the the Digital ID & Authentication Council of Canada Insurance Corporation of British Columbia (ICBC). was launched as a public-private effort, and in 2016, It replaces the aging CareCard (an unique ID card the Pan-Canadian Trust Framework (PCTF) Overview used for health care services), can be combined into a was published enabling the public and private sector single card with a driver’s license, and, like many new to work collaboratively to safeguard digital identities credit cards, is a ‘chip card’ — meaning it is embedded by standardizing processes and procedures. In 2017, as with an encrypted chip that can connect to secure and part of the Pan-Canadian Trust Framework Components, inexpensive chip card readers. These card readers can be the DIACC (The Digital ID & Authentication Council set up at government service counters and also connected of Canada) and IMSC ( Identity Management Steering to a personal computer at home. This chip and the Committee) collaborated to develop conformance digital identity management system open up the standards criteria for trust framework components. possibility of reliable and secure online access to more Based on the national framework, a set of Digital ID government services. programs were created as pilot projects. These include My Alberta Digital ID British Columbians (B.C) ‘Service cards’ which is used for connecting provincial services and Alberta’s ‘My The My Alberta Digital ID program provides an Alberta Alberta Digital ID program which is used for digital resident with a personal online identity that securely identity purposes in the state of Alberta. In the latter half accesses multiple Government of Alberta online products of 2018, SecureKey’s‘Verified.me’ will be launched to and services. My Alberta Digital ID uniquely identifies provide secure and privacy respecting authentication an individual online, much like a driver’s license or and attribute validations across Canada. In addition, identity card works in person-to-person interactions. the Government of Canada’s own cyber authentication The Government of Alberta ensures that sufficient solution and immigration frameworks mapping trust information is obtained to properly identify an individual frameworks has been developed to assist users of these to differentiate from others that have the same or similar Digital ID’s. There is an attempt being made to unify names. This ensures the correct services are provided to all the pilot projects into a unified Canadian Digital ID the correct person. ecosystem and this would enable greater integration of the various Digital ID projects that have been created. G20 DIGITAL IDENTITY ONBOARDING 55 Government of Canada Cyber Authentication through the use of fingerprint scanners, iris scanners, and Solution cameras – for face recognition, allowing for instantaneous The Government of Canada Cyber Authentication identity authentication. So far, almost 1.20 billion Solution provides end-users. A mandatory cyber Aadhaar Numbers have been generated, 339 million authentication service that enables Canadians and the Aadhaar have been linked with bank accounts, and general public to securely sign-on to Government of over 1.7 billion authentications have been done through Canada online services. The solution is a standards-based, Aadhaar in last 3 years. Total digital transactions have anonymous user sign-in solution, available through reached 17.57 billion in FY 2017-18, which is nearly GCKey, a government-branded service, and a ‘Credential 70 percent more than the digital transactions in FY 2016- Broker Service’132 that enables users to authenticate with 17 (10.76 billion).133 their online banking credential. Applications Verified.me Integration of Digital ID with e-KYC In the latter half of 2018, SecureKey’s Verified.me, a (Electronic KYC) Service competitive and interoperable ecosystem for financial Digital onboarding through JAM is fast, reduces inclusion, is expected to launch. Verified.me leverages transaction costs for the customer and facilitates a near capabilities of Canada’s financial institutions and instant opening of account. The Aadhaar system has been participating provinces to provide secure and privacy integrated with an electronic KYC (e-KYC) service to respecting authentication and attribute validation. expedite the verification of a client’s identity. The e-KYC Furthermore Canada’s payments network, Interac enables an individual with an Aadhaar number to allow indicates their intent to launch an interoperable digital UIDAI to disclose his/her personal information to service identity service in the near future. The Interac model will providers who wish to instantly activate services such issue and leverage a secured record of identity with a as mobile connections, bank accounts, etc. The e-KYC tokenized credential. is paperless, consent-based and private, non-repudiable Immigration Services and instantaneous. As a result, accurate and reliable CDD data is shared with the reporting entity in real time. As There is work underway between countries US, Canada the CDD data is released directly to service providers and the UK to map their respective trust frameworks, only upon the consent of the customer, his/her privacy and develop a cross-border mutual recognition process. remains protected. So far, a total of 4.9 billion e-KYC This also extends to other services including security and transactions have been done through Aadhaar. Banks transparency mechanisms for the Digital ID setup. and payment network operators have embedded Aadhaar India authentication into micro-ATMs to provide branch-less banking anywhere in the country in a real-time, scalable The Indian government has undertaken reforms to and interoperable manner. increase financial inclusion through the JAM Trinity, an enabling ecosystem integrating Unique Digital IDs Seamless Integration with Other Financial Services (Aadhaar), Bank Accounts (Jan Dhan) and Mobile The Central KYC Records Registry (CKYCR) is through various cost effective digital payments systems envisaged as a repository of the KYC records obtained such as United Payment Interface (UPI), Bharat Interface by the Regulated Entities (REs) across the financial for Money (BHIM), and Aadhaar Enabled Payment sector. This database enables inter-usability of the KYC Systems (AEPS). records with a goal of reducing KYC documents and its ’Aadhaar‘, a free 12-digit number issued by the Indian subsequent verification processes for a new financial government to all residents of India, was issued by the entity.134 UIDAI (Unique Identification Authority of India) with Mobile Payments the objective of being (a) robust enough to eliminate One of the building blocks of the payments ecosystem duplicate and fake identities and (b) able to be verified in India, Unified Payments Interface (UPI) powers and authenticated in a simple cost-effective way. multiple bank accounts into a single mobile application The technology uses demographic information (i.e. (of any participating bank), merging several banking name, address, date of birth, gender, telephone number features, seamless fund routing and merchant and email address) along with biometric data collected payments under one umbrella. Based on UPI, the 56 ANNEX 5: COUNTRY CASE STUDIES Government of India has introduced Bharat Interface the Voting Card.138 By mid-2017 (biometric registration for Money (BHIM) application which allows users started in 2001), the electoral registry had data on about to directly perform payment transfers to other users 95 percent of the voting-age population. or merchants with an easy to use interface. BHIM has Low-income individuals may lack all the standard been downloaded 23.8 million times since its launch required documents to satisfy CDD and AML/CFT in December 2016. Till 31st January 2018, the number requirements to open an account or to obtain a loan. In of transactions on BHIM-UPI platform (BHIM and order to address this concern, a proportional regulatory BHIM UPI family Apps) has reached USD 1.12 Billion approach for deposits accounts was developed. Risk- (by Value) and 580 Million (By Volume). tiered accounts were created in 2009 and were divided Facilitating Government-to-Person Transfers into four levels in 2011. Higher-level accounts allow The introduction of Aadhaar Enabled Payment System higher levels of monthly deposits and higher balances,139 (AEPS) has facilitated disbursements of entitlements more access devices, and more operations that are (like wages under Mahatma Gandhi National Rural available.140 In turn, these prescribe increasing opening Employment Guarantee Scheme, Social Security Pension, requirements. Level 1 accounts are anonymous and need Old Age Pension etc) of Central or State Government no documentation or interview to be opened. Level 2 bodies using Aadhaar based authentication. During accounts require applicants to provide personal data141 FY 2017-18, a total of around 1.62 billion transactions and show a valid ID.142 The opening process for level amounting to INR 1612.05 billion have been carried out 2 accounts may be carried out face-to-face at a bank through the Direct Benefit Transfer (DBT) scheme. branch, face-to-face through an agent authorized by the bank, or remotely, through a digital device.143 Relative Mexico to level 2 accounts, level 3 and level 4 accounts require additional data144 and, for level 4 accounts, photocopies Introduction of some documents.145 Recent regulatory adjustments in Mexico are contributing Applications to address important challenges to financial inclusion such as limited availability of points of access to financial Worried about fraud and identity theft, some banks have services, lack of required documents, lack of trust in begun collecting biometric information. In 2017, with the financial system. These regulatory adjustments the goal of curbing identity theft by taking advantage of have exploited the country’s existing identification technology, regulatory adjustments to the identification infrastructure to ease the onboarding and identification process undertaken by banks were introduced.146 These process for the provision of financial services and consider two moments when clients must be identified: improve fraud detection. when signing on products (see Table 1), and when performing transactions at a bank’s branch (see Table In Mexico, when individuals are born, they are registered 2).147 In both cases, the main innovation is to require in State Civil Registries, and the National Population financial institutions to collect and verify biometrics in Registry (RENAPO, for its acronym in Spanish) generates some cases (without the need to store them), improving a unique key135 (CURP) which serves as a foundational ID access by using remote channels,148 and enhancing used for essential functions such as voting, social security security. Regardless of the ID presented, the institution programs, and public healthcare services. Although this needs to validate that the information they collect, information is digitized, it lacks biometric information. including the CURP, matches RENAPO’s records. As part of the registration process to perform such activities, several government agencies offer functional Instead of verifying identity with INE, banks may create a IDs based on the above mentioned foundational IDs, database with their customers’ fingerprints and use these which are legal, unique, mostly digital, and biometric.136 to identify them in the future. To do so, banks previously The most commonly used is the Voting Card, available need to register the fingerprints of all their employees and to Mexicans 18 years old and above, which requires a their managers and, when registering the fingerprints of birth certificate, proof of address, and a picture ID.137 INE each customer, they need to validate the client’s identity (Insituto National Electoral—the agency for conducting with INE (fingerprint matching). elections) contacts RENAPO to get individuals’ CURP, The regulatory adjustments expand onboarding access, adds it to its database. It then collects applicants’ biometric since some higher-level accounts and some loans can now information, such as fingerprints and picture, and issues be obtained remotely. The adjustments reduce the risk G20 DIGITAL IDENTITY ONBOARDING 57 Table 4: Identification When Signing on Products (Accounts, Loans and Transactions) Signing on Method Face-to-Face Remote Level 1 Not allowed. No biometrics. No biometrics. No video-call interview. Accounts Level 2 CURP verified against RENAPO’s records. Level 3 Biometrics (face- Level 4 recognition) are verified Biometrics (fingerprint) are verified with INE’s registries only when the through video call. ID presented is the Voting Card.149 The only accepted ID is 0 – 60,000 UDIS the Voting Card. CURP verified against RENAPO’s records. Loans 60,000 UDIS or Not allowed. more <1,500 UDIS No biometrics, a valid picture is required. Not allowed. Transactions (Cash withdrawals Biometrics (fingerprint) are verified with INE when the ID presented is 1,500 – 2,800 the Voting Card.151 If clients present a debit/credit card that includes a Not allowed. &Transfers150) UDIS chip and enter their Personal Identification Number152 and any valid ID, there is no need to verify biometrics. Biometrics (fingerprint) are verified with INE when the ID presented is the Voting Card. If clients do not present their Voting Card, they can show >2,800 UDIS Not allowed. other 2 IDs and banks need to verify that their underlying data matches. The bank’s branch manager needs to authorize the transaction. that a fake customer’s ID is accepted, preventing fraud, biometric data were linked to the foundational IDs, it since institutions are required to verify that the provided would be possible to substitute current ID requirements data is consistent with RENAPO’s registries and that the linked to functional IDs and, more importantly, Voting Card’s underlying data matches INE’s.153 The risk individuals lacking functional IDs would be able to apply of identity theft is also reduced, because when individuals for financial products. present Voting Cards as a means of identification, it is A related challenge concerns the collection of the checked that their biometric information matches INE’s underlying biometric information. Currently, some public records. Mitigating fraud and identity theft risks has and private institutions, including banks, are engaged in the potential to enhance population’s trust in financial gathering different types of biometric information. In institutions and lower provision costs, thereby increasing August 2018, when the discussed regulatory changes demand and supply of financial services. become effective, all financial institutions will be forced Despite these benefits, there are important areas of to verify biometric information. In doing so, they may opportunity. First, biometric verification is not carried out wish to store it. One possible course of action is to when individuals present IDs other than the Voting Card integrate biometric information collected and stored by at bank branches. Extending biometric identification public and private institutions into a centralized database, mechanisms to other functional IDs has the potential and that this database is used to validate individuals’ to further curb identity theft and fraud. Moreover, if identity and to grant them with a recognized digital ID. 58 ANNEX 5: COUNTRY CASE STUDIES Nigeria Harmonization & Integration Using NIN There are initiatives to integrate the NIN, e-ID and BVN Introduction to achieve the harmonization objective and facilitate The cornerstone of the digital identification initiative e-government and public-sector applications. The NIN in Nigeria, a country with a population of nearly 187 presents the core infrastructure and framework upon million people,154 is the National Identity Management which harmonization would operate, as most common Commission (NIMS), the parent organization of the factor to all stakeholders in the harmonization platform National Identification Number (NIN): The NIN is a set is the requirement of a ‘proven identity’. The NIN of numbers assigned to an individual upon successful infrastructure serves as the platform in which identity enrolment. Every citizen or legal resident above the age management sub-systems and applications as components of 16 is eligible to enroll for the National Identification are coordinated. Number (NIN). Enrolment consists of the recording of The NIMS, which is designed to provide a unique identity an individual’s demographic data and capture of ten (10) for all individuals as well as a national identity database fingerprints, head-to-shoulder facial picture and a digital and authentication/verification infrastructure, will be signature, which are all used to cross-check existing data central to the harmonization process. In the future, there in the National Identity Database to confirm that there could be a universal ID (like SSN in the USA) integration is no previous entry of the same data. Uses of the NIN which could facilitate opportunities for data exchange number include obtaining a National e-ID (electronic and efficiencies by re-using existing data in each system. ID) card, obtaining a passport, opening personal bank accounts, obtaining a driver’s license, obtaining a Regulatory and Legal Framework Permanent Voters’ Card, participating in the National Data Protection Health Insurance Scheme and paying taxes. Nigeria has no comprehensive data protection law and Applications no independent data protection authority. Two separate National e-ID Card Bills have been pending since 2008 and 2010. In 2013, The National Information Technology Development The biometric general multi-purpose e-ID card can be Agency Draft Guidelines on Data Protection, known used to authenticate an individual’s identity across several as “the Guidelines”. Additionally, while there has been public and private services. The card was developed integration of the NIN with other services including in liaison with MasterCard, with Prepaid MasterCard transit, immigration, and police, there appears to be functionality included in the e-ID. The primary ID number insufficient separation between services to ensure privacy. and infrastructure used for the national e-ID card is the NIN. Following the launch of the NIN registration in 2014, Norway about 15 percent of the adult population (14,491,000) has been registered for a NIN; however, only 3-4 percent of Introduction the population has been issued an e-ID card. Challenges Digital ID in Norway is based on the National Population pertaining to lack of enrollment include lack of rural Register’s identification system, managed by the identification centers and an inequitable regulatory system. Norwegian Tax Administration. All Norwegian residents BVN: The BVN (Bank Verification Number) service, are issued with a personal identification number which operated by the Nigeria Inter-Bank Settlement System becomes their personal identifier for life. This personal (NIBSS), provides a unique identifier for each citizen that identification number can be linked to e-ID to provide allows them to be identified, authenticated, and linked to individuals with access to numerous digital services such existing accounts and financial products by any Nigerian as online banking and public services. bank. Besides serving as the national ID authenticator,155 In 2004, the BankID solution was developed through the NIN platform provides foundationalsupport enabling cooperation by Norwegian banks. The BankID solution the development of BVN numbers across Nigeria. The fulfills the highest level of security requirements and stated objective of BVN is to provide a uniform industrially can be used for accessing both private and public sector accepted unique identity for bank customers, enabling services. eID was established through private and customer identification and transaction authentication public sector cooperation; eID solutions used within the without the use of cards, using only biometric features Norwegian public sector are mainly supplied by private and PIN. developers. These privately developed eID solutions G20 DIGITAL IDENTITY ONBOARDING 59 are integrated within the public sectors’ ID-portal the ID-portal. The Feide solution allows access to services (ID-porten), and the use of such solutions has been secured across primary and secondary schools, as well as higher through a national public procurement agreement. education institutions. Within the health sector, an eID solution provided by private developers is used by health Applications personnel for authentication and authorization purposes. The Norwegian ID-portal Pakistan In 2017, the Norwegian ID-portal was used more than 11,415 million times and provided access to more than Introduction 1500 public services. The portal can be used by anyone NADRA (National Database and Regulation Authority) with a national identifier issued by the Norwegian Tax is one of the earliest developing country ID agencies Administration, including citizens, foreign residents and to use biometrics to ensure unique ID numbers for its persons working temporarily in Norway. citizens. With estimated coverage of the adult population The ID-portal can be used by central, regional and local at 207 million people,156 almost 99 percent, the National government agencies to provide access to public services ID Card has become the dominant form of identification online. It simplifies public agencies’ use of eID by for most transactions. NADRA has worked closely with providing technical solutions and a common procurement the Benazir Income Support Program (BISP) 157 to ensure agreement. It provides a single sign-on universe which robust identification of the beneficiaries of the country’s simplifies the development of digital services that span largest cash transfer program and has implemented different agencies and sectors. In terms of security, the an e-payments system linked to this robust form ID-portal protects and prevents the user’s public service of identification. log-in history from being transferred to private eID The Computerized National Identity Card (CNIC), a developers. Only the ID-portal and user know which unique 13-digit number applicable to every Pakistani public service a user has chosen to access. citizen above 13 years of age, is the core product of The ID-portal supports public services from all sectors, NADRA.158 The CNIC, with its enhanced security including health, inland revenue, government to business, features, is specifically used for opening accounts and education and municipal sectors. Since the portal supports receiving remittances, in different government programs the recognition of eID at the highest level of security, such as voting and social welfare and in the private sector access to all services can be provided and protected. for verification purpose. eID in the Financial Sector While digital ID services have become widespread, there BankID, supported by eID, is used on average by each is concern about the ID services offered, specifically Norwegian 160 times per year and scores well (80- for the private sector. While the account opening costs 90 percent) when it comes to user satisfaction, user- are estimated to vary from PKR 15 to PKR 45,159 the friendliness, safety and ease of use among its 3.8 million transaction based costs are estimated to range from Rs users. BankID provides access to a large range of services 2 to Rs 6 per transaction depending on the number of relating to the financial sector. Access to internet banking total transaction. These are subsidized for government and the digital signing of financial documents are entities with large discreet discounts. While the concept services most commonly used by customers. A customer of ‘value pricing’ is known in the private sector, the lack can open a new bank account online without having to of transparency and fairness in pricing across the public go to the bank in person or provide paper documentation. and private sectors remains an issue. BankID supports Norwegian anti-money laundering Applications regulation and is an important tool for the digitisation of the Norwegian banking sector. Branchless Banking Public Sector eID Solutions Digital ID has played an integral role in the growth of branchless banking by enabling banks to offer specialized In addition to the ID-portal, other eID alliances operate types of accounts that can be accessed through mobile within the Norwegian public sector. Feide is an eID phones using mobile technologies for initiating Person- solution used by the Norwegian education sector. This to-Person (P2P) remittances, bill payments and payments eID solution provides access to educational resources that for retail purchases, as well as cash withdrawal and require a lower level of security than those protected by cash deposit through mobile banking agents.160 A total 60 ANNEX 5: COUNTRY CASE STUDIES of 8 banks, including micro-finance banks, offer mobile institutions can access the ECIB data. The common link money accounts and collectively operate 402,710 agents between all credit reporting systems, banks, and MFIs is (as of January 2018161). NADRAs can also be used to open the CNIC. level 0 accounts, accounts with the lowest transaction NADRA E-Sahulat and International Remittances limits, through validation of basic biometric information linked to a CNIC through branchless banking systems.162 E-Sahulat, launched in 2008 as part of NADRA’s electronic commerce platform drive in 2005170 is a CNIC enabled SIM Verification low-cost e-services collection and disbursement platform Based on NADRA’s Digital ID, the PTA (Pakistan consisting of over 12 thousand active franchisees and a Telecom Authority) and MoIT (Ministry of Information switch connecting with telecoms and banks processing an Technology) collaborated to introduce a SIM registration average of 7.5 million transactions a month. All the three system called Biometric Verification Systems (BVS) stages of the E-Sahulat process (site survey, verification program, which made it mandatory for all cell phone and enrollment) involves mapping with the CNIC Digital owners to register each new SIM and have their identity ID system. The E-Sahulat interface plays a significant biometrically verified against the NADRA database role in expanding domestic and international remittances, before activation of SIMs.163 The customer’s CNIC is especially due to its more than 8000 plus touch points linked with several SIMs (up to 5),164 and a limit placed serving low socioeconomic status customers.171 on each person obtaining SIMs. An important factor that has led to the success of the BVS rollout is the extensive Regulatory and Legal Framework and dense agent network throughout the country, which Legal Measures to Enable Data Protection was originally developed for the branchless banking Pakistan has no independent data protection authority system.165 The unique ‘Over the counter’ (OTC) or data protection law, although a draft Electronic Data methodology allowed agents to connect with customers Protection Act was introduced in parliament in 2005 at low cost.166 focusing on personal and sensitive data. There has been Accelerating G2P Payments a sustained effort by policymakers and social think tanks The CNIC has been central to promoting the growth to enact a new law, and it is expected that new legislation and digitization of G2P payments, organized into three will be passed soon.172 categories: (a) social cash transfers, (b) government Branchless Banking Regulations Incorporating salaries and (c) government pensions. One of the important Digital ID attributes of CNIC is that it ensures personal presence ‘Branchless banking’ regulations which were introduced of the beneficiary at the time of withdrawal of money in 2007 and updated in 2016173 and are applicable to all contrary to the existing system where the beneficiary banks including Islamic and microfinance banks, lay out himself/herself is not self- recipient of money in majority regulations for the technology architecture of the CNIC/ of cases. The beneficiary does not require high level of NADRA Digital ID ecosystem and minimum standards financial literacy for withdrawal of money as required for for data and network security along with consumer usage of debit card, and the CNIC simplifies security tiers protection and risk management. There is an emphasis on of withdrawal.167,168 risk based CDD processes. In addition, a risk management Credit Reporting Systems Development program to FIs shall put in place risk based information/ In the credit information space, the Electronic Credit data security requirements as well as channels like mobile Information Bureau (eCIB)169 has facilitated each CNIC phones, SMS, USSD, mobile applications (3G or 4G) etc. having credit information linked using the NADRA online Peru verification and authentication process. For corporate credit reports, each corporate entity (listed and unlisted) Introduction is mapped to a unique borrower code derived from the The National Registry of Identification and Civil Status CNIC system, and financial institutions are required (Registro Nacional de Identificación y Estado Civil, or to report all financial obligations under this unique RENIEC in Spanish) is the premier national ID system borrower code. In addition to the ECIB, more traditional in Peru, a country with a population that is in excess of credit reporting on banked customers, Microfinance 31 million174 with the fifth largest economy in GDP.175 Credit Information Bureau (MF-CIB)’s microfinance The RENIEC is an autonomous constitutional body of G20 DIGITAL IDENTITY ONBOARDING 61 the State of Peru that is charged with maintaining records Known as Billetera Movil (BiM), the new service, of major events such as births, marriages, divorces and which provides services such as cash in/cash out at agent deaths in the country in addition to information regarding points, balance check, P2P payments, and airtime top- voter eligibility and registration along with the issuance up, was launched in February 2016, and reached around of the national identity card. 80,000 subscribers in its first three months of operation. The national identity card comes in two types: the According to the GSMA,178 95 percent of the population traditional non-smart DNI (Documento Nacional de of Peru lives in an area with mobile broadband coverage, Identidad card), and the relatively new smartcard-based and around 70 percent of the population has a mobile electronic ID (DNIe) with biometric identification. To phone connection. date, 99.9 percent of citizens have DNI and there are Some key challenges of Modelo Peru include expanding plans to aggressively scale up the DNIe in the years the potential of the agent network and mobile money ahead RENIEC has a budget of US $130 million, and it in inaccessible areas. Issues of training and knowledge is estimated that about 45 percent of this comes through transfer can be reduced through hybrid and technological revenues generated through fees generated through the ID approaches. Reaching remote rural communities through program. Currently the DNIe card is a standard contact mobile networks is a challenge which cannot always smart card, and citizens must pay US$10 for it. Banks, be left to mobile operators; government investment mobile operators and other service providers/relying may play a critical role in expansion in areas with parties pay a transaction fee for online verification to difficult geography. RENIEC – between US$0.30 and US$1 depending on the service requested. Regulatory Protection Peru has both comprehensive data protection legislation179 Applications and an independent data protection authority.180 Under Mobile Connect this legislation: The RENIEC Digital ID serves as the foundation for • Personal data includes any information on an enabling authentication in the Mobile Connect platform, individual which identifies or makes him identifiable the customer authentication mechanism for the mobile through means that may be reasonably used. environment including access to websites and apps. The • Sensitive data includes biometric data, data concerning international telecom trade body GSMA launched Mobile the racial and ethnic origin, political, religion, Connect in Peru with Movistar, who went live with the philosophical or moral opinions or convictions, service in June 2016. Movistar is reported176 to have a personal habits, union membership and information 54 percent share of the telecom market; estimated at related to health or sexual life. around 8.5 million subscribers. Mobile Connect’s service is currently being absorbed by the participating mobile The inclusion of biometric data in ’sensitive data‘ has operator (Movistar), with the support of the GSMA. It is implications for ID systems by requiring consent given expected that this will change once usage of the service through a handwritten signature, digital signature or other becomes more commonplace. authentication mechanism that guarantees unequivocal consent by the owner.181 It is unclear how these restrictions Modelo Peru (e-money Platform), PDP & BIM would apply to biometrics delivered via a mobile device The Peruvian Bankers’ Association (ASBANC) such as Apple’s TouchID. announced an initiative to develop and offer a shared e-money platform in 2014 with RENEIC Digital ID as United Kingdom its core database. Named Modelo Peru, the initiative Introduction quickly grew into a collaboration between the country’s government, financial institutions, telecommunications The UK national eID scheme, GOV.UK Verify, has been companies, large payers (salaries) and payees (billers) live since May 2016 and currently has over 2.2 million as part of Peruvian Digital Payments (PDP). PDP is co- users with a verified identity. There are currently 17 public owned by the Association of Banks of Peru (ASBANC) sector services that are utilizing these identities to allow as well as many of its member banks and electronic citizens to access digital services ranging from taxation money issuers and developed the shared infrastructure and pension transactions to benefits, driver licensing, for the mobile money service.177 and redundancy claims. The program is currently being 62 ANNEX 5: COUNTRY CASE STUDIES expanded to various health and social services as well as International Interoperability the private sector. The UK government views international interoperability GOV.UK Verify is a federated identity system managed by of eID as a key driver for the growth of digital the UK Government Cabinet Office. The trust framework economies around the world. The key is to provide within which providers and services operate follows interoperability frameworks to enable the recognition rules defined by the UK Government such as its well and reuse of identity from multiple trusted sources based known identity proofing, verification and authentication on international standards. To ensure interoperability standards,182 all of which are openly available. Identity and trust frameworks, the UK has engaged (at various proofing, verification and authentication are all provided levels) with international organisations such as the UN by a group of commercial organisations certified to (UNCITRAL), the World Bank, and the European Union, operate against UK standards and subject to commercial where these frameworks are being considered. contracts derived from a Cabinet Office procurement Trusted Attribute Services framework for identity assurance. Currently 7 providers are certified to operate under this framework and provide Trusted Attribute Services provide data about individuals identity accounts to citizens. or entities (Attributes) where a link can be established between the identity and the data at some level of Applications assurance, Attribute data combined with verified identity Interoperability with the Private Sector satisfies many of the needs of digital services and citizens accessing services by providing much needed trust when The UK government is engaging with the financial sector, determining eligibility, and also enables the creation of where changes to legislation and disruptive technologies efficient digital services. GOV.UK Verify currently only are driving the need to better understand the identity of utilises attribute data to satisfy the need for identity online users, to expand digital ID. The government is matching at a relying party. In this case, attributes currently removing commercial and policy barriers to are provided as part of an identity assertion from the interoperabilitywhere they exist whilst continuing to Identity Provider as MDS (Minimum Data Set). The UK publish standards for digital identity that support the government intends to widen this capability enabling needs of users and services alike. verified identity to release further attribute provision. G20 DIGITAL IDENTITY ONBOARDING 63 ENDNOTES 1. Adapted from NIST (2013a) 19. Transaction account refers to any type of account 2. Adapted from OWI (2017), NIST (2013a), maintained with a bank or licensed non-banking World Bank 2016. entity that enables making and receiving payments and saving balances – (i.e.) serve as a store of value. 3. Adapted from NIST (2013b) References to account in this document should be 4. Adapted from World Bank (2018a) read as transaction account. 5. Adapted from Distributed Ledger Technology (DLT) 20. World Bank (2017). Identification for Development. and Blockchain, Fintech Note 1, WBG 2018. 21. G20 High-Level Principles for Digital Financial 6. Adapted from World Bank (2016, 2018b) Inclusion 7. Adapted from World Bank (2018b) 22. Principles on Identification for Sustainable 8. Adapted from World Bank (2018b), EC (2017), IDB Development (2013) 23. http://pubdocs.worldbank.org/en/ 9. Adapted from World Bank (2018a, 2018b), Gelb & 205641443451046211/ID4D- Clark (2013)]. IntegrationAproachStudyComplete.pdf 10. World Bank (2017, 2018b) 24. http://www.fatf-gafi.org/ 11. NIST Glossary: Identifiers 25. Ten Principles on Identification for Sustainable development 12. As defined by ISO 17442 here: https://www.leiroc. org/ 26. 2017 Global FinDex Report 13. World Bank 2017 (Pending HLAC/UN discussions) 27. A transaction account is defined as a basic bank account with a financial institution which allows 14. Richard Kissel (May 2013). Glossary of Key for the efficient transfer of funds by the account Information Security Terms. NIST Retrieved from: holder to third parties as well as receiving electronic http://nvlpubs.nist.gov/nistpubs/ir/2013/NIST. payments into this account. IR.7298r2.pdf 28. UFA2020 Overview: Universal Financial Access by 15. NIST Glossary: Relying Party 2020 16. NIST Glossary: Revocation 29. http://globalfindex.worldbank.org/ 17. Sovrin: A Protocol and Token for Self-Sovereign 30. World Bank (2017). Identification for Development. Identity and Decentralized Trust 31. Digital Identity: Towards Shared Principles for 18. NIST Glossary: Verification Public and Private Sector Cooperation 32. Digital Identity: Towards Shared Principles for Public and Private Sector Cooperation G20 DIGITAL IDENTITY ONBOARDING 65 33. UN-WB working paper: DISCUSSION PAPER: 51. https://fidoalliance.org/ Working Definition of Proof of Legal Identity, May 52. https://www.bankid.com/en/om-bankid/detta-ar- 2018 bankid 34. ‘Are Biometric ID Systems Good for Women?’, 53. Regulatory Framework for Bank Verification Alan Gleb, 2016 Number (BVN) Digital Financial Inclusion: Emerging Policy 35. 54. https://www.gov.uk/government/publications/ Approaches introducing-govuk-verify/introducing-govuk-verify 36. ID4D is a multi-sectoral and cross-practice initiative 55. http://www.bbc.com/news/uk-politics-41642044 that unites teams from around the WBG. To enable access to services and rights the initiative supports Graham Greenleaf, “Global Tables of Data 56. progress towards identification systems using 21st Privacy Laws and Bills (4rd Ed, January 2015),” century solutions. SSRN Scholarly Paper (Rochester, NY: Social Science Research Network, January 30, 2015), 37. Landscape Technology for Digital Identification https://papers.ssrn.com/abstract=2603502; Graham 38. World Bank ID4D Dataset, 2017 Greenleaf, “Global Data Privacy Laws 2015: 109 39. Digital Identity: Towards Shared Principles for Countries, with European Laws Now a Minority,” Public and Private Sector Cooperation SSRN Scholarly Paper (Rochester, NY: Social Science Research Network, January 30, 2015), 40. Jan Dhan Yojana (JDY) scheme, was launched by https://papers.ssrn.com/abstract=2603529. the Indian government in August 2014, with the goal to ensure that every household in the country 57. It should be noted there that transparent is used to has an account. Everyone with a JDY account is indicated that the records are public, however, the eligible for a RuPay debit card, accident insurance algorithms behind it are most often opaque. of Rs.100,000 (~USD $150) and life insurance 58. Tobias Young (14 March 2017). Blockchain coverage of Rs.30,000 (~USD $45) and is eligible for technology cuts through the hurdles to simplify an overdraft facility upon satisfactory performance everyone’s lives. of the account. 59. Technology Landscape for Digital Identification 41. http://www.pmjdy.gov.in/home 60. Technology Landscape for Digital Identification 42. News Article: Nigeria announces removal of 23,846 61. ‘Global Findex Survey 2018’, WBG, 2018, (http:// ghost workers from government payroll globalfindex.worldbank.org/) 43. Public sector savings & revenue from identification 62. Providers are legally permitted to “rely” on an systems: Opportunities & Constraints’, WBG ID4D Aadhaar check to discharge their ID and ID report, 2018 verification obligations 44. http://www.intellectualventures.com/news/press- 63. Adapted from the case study provided by India releases/global-good-fund-and-element-inc.-to- membership. develop-biometric-identification-techn 64. Closing the coverage gap: Digital Inclusion in Latin 45. GDPR Regulation America, 2015, GSMA 46. Digital Identity: Towards Shared Principles for 65. http://www.w3.org/2001/sw/Europe/events/foaf- Public and Private Sector Cooperation galway/papers/fp/token_based_authentication/ 47. https://cfi-blog.org/2016/02/17/bim-the-first-fully- 66. For further reading on LOAs, see: http://securekey. interoperable-mobile-money-platform-now-live-in- com/wp-content/uploads/2016/06/ECONOMICS- peru/ OF-IDENTITY.pdf 48. Excerpt provided by the G20 representatives from 67. One critical element of the standards are that the the Government of India as a case study (attached in PIN is encrypted from the time it is entered to the the annexures) time it is transformed into the reference value of 49. Consult Hyperion Pakistan Note’, 2017 verification. The full standards are available at 50. Numbers supplied by country https://www.pcisecuritystandards.org/ 66 ENDNOTES 68. http://www.fin24.com/Tech/Companies/fingerprint- 86. ‘It’s important no one gets left behind’, The authentication-coming-to-sa-bank-cards- Guardian, 2017, (https://www.theguardian.com/ 20160726?isapp=true public-leaders-network/2017/may/02/singapore- 69. The Global National eID Industry Report: 2017 government-data-strategy-jacqueline-poh) Edition by Acuity Market Intelligence. 87. ‘MyInfo access extended to local businesses’, 70. Mastercard (26 October 2017). Mastercard and Bank Nov 2017 (http://www.straitstimes.com/singapore/ of Maldives Introduce Passport Card in Partnership myinfo-access-extended-to-local-businesses) with Maldives Immigration. 88. BISP’s innovation in G2P payment systems’, BISP, 71. https://www.zdnet.com/article/estonias-id-card- Government of Pakistan, 2018 scrisis-how-e-states-poster-child-got-into-and-out- 89. https://www.nadra.gov.pk/about-us/ of-trouble/ 90. Financial Inclusion of forcibly displaced Persons 72. Introducing Mobile Connect – the new standard in (GPFI) digital authentication. *These cards were issued initially by UNHCR 73. Circular 3/2012, article 17 but Government of Lebanon told UNHCR to stop 74. Technology Landscape for Digital Identification registering refugees from 2015 onwards. 75. World Bank (2016). Digital Identity: Towards shared 91. ‘The Role of Financial Services in Humanitarian Crisis’, principles for public and private sector cooperation WBG, Nov 2017, (http://documents.worldbank. org/curated/en/687701493270597254/The-role-of- 76. h t t p s : / / w w w . t e c h d i r t . c o m / a r t i c l e s / financial-services-in-humanitarian-crises) 20161011/10075735774/bangladesh-brings- nationwide-digital-identity-cards-linking- 92. Norwegian Refugee Council (2017). Syrian refugees’ biometrics-to-mobile-phone-numbers.shtml right to legal identity: implications for return. https:// www.nrc.no/globalassets/pdf/briefing-notes/icla/ 77. Technology Landscape for Digital Identification final-syrian-refugees-civil-documentation-briefing- 78. Soft and Hard Biometrics for the Authentication of note-21-12-2016.pdf Remote People in Front and Side Views: Ghalleb A, 93. ‘Approaches to Providing Identification to Refugees Amara N and Asylum Seekers’, WBG ID4D Working Paper, 79. As above 2018-9 80. https://newsroom.mastercard.com/press-releases/ Other humanitarian agencies, such as WFP and 94. mastercard-zwipe-announce-launch-worlds-first- NGOs, may also register refugees and asylum biometric-contactless-payment-card-integrated- seekers, as beneficiaries of the assistance they fingerprint-sensor/ provide. Smith, S. (29 November 2016). Voice and Facial 81. 95. ‘Iris scan helps Syrian refugees in Jordan receive UN Recognition to Be Used in Over 600 Million Mobile supplies in ‘blink of eye’, UN news, 2016 (https:// Devices by 2021. news.un.org/en/story/2016/10/542032-iris-scan- 82. refers to billions of physical devices around the world helps-syrian-refugees-jordan-receive-un-supplies- that are now connected to the internet, collecting and blink-eye) sharing data 96. https://documents.wfp.org/stellent/groups/public/ 83. Badugu, N. (17 May 2017). Biometrics in Internet of documents/communications/wfp287655.pdf Things (IoT) Security. IoT ONE. 97. ‘General Principles of Credit Reporting’, 2011, 84. ‘NPCI FAQ on Aadhar Payment Bridge System’ Financial Stability Board, (http://www.fsb. (APB),2017, (https://www.ucobank.com/pdf/faq- org/2011/09/cos_110907/) apb.pdf) ‘ECIB Website’, State Bank of 98. Pakistan 85. Singpass,2018, Government of Singapore (http://www.sbp.org.pk/ecib/index.htm ) (https://www.singpass.gov.sg/spauth/login/ 99. WBG Digital ID note on Pakistan 2017 loginpage?URL=%2F&TAM_OP=login) G20 DIGITAL IDENTITY ONBOARDING 67 100. Bank-ID website, 2018, (https://www.bankid.no/ Dig and Text below Adapted from the World 120. en/about-us/) Bank Report: Technology Landscape for Digital 101. ‘Changing ID trends power banking in Norway’, Identification 2018 2015, (https://www.computerweekly.com/news/ 121. United Nations Department of Social and Economic 4500244960/Changing-IT-trends-power-banking- Affairs (2014). Principles and Recommendations in-Norway) for a Vital Statistics System, Revision 3. Retrieved 102. ‘UID Aadhar’ http://udyogaadhaar.gov.in/UA/ from: https://unstats.un.org/unsd/demographic/ UAMRegistration.aspx standmeth/principles/M19Rev3en.pdf 103. ‘Bangladesh brings nationwide digital identity 122. Aadhaarcard.net.in (07 November 2016). Apply for cards linking biometrics’ https://www.techdirt. Aadhaar Card without any Documents. Retrieved com/articles/20161011/10075735774/bangladesh- from: https://uidai.gov.in/component/fsf/?view- brings-nationwide-digital-identity-cards-linking- faq&catid=36 biometrics-to-mobile-phone-numbers.shtml National Institute of Standards and Technology, 123. 104. h t t p : / / s i t e r e s o u r c e s . w o r l d b a n k . o r g / U.S. Department of Commerce (June 2017). EXTFINANCIALSECTOR/Resources/Good_ Digital Identity Guidelines: Enrollment and Practices_for_Financial_CP.pdf Identity Proofing. Retrieved from NIST: https://pages.nist.gov/800-63-3/sp800-63a.html 105. ‘GPFI report on alternative data transforming SME’s’, GPFI, 2017, (https://www.gpfi.org/ European Commission (25 February 2015). 124. publications/gpfi-report-alternative-data- Trust Services and eID. Retrieved from European transforming-sme-finance) Commission: https://ec.europa.eu/ digital-single- market/en/policies/trust-services-and-eidentification 106. ‘Digital ID for businesses’, WBG Report, 2017 125. http://eur-lex.europa.eu/legal-content/EN/TXT/?uri 107. The Role of Digital Identification for Healthcare: =uriserv:OJ.L_.2014.257.01.0073.01.ENG The Emerging Use Cases’, Case Studies, 2018 126. https://www.iso.org/standard/45138.html 108. https://www.gov.uk/government/publications/ introducing-govuk-verify/introducing-govuk- 127. https://pages.nist.gov/800-63-3/sp800-63-3.html verify 128. Technology Landscape for Digital Identification 109. http://diacc.ca 129. https://reliefweb.int/report/jordan/rais-jordan- 110. https://www.gsma.com/identity/mobile-connect mission-assistance-coordination-bulk-upload- trainer-trainer-guide 111. https://fidoalliance.org/ 130. https://reliefweb.int/report/jordan/rais-jordan- 112. https://www.bankid.com/en/ mission-assistance-coordination-bulk-upload- 113. https://www.bankid.no/en/about-us/ trainer-trainer-guide 114. Def: to design a framework so that it can still be 131. ‘Uganda launches major refugee verification used in the future, even when technology changes. operation’, UNCR, 2018 (http://www.unhcr.org/ 115. Principles on Identification for sustainable en-us/news/latest/2018/3/5a9959444/uganda- development: toward the Digital Age launches-major-refugee-verification-operation. html) Digital Identity: Towards Shared Principles for 116. Public and Private Sector Cooperation 132. ‘Credential Broker Service’, 2018, Government of Canada 117. h t t p : / / d o c u m e n t s . w o r l d b a n k . o rg / c u r a t e d / en/213581486378184357/Principles-on- 133. ‘India: Case Study on Digital ID’, G20 Digital ID identification-for-sustainable-development-toward- Onboarding paper, Government of India, 2018 the-digital-age 134. More details can be obtained in Box 7 in the main 118. At a Crossroads: PersonHood and digital identity text of ‘G20 Digital ID Onboarding Paper’ in the information society. OECD working paper, 135. It is composed by a codification derived from an 2008. individual’s name, gender, place and date of birth, 119. https://pages.nist.gov/800-63-3/sp800-63-3.html plus a random number. 68 ENDNOTES 136. These functional IDs include Voting Card, Passport, 146. Since 2008, Mexican regulation has foreseen that Certificate of Higher Education Studies (college and banks may use biometric data to identify their graduate degrees), Military Service Card, Consular clients when performing some transactions through ID (offered by Mexican Consulates as a mean of banking agents and through electronic banking. identification), Senior Citizen’s ID, IDs issued by Banks were then allowed to use identification Mexican Social Security Agencies (which mainly mechanisms such as PINs, passwords, tokens or the provide health care services), driver’s license and use of debit or credit cards with a chip. In addition, taxpayer identification number. biometric information from the Voting Card did not 137. Individuals without a picture ID need to present two need to be verified with INE. witnesses with valid Voting Cards. Accepted IDs 147. The main regulatory changes are included in articles are those currently valid which include a picture of 51 Bis to 51 Bis 12 and Annex 71 of the “Circular the individual. Such IDs may be not be linked to Única de Bancos”. foundational IDs and thus be more easily falsified. Only levels 3 and 4 accounts (level 4 with 148. Currently, INE has 100 percent of the 2 index 138. maximum monthly deposits of 30,000 UDIs) and fingerprints and 80 percent of the 10 fingerprints loans under 60,000 UDIs can be obtained remotely of individuals in the electoral registry. INE started through a video-call interview, in which biometric collecting only 2 index fingerprints. It now collects information is collected. all 10 when individuals obtain their Voting Card, 149. If the client does not have a Voting Card, she can show and when they renew it or replace it. her passport and any of the IDs that allow complying 139. Level 1-3 accounts’ maximum monthly deposits are, with AML rules and the bank needs to verify that the respectively, 750, 3,000, and 10,000 “UDIS” (1 UDI data is consistent across these two. These IDs include = 0.33 USD). Level 4 accounts have no maximum consular registration card, professional identification monthly deposits. Level 1 accounts’ maximum card, the national military service record, the military balance is 1,000 UDIS. ID, the National Institute of Senior Citizens’ ID, the 140. Level 1 accounts cannot be set up for electronic Mexican Social Security Institute’s ID, driving license, banking. Levels 2-4 accounts may use electronic and any ID issued by a Federal, State or Municipal banking including through mobile devices. Authority. If INE cannot issue Voting Cards, due to restrictions derived from the electoral calendar, the 141. Full name, date of birth and address, at a bank or by client has to show any 2 of the above-mentioned IDs, authorized agent. If the account is opened remotely, and the operation requires authorization from the the data to register are: full name, gender, place and bank’s branch manager. date of birth, address, CURP, and cellphone number if the account has a linked cellphone. Money transfers to other accounts owned by 150. the client in the same bank are exempted from 142. The ID needs to include a picture and signature. No identification actions. photocopies are collected. 151. If the client does not have a Voting Card, she can 143. If the process is carried out face-to-face, the data show 2 IDs that allow to comply with AML Rules is collected through an interview. If it is carried and the bank has to verify that the underlying out remotely, the corresponding individual’s data across these matches. These include the IDs information needs to be verified against RENAPO’s mentioned above and passport. records. 152. The bank must validate a client’s identity with INE 144. Country of birth, nationality, occupation, taxpayer (fingerprint match) when the client is given her card ID number, telephone number, e-mail and serial and when the client sets the Personal Identification number of the electronic signature (if the client Number for the first time. has it). 153. In the case of immigration documents showed by 145. Level 3 accounts require the client showing a valid foreigners and passports, banks have to identify ID with picture and signature. Level 4 accounts their security elements. require photocopies of a valid ID with picture and signature, CURP, and proof of address. 154. United Nations, World Population Prospects (2016) https://esa.un.org/unpd/wpp/DataQuery/ G20 DIGITAL IDENTITY ONBOARDING 69 155. ‘BVN Biometric’, https://www.firstbanknigeria. 167. BISP’s innovation in G2P payment systems’, BISP, com/biometric/, 2017 Government of Pakistan, 2018 Pakistan Population Census, 2017 (http://www. 156. 168. ‘BISP’s innovation in G2P payment systems’, pbs.gov.pk/content/population-census) BISP, Government of Pakistan, 2018 157. ‘5.2 million families receive a monthly transfer of 169. ‘ECIB Website’, State Bank of Pakistan (http:// USD15 through BISP’ World Bank Group ID4D 2 www.sbp.org.pk/ecib/index.htm ) Pager, December 2015 170. ‘NADRA E-Sahulat’, Government of Pakistan, 2018 ‘National Identity Card’, NADRA, 2017, https:// 158. (https://e-sahulat.nadra.gov.pk/) www.nadra.gov.pk/identity/identity-CNIC/ 171. ‘HBL Express and NADRA launch branchless 159. Rs 15= 0.129 USD and Rs 45= 0.389 USD as banking services’, January 2015, (https://goo. per XE conversions (Conversion rate: 1 USD = gl/3Nhdv7) 115.601 PKR) ‘Data Protection Law in Pakistan: Policy 172. 160. ‘Technical Note: Payment systems aspects of Recommendations by DRF’, Digital Rights financial inclusion’, Pakistan, 2014 Foundation, October 2017 (https://goo.gl/KaR4st) 161. ‘State Bank of Pakistan agents numbers”, December 173. ‘State Bank of Pakistan Branchless Banking 2017, (https://propakistani.pk/2017/12/05/number- Regulations’, June 2016, (http://www.sbp.org.pk/ branchless-banking-agents-crosses-400000- bprd/2016/C9-Annx-A.pdf) pakistan/) 174. https://esa.un.org/unpd/wpp/Download/Standard/ ‘State Bank of Pakistan removes barriers to 162. Population/ branchless banking’,CGAP, July 2011 175. https://www.cia.gov/library/publications/the- 163. ‘Biometric Verification Services’, PTA. 2017, world-factbook/geos/pe.html (https://www.pta.gov.pk/en/biometric-verification) 176. https://www.budde.com.au/Research/Peru- 164. The biometric linking process is not done for post- Telecoms-Mobile-Broadband-and-Digital-Media- paid accounts but these comprise less than 1% of Statistics-and-Analyses the market (which is almost entirely pre-paid) and 177. https://cfi-blog.org/2016/02/17/bim-the-first-fully- other checks are done to prevent fraud and other interoperable-mobile-money-platform-now-live- issues with corporate accounts in-peru/ 165. For example, agents are located so close together “Connected Society: Digital inclusion in Latin 178. that it takes a median of 5 minutes to reach the America and the Caribbean”, GSMA, 2016 nearest agent serving the same provider, with Telenor providing one of the broadest reaching 179. Data Protection law (Ley N° 29733) networks of over 200K points of service, selling 180. National Authority for Personal Data Protection airtime for its GSM business, unlike bank branches, 181. Article 14 of Law 29733 which had limited geographical reach. 182. https://www.gov.uk/government/collections/ 166. ‘Agent Network Accelerator—Pakistan Country identity-assurance-enabling-trusted-transactions Report’, Helix Institute of Digital Finance, 2014 70 ENDNOTES C