Digital identity is a hot topic. Whether we are talking about the massive Equifax data breach or the more recent scandal involving 50 million Facebook users whose data was alleged to have been misused by consultancy firm Cambridge Analytica, digital identity is at the forefront of the conversation.
Thomson Reuters, in partnership with the Association of Certified Anti-Money Laundering Specialists (ACAMS) recently presented a one-hour webinar titled, Rethinking Digital Identity. Thomson Reuters’ resident expert, Robert “Bob” Schukai, Global Head of Design for Digital Identity Solutions, explained the basics of digital identity to more than 2,300 audience members and challenged all entities to improve the digital identity requests they make of consumers by moving to a use-case model.
The hour certainly flew by and many attendees still had important questions about upcoming regulatory changes, Know Your Customer (KYC) procedures, and even the safety of using a credit over a debit card.
Below you will find a handful of questions from the webinar that were answered by Schukai. You can also hear Schukai speak live in both Charlotte on April 24, and Washington, D.C. on April 26 at the Thomson Reuters Public-Private Partnership Forums.
Do you think the European General Data Protection Regulation (GDPR) will improve citizen protection?
Bob Schukai: Europe is always much more proactive on attempting to protect its citizens and their personal information. I understand the intent of the law, but I think it is way too early to assess a positive or negative impact. As an example, the “right to be forgotten” has many problems with respect to actual execution. Sure, I can wipe out a bad story about an individual so that it can’t be seen in the UK, but what if tools such as the Internet Wayback Machine has already archived it? Who is responsible for chasing down very last potential hosting of a particular piece of content?
With respect to KYC in a banking environment, what do you think is dated material and what better measures should be put in place in this new environment in 2018?
Bob Schukai: It is high time that KYC moves into a new world of “KYC as a Utility” (KYCU). It’s one thing to onboard a customer and verify that they are not on sanctions lists or watch lists. How often though do banks go back and re-check their clients?
Perhaps it does not need to be performed with every single transaction, but I think there should be a more regular vetting process that takes place. I also think we can do a better job of using tools like artificial intelligence to glean patterns on money movements and spend. It must be done carefully though so as not to prohibit legitimate commerce, but it should take into account the fact that it takes a very small amount of money in 2018 to conduct illegal transactions.
Digital identities get compromised in cross-border transactions through correspondent banking — the ultimate beneficiary and remitters’ identities may not be captured in SWIFT [Society for Worldwide Interbank Financial Telecommunications] messages. How can we strengthen the correspondent banking due diligence process?
Bob Schukai: This is a great question and one that banks are grappling with worldwide, especially with the advent of new payment platforms. If a bank vets outbound transactions, should a bank on the other side accept that vetting without doing any inbound verification of the receiver? Quite simply, this will remain a point of contention between banks and regulators that will need resolution sooner rather than later.
How will Bitcoin change the dynamics of Digital Identity?
Bob Schukai: Bitcoin is challenging the very notion of identity. Many bitcoin transactions can and will take place between parties who do not know each other’s specific identity — nor does the government know.
This is why you are seeing greater scrutiny around cryptocurrencies in general — for example from the Securities and Exchange Commission (SEC). Companies like Coinbase are doing a very good job of screening individuals now before they give them an account and the ability to transfer real-world currency into bitcoin.
Do you think blockchain technology could be leveraged to provide further ways to protect personal information or add another layer of information when applying for credit or other services that requires ID?
Bob Schukai: I am personally not convinced at present that blockchain is the answer to protecting personal information for credit or other services. Rather, we should be asking those that require identity for transactions to be more selective in terms of the attributes that they require to complete a given transaction.
In the webinar, I spoke about the fact that the “sledgehammer” approach to something as simple as buying alcohol should not require me to reveal my name, address or other attributes on my driver license. Rather, I should simply have to provide a mechanism that demonstrates I am of legal age and have a photo on a validated government document — like a license or passport — that approximately looks like me.
In personal finance is it safer to use a credit card for purchases than a debit card tied to your bank account?
Bob Schukai: Absolutely, your credit card. Under federal law, the maximum amount you are liable for in the event of fraudulent use of your credit card is only $50, or nothing if you report it lost or stolen and it hasn’t yet been used!
With a debit card, you may be liable for up to $500. Additionally, if your account is drained, you could end up unknowingly writing a check against your account, have it bounce, and then be liable for overdraft fees. Lastly, issuers of credit cards tend to reimburse their users much quicker than those who have been hit with fraudulent debit card use.
How do you lock your credit?
Bob Schukai: To lock your credit, all you have to do is follow the links provided by consumer expert Clark Howard. This guide also tells you how to unlock your credit. As an aside note, I am a big fan of Clark and his website. He has a lot of very practical advice for consumers on money management!
Want to learn more about combating digital identity fraud? You may also be interested in one of our latest articles, Today’s Digital Identity Crisis: Banks need next-generation KYC to confront the Dark Web’s black market.