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European Business Organization Law Review

, Volume 20, Issue 1, pp 55–80 | Cite as

The Identity Challenge in Finance: From Analogue Identity to Digitized Identification to Digital KYC Utilities

  • Douglas W. ArnerEmail author
  • Dirk A. Zetzsche
  • Ross P. Buckley
  • Janos N. Barberis
Article
  • 64 Downloads

Abstract

Identity is fundamental in finance: to protect against fraud and crime, to fulfil know-your-customer obligations, and to ensure market integrity. At the same time, identification and know-your-customer rules can be major barriers to accessing financial services. This paper considers the various requirements for identification in the financial sector and the evolving nature of identity. We argue that technology presents an opportunity to solve this challenge through the development of digital identity infrastructure and related utilities. The establishment of such utilities requires addressing design questions such as registration methods, data availability, and cross-jurisdiction recognitions. Yet, as with any reform, a balance between flow through efficiency and cyber-security needs to be reached to ensure that the objectives of financial inclusion and market integrity are not achieved to the detriment of financial stability.

Keywords

Finance Identity Digital identification eKYC infrastructure KYC utilities Market integrity Anti-money laundering Financial inclusion FinTech RegTech 

Notes

Acknowledgments

The authors are grateful for comments from Iris Chiu, Emilios Avgouleas, Pierre Schammo, Jean-Louis Schiltz, Anton Didenko, Tsany Ratna Dewi as well as participants of the Alliance for Financial Inclusion Global Policy Forum (AFI GPF) in Sochi (September 2018), and for the research assistance of Rohan Balani, Jessica Chapman and Evan Gibson. All responsibility is the authors. The authors gratefully acknowledge the financial support of: the Luxembourg National Research Fund, project ‘A new law for Fintechs—SMART Regulation’, INTER/MOBILITY/16/11406511; the Australian Research Council, project ‘Regulating a Revolution: A New Regulatory Model for Digital Finance’; and the Hong Kong Research Grants Council Theme-based Research Scheme.

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Copyright information

© T.M.C. Asser Press 2019

Authors and Affiliations

  • Douglas W. Arner
    • 1
    Email author
  • Dirk A. Zetzsche
    • 2
    • 3
  • Ross P. Buckley
    • 4
  • Janos N. Barberis
    • 5
  1. 1.Kerry Holdings Professor in Law and Co-Founder, Asian Institute of International Financial LawUniversity of Hong KongPokfulamChina
  2. 2.Professor of Law, ADA Chair in Financial Law (Inclusive Finance), Faculty of Law, Economics and FinanceUniversity of LuxembourgLuxembourg CityLuxembourg
  3. 3.Director, Centre for Business and Corporate LawHeinrich-Heine-UniversityDüsseldorfGermany
  4. 4.KPMG Law King and Wood Mallesons Chair of Disruptive Innovation, Scientia Professor, and Member, Centre for Law, Markets and RegulationUNSW SydneySydneyAustralia
  5. 5.Co-Founder, Supercharger, and Research Fellow, Asian Institute of International Financial LawUniversity of Hong KongPokfulamChina

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