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

34 Pages Posted: 1 Aug 2018 Last revised: 17 Aug 2018

Douglas W. Arner

The University of Hong Kong - Faculty of Law

Dirk A. Zetzsche

Universite du Luxembourg - Faculty of Law, Economics and Finance; Heinrich Heine University Dusseldorf - Center for Business & Corporate Law (CBC)

Ross P. Buckley

University of New South Wales (UNSW) - Faculty of Law

Janos Nathan Barberis

The University of Hong Kong - Faculty of Law

Date Written: June 1, 2018

Abstract

Identity is fundamental in finance. From a business standpoint, knowledge of clients’ identities is essential to protect against fraud and crime, and underpins all know-your-customer obligations. From a risk management and regulatory standpoint, identity is essential to market integrity. At the same time, identification and KYC rules can be major barriers to accessing financial services, for individuals and small businesses in particular. This paper considers the various requirements for identification in the financial sector and the evolving nature of identity and its evolution from analogue to digitized to digital. 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 for digital or electronic identification 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 the objectives of financial inclusion and market integrity are not achieved at the detriment of financial stability.

Keywords: Finance, Identity, Digital Identification, eKYC Infrastructure, KYC Utilities, Market Integrity, Anti−money laundering

JEL Classification: K2, K23, K22, O16, O23, O38

Suggested Citation

Arner, Douglas W. and Zetzsche, Dirk A. and Buckley, Ross P. and Barberis, Janos Nathan, The Identity Challenge in Finance: From Analogue Identity to Digitized Identification to Digital KYC Utilities (June 1, 2018). European Business Organization Law Review, Forthcoming; UNSW Law Research Paper No. 18-45; European Banking Institute Working Paper Series 2018 No. 28; University of Luxembourg Law Working Paper No. 2018-008. Available at SSRN: https://ssrn.com/abstract=3224115 or http://dx.doi.org/10.2139/ssrn.3224115

Douglas W. Arner

The University of Hong Kong - Faculty of Law ( email )

Pokfulam Road
Hong Kong, Hong Kong
China

HOME PAGE: http://hub.hku.hk/rp/rp01237

Dirk Andreas Zetzsche

Universite du Luxembourg - Faculty of Law, Economics and Finance ( email )

Luxembourg, L-1511
Luxembourg

HOME PAGE: http://wwwen.uni.lu/recherche/fdef/research_unit_in_law/equipe/dirk_andreas_zetzsche

Heinrich Heine University Dusseldorf - Center for Business & Corporate Law (CBC) ( email )

Universitaetsstr. 1
D-40225 Düsseldorf
Germany
+49 211 81 15084 (Phone)
+49 211 81 11427 (Fax)

Ross P. Buckley (Contact Author)

University of New South Wales (UNSW) - Faculty of Law ( email )

Sydney, New South Wales 2052
Australia

Janos Nathan Barberis

The University of Hong Kong - Faculty of Law ( email )

Pokfulam Road
Hong Kong, Hong Kong
China

Register to save articles to
your library

Register

Paper statistics

Downloads
114
rank
224,342
Abstract Views
524
PlumX