IDnow has joined a consortium that will work to make crypto companies compliant with the European Union’s Anti-Money-Laundering Regulation and the Transfer of Funds Regulation (TFR). Other members of the consortium, which has not yet been named, include the IOTA Foundation, walt.id, SPYCE.5, and Bloom Labs.
The new TFR requires cryptocurrency transactions to carry identifying data of both the sender and the receiving party, while new AML rules will make “Crypto Asset Service Providers” subject to similar AML regulations applied to traditional financial institutions. The consortium’s goal is to propose a system in which a trusted party verifies an identification process while tokenizing identity information.
Transactions would be confirmed without revealing PII, but the “Soul-Bound Token” could be used to share identity information when it is requested by a recognized authority, such as a law enforcement agency.
The consortium’s system involves each member playing a crucial role. IOTA Foundation provides the blockchain network for the system, ensuring secure and efficient transactions. walt.id creates a service for verifying identities without compromising privacy, using tokenization. IDnow handles user identity verification, essential for meeting regulatory standards. Bloom Labs offers a wallet for managing these identity tokens, facilitating user interaction with the system. SPYCE.5 ensures the system communicates effectively across different blockchain technologies, maintaining compliance and functionality.
“We are excited to be part of this forward-thinking consortium alongside highly esteemed crypto asset industry players to address a pressing need for crypto wallet solutions that comply with the latest EU regulations,” said IDnow’s Director Global Regulatory and Government Affairs, Rayissa Armata. “Crypto companies are facing a race against the clock to implement new requirements, which is why we wish to submit this proposed solution to the EU for consideration to address the technological and regulatory challenges around AML, KYC and TFR in crypto.”
In announcing its involvement in the consortium, IDnow did not detail the identity verification process it plans to implement in the group’s system. But the company is known for its selfie-based remote onboarding technology, which uses facial recognition technology to match an end user to images of their official ID, with liveness detection tech helping to ensure that the user is present during the session, and to fend off any spoofing attempts on the part of fraudsters.
The company announced last month that it was providing this technology for Zorrz, a London-based fintech startup.
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February 16, 2024 – by the Mobile ID World Editorial Team
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