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Fintech Market Overview

This article does not constitute legal advice.

Client identification in the USA

There is currently no universally recognized digital customer identification in the US.1

The National Institute of Standards and Technology (NIST) of the US Department of Commerce has issued guidelines that are often used as a digital identity standard.1

The 2018 U.S. Treasury Department's Financial Technology Report identifies two main components of digital identity:

  • verification of identity, registration and identity card;
  • authentication 1

Many fintech companies can achieve rapid customer growth in a relatively short timeframe using fully digitized customer registrations.1

Fintech companies should obtain the following information before opening an account for a client:

  1. First name, Last name
  2. Date of birth (for individuals)
  3. The address
  4. Taxpayer identification number
  5. Government-issued document with a photo (for individuals)
  6. Government-issued document certifying the existence of a legal entity (for companies)
  7. Use of comprehensive CDD programs
  8. Use enhanced due diligence programs (for higher risk clients) 1

There is currently no generally recognised digital identity in the United States. The US Department of Commerce National Institute of Standards and Technology (NIST) has issued technical requirements for digital identity services, the guidelines are only mandatory for the federal government and voluntary for the private sector. The NIST guidelines are generally seen as setting the standard for the direction of any potential federally recognised digital identity.1

The US Department of Treasury released the "Fintech Report" in 2018 that includes two recommendations focused on the creation of a national digital legal identity and encourages private and public sector stakeholders to leverage the NIST guidelines to develop trustworthy digital identity products and services.1

The Fintech Report describes digital legal identity as using electronic means to unambiguously assert and authenticate a real person's unique legal identity, and highlights two essential components of digital identity systems:

  1. identity proofing, enrolment and credentialing
  2. authentication 1

Notes
  1. https://thelawreviews.co.uk/title/the-financial-technology-law-review/usa