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Financial Services Law Insights and Observations

FinCEN stresses importance of reliable digital interactions

Federal Issues FinCEN Financial Crimes Fintech Digital Identity Anti-Money Laundering Combating the Financing of Terrorism Digital Assets

Federal Issues

On September 7, speaking before the 2022 Federal Identity Forum & Exposition in Atlanta, Georgia, acting Deputy Director of FinCEN Jimmy Kirby addressed the importance digital identity plays in FinCEN’s mission as it relates to privacy and cybersecurity, particularly with respect to protecting the U.S. financial system from illicit finance. This includes helping financial institutions comply with various reporting requirements, such as filing suspicious activity reports and currency transaction reports and ensuring that recordkeeping requirements under the Customer Identification Program and Customer Due Diligence rules are met. While Kirby recognized that digital identity frameworks have the potential to “spur innovation in financial products and services across the legacy financial system, as well as digital assets and emerging central bank digital currencies,” he stressed it is vital that digital identity is handled correctly through the implementation of “identity solutions that preserve privacy and security, promote financial inclusion, and protect the integrity of the financial system.” Focusing on topics related to emerging threats and responsible innovation, Kirby emphasized the need for financial institutions to implement measures for knowing who their customers are, both on the front end and throughout the customer relationship, and to take steps to prevent identity theft and fraud. Kirby also discussed the importance of fostering responsible innovation and developing infrastructure, information sharing, and standards that mitigate the risks associated with digital identities.

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