Digital Identity Verification Best Practices For Canadian Financial Services

Many financial services businesses are subject to legal or regulatory obligations that require them to verify the identity of their customers. Although innovative technological tools, including those using artificial intelligence and biometrics, are simplifying the identity verification process, these tools must be used in a way that complies with privacy and financial sector laws.

In this bulletin, we summarize five best practices for ensuring regulatory compliance when engaging in a new digital identification or verification project.

1. Know Your Regulations

Most financial services businesses operating in Canada, including banks, savings and credit unions, insurers, trust companies, loan companies and securities dealers (financial entities, or FEs), are required to verify the identity of an individual or an entity under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act in connection with certain transactions.