Is banking use of mDLs permitted when you have to prove your identity? Before we dive into this, let’s define some things.
This post looks at five acronyms:
- CIP, for the Customer Identification Program (Rule)
- VDC, for Verifiable Digital Credential
- mDL, for mobile Driver’s License
- FAQ, for Frequently Asked Question
- FinCEN, for Financial Crimes Enforcement Network
Finally, we look at FinCEN’s FAQs regarding CIP acceptance of mDLs as VDCs.
Five acronyms
A Customer Identification Program (CIP), mandated by Section 326 of the USA Patriot Act and other legislation, specifies how financial institutions implement Know Your Customer (KYC) and anti-money laundering (AML) programs to stop terrorists and others from sending illicit money through the institutions. Each individual financial institution writes its own CIP, and at a minimum it dictates that the institution collect the customer’s name, address, government-issued identification number, and (for individuals) their date of birth.
A Verifiable Digital Credential (VDC) is one way to gather the information mandated by a financial institution’s CIP. NIST breaks down the three words in the name:
- Verifiable: cryptographically, to verify the authenticity and integrity of the data.
- Digital: on a smartphone, a cloud wallet, or somewhere similar.
- Credential: issued by a government, educational institution, or some similar holder of personal information.
We’ve talked about mobile Driver’s Licenses (mDLs) before. They’re VDCs that display the same information (or a subset) that is contained on your physical driver’s license. And they’re not restricted to the United States.
A collection of Frequently Asked Questions (FAQs) supposedly answers the most pressing questions about a particular service. Even Bredemarket has a collection of FAQs, but they’re hopelessly outdated. Add to to-do list.
Finally, the Financial Crimes Enforcement Network (FinCEN) is part of the U.S. Department of the Treasury. We’ve talked about FinCEN before also: what it does, and what it doesn’t do.
Is banking use of MDLs allowed?
A mobile driver’s license does you no good if no one accepts it.
There are precious few places where I can use my California mDL. The Transportation Security Administration people at Ontario International Airport accept them, but that’s about it.
Which is why FinCEN’s new FAQs are so important.
“The U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN), jointly with the staffs of the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the National Credit Union Administration, and the Office of the Comptroller of the Currency (the “Agencies”), are issuing two new frequently asked questions (FAQs) that address the use of state-issued mobile driver’s licenses (mDLs) and other government-issued verifiable digital credentials, which may be used to verify identities of natural person customers under the Customer Identification Program (CIP) Rule.”
I will save you from having to read the FAQs.
Yes, the industry supports banking use of mDLs.
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