Hong Kong’s financial regulators are testing digital identity verification solutions to facilitate anonymous Know Your Customer (KYC) procedures for mainland Chinese citizens, aiming to balance privacy with regulatory compliance in cross-border finance.
Building on Hong Kong’s digital identity system introduced in 2020, these trials incorporate advanced cryptographic methods, such as threshold signatures and fuzzy cliques, to enable privacy-preserving identity verification that aligns with Financial Action Task Force (FATF) recommendations.
The Hong Kong Monetary Authority (HKMA) emphasizes that the trials adhere to international standards, including ISO 27701 for privacy information management, and align with guidelines from FinCEN and FATF for anti-money laundering (AML) compliance. By integrating zero-knowledge proofs, the system allows financial institutions to verify identities without accessing sensitive personal data, protecting user privacy while meeting regulatory requirements.
The trials include decentralized identity technology that utilizes blockchain-based credential verification and biometric liveness detection to enhance security and ensure that only authentic users access services. Privacy-preserving data-sharing protocols enable secure information handling during transactions, supporting confidentiality in line with data protection standards. Additionally, the system’s cross-border regulatory compliance features streamline operations across different jurisdictions.
Expected to conclude by mid-2025, the trials represent a step toward secure, compliant cross-border financial services that prioritize both privacy and regulatory standards.
Source: ID Tech
November 11, 2024 – by the Mobile ID World Editorial Team
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