On September 9, 2022, FinCEN issued a summary of the FDIC and FinCEN Digital Identity Tech Sprint (Tech Sprint) Demonstration Day which happened on April 4, 2022. Early in 2022, the FDIC and FinCEN announced a Tech Sprint to develop solutions for financial institutions and regulators to help measure the effectiveness of digital identity proofing—the process used to collect, validate, and verify information about a person.
The teams’ solutions attempted to answer this Tech Sprint challenge question: “What is a scalable, cost-efficient, risk-based solution to measure the effectiveness of digital identity proofing to ensure that individuals who remotely (i.e., not in person) present themselves for financial activities are who they claim to be?”
Solutions presented by the team must include increasing efficiency and account security; reducing fraud and other forms of identity-related crime, money laundering, and terrorist financing; enabling technology accessibility; and fostering customer confidence in the digital banking environment. The Tech Sprint teams proposed solutions that followed one of three unique approaches: a) tools that would measure the effectiveness of identity proofing systems, b) development of a scoring methodology for remote identity proofing, and c) envisioning an identity provider consortium or platform. Some of them attempted to combine more than one of the three elements, articulated roles for both the public and private sectors, called for partnerships, and identified funding mechanisms.
Eight teams participated in the demonstration day with the following proposed solutions:
Team 1: Identity Ninjas proposed a free, open source identity-advisor tool to help financial institutions identify digital identity proofing process gaps and provide customized, actionable recommendations.
Team 2: Team Manatoko proposed a shared identity provider platform to orchestrate technologies and frameworks through enriched identity data obtained from multiple public and private sources shared across banks, money service businesses, and virtual asset service providers.
Team 3: Team DNS proposed establishing a trusted credential network with a shared governance model, overseen by a non-profit or a public-private partnership (PPP), and technical approach for pilot through a regulator-sponsored sandbox.
Team 4: Team ConfIDence, who were recognized in the Creativity category, proposed a regulatory-sponsored identity verification scorecard and testing sandbox environment to drive innovation in effective and compliant identity proofing for remote onboarding over digital channels.
Team 5: Team This is Me proposed a two-step approach with a measurement matrix and checklist to measure the effectiveness of identity proofing mechanisms and creation of an examination program to evaluate solutions.
Team 6, recognized in the Market Readiness category, proposed an identity proofing solution scoring system based on various attributes, and encouraged financial institutions to use direct source verifiable credentials (VC) and fraud data in identity proofing processes.
Team 7 proposed a risk-based, multi-variate digital identity proofing approach leveraging a shared collaborative framework with four components: 1) an onboarding questionnaire-based workflow to determine the customer’s risk rating; 2) a multi-variate/cross-validation measurement to determine the legitimacy of the digital identity; 3) collaborative confirmation via a central multitenant data clearinghouse for risk detection; and 4) perpetual improvement of the data set.
Team 8: Team Heimdall, who were recognized in the Effectiveness/Impact Category, proposed a creation of a collaboration lab intended to allow institutions to collaborate and share threat and vulnerability information; validate data against fraudulent identities and suspicious behavior; and improve upon alerts, red flags, and indicators of compromise using decentralized data and distributed algorithms.
FinCEN’s full press release can be found here.
