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Australia’s Digital ID Bill received royal assent on May 30 to become the Digital ID Act 2024. This act will come into effect on November 20, 2024, establishing a comprehensive government-run digital ID system in Australia.
Key Considerations
The Digital ID Act has four key components that ensure a comprehensive and secure implementation of the digital ID platform:
1. Optional service: The digital ID platform is not a mandatory service that financial institutions must use, but it will provide enhanced security, among other things.
2. Industry agnostic: The act does not target any specific industry, but the platform may be used by any institution so long as it has been approved through the associated accreditation scheme.
3. Accreditation scheme: The Australian Competition and Consumer Commission (ACCC), the designated digital ID regulator, will run the accreditation scheme. Any financial institution interested in using the digital ID platform must be accredited as either an attribute service provider, identity exchange provider, identity service provider or an entity that provides permissible activities in line with the accreditation rules listed in the act. If an entity is denied accreditation, it will not be allowed to participate in or use the digital ID platform.
4. Privacy safeguarding: The digital ID system is government run, which means that all data used on the system will be collected, stored and monitored by a government system. The data used on the system will include basic identity and online activity information.
Why should you care?
The digital ID system will provide enhanced security features and a streamlined identity verification process, which are expected to decrease the administrative overhead costs associated with identity verification procedures. This has potential benefits for companies to more quickly and cost effectively complete anti-money laundering/counter-terrorism financing compliance, know your customer (KYC)/customer due diligence compliance and customer onboarding.
Digital ID platforms have been successfully implemented in many countries worldwide. Notable examples include Estonia and Singapore, where approximately 99 percent and 97 percent of their populations, respectively, have and use a digital ID. Although the Australian Digital ID Act differs somewhat in its specifics, these countries demonstrate a strong use case and adoption rate of digital identification.
