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Digital identities - how and why we are where we are, what it's proposed we do about it and whether it will work.

The fintech world is at last waking up to the biggest problem facing real-world businesses: how to perform KYC on customers you will never physically meet and who live lives which do not intersect with your own except for one specific purpose - the provision of a service. Of course, being tech-driven, fintechs are looking for a tech solution and they've even got a name for it - Digital Identities. The world is full of "White Papers" but there are no practical applications nearing real-world testing, so far as we can ascertain. It appears that, as in so many cases, people are starting with the tech and trying to make the problem fit it, rather than looking at the problem and trying to build tech around reality, says Nigel Morris-Cotterill.

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**This article has been updated for spelling, grammar and one or two additions or amendments performed to improve clarity.** 11 November 2019.

Will the great unbanked become the great unidentified?

Those, then, are the options. a global database as proposed by the Basel Institute, many databases containing self-selecting members created within segments of the xTech landscape and patchy but in depth (albeit self-censored) databases by one, several or a combination of social media companies.

Before the idea is dismissed, it's useful to consider that several countries have been talking about central registers of bank account holders. Although the idea was not new in 2012, a paper by the woefully misleadingly named "Tax Justice Network," which actively encourages an agenda of high taxes across the world and action against those who do not fall into line and adopt the principles it approves of, is interesting if one cuts through its political bent and looks at the underlying principles. The paper (link below) " looked into the existing systems of bank account registries and/or bank account reporting obligations of eleven countries (Argentina, Austria, Australia, Denmark, Finland, France, Germany, The Netherlands, Norway, Spain and the United States)." It could have added Sweden which had begun a system of international reporting of offshore assets held by residents of Sweden as early as 1996 in a less well known version of the USA's FATCA which came much later. This particular paper is focussed on practical measures and not on politics and there are a number of measures that, again not new, were worthy of restating. Several of those measures are potentially influential in the development of a global identity system. As always, the most comprehensive and accurate source of data is tax authorities. They know where you live, they know what you do for a living, they know your declared income and accumulated assets and they know, broadly, how you use and spend it. But there are many, many extremely good reasons why this should not, ever, form part of a public register, personal security being at the top of the list. If one could, in an ideal world, integrate tax data with electoral roll data and property registers, then - provided the subject of the enquiry meets certain essential criteria (e.g. owns property) or, in countries where there are formal registers of tenants he appears on one, the creation of a centralised, verifiable database would be, in terms of data, simple but it would be huge in terms of scale.

Would that information be sufficient? What happens about people who, for perfectly good reasons, don't settle (in legal terms) anywhere? I'm not talking about the "perpetual traveller" much loved by dodgy websites promoting alternative passports and easy-in residence documents (hi, Jho Low, yes, I'm talking about people like you and the island citizenship you, it is alleged, managed to sort out for yourself before agreeing to hand over to the USA some USD700 million which you say you did not get from the Malaysian people via the 1MDB project) but of people who just fall between the cracks as life doesn't fall into the patterns that governments expect it to? How would such a scheme work in countries that place considerable restrictions on what those present under a simple work permit can do, which place such stringent controls on opening bank accounts that people don't bother and all manner of other things. Such a colossal scheme would, by its very size have to be rigid and bureaucratic and that means that the great unbanked will become the great unidentified.

There are those who will argue that I'm just being contrary but no, across large parts of the world there are entire populations which have been rendered stateless or have never had citizenship granted and have no rights or protection under significant parts of the national laws. In some cases, their tribes have lived in countries for hundreds if not thousands of years pre-dating those who lay false claim to be the original settlers.

That brings us back to Allen's discussion of each person having a self-sovereign identity.

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