Question 1

What identity verification standard must US financial institutions follow in 2026?

Accepted Answer

The primary technical framework is NIST SP 800-63-4 (August 2024) for identity assurance levels. For BSA/AML compliance, FinCEN's Customer Identification Program rules under 31 CFR §1020.220 govern document-based and non-documentary verification. IAL2 is the de facto minimum for remote account opening at regulated financial institutions.

Question 2

Does the US have an equivalent to the EU's EUDIW?

Accepted Answer

Not yet at the federal level. The closest equivalents are Login.gov (federal agencies) and state mDL programs operating under ISO/IEC 18013-5. A federal digital identity framework is under discussion in Congress but no legislation has passed as of April 2026.

Question 3

What is the Corporate Transparency Act (CTA) and who must comply?

Accepted Answer

The CTA requires most US companies (LLCs, corporations, LPs) formed or registered in the US to report beneficial ownership information to FinCEN. Entities with over 20 full-time employees, $5M in gross receipts, and a physical US office are exempt. Penalties for willful non-filing: civil fines of $591/day and criminal prosecution.

Question 4

How does OFAC screening integrate with digital identity verification?

Accepted Answer

OFAC screening and identity verification are separate but sequential steps. Identity verification establishes who the customer is; OFAC screening checks that identity against the SDN and other restricted party lists. Both must be completed before account opening or transaction processing. Automated tools can perform both in real time.

Question 5

Which states have the strictest biometric privacy laws businesses must know?

Accepted Answer

Illinois (BIPA), Texas (CUBI), and Washington (My Health My Data) have the most stringent requirements: written consent before collection, retention limits (typically 1-3 years), prohibition on selling biometric data, and private right of action in Illinois. Non-compliance with BIPA has resulted in settlements exceeding $650 million (Facebook, $550M; Google, $100M).

Question 6

Is biometric verification required for KYC compliance under US law?

Accepted Answer

Biometric verification is not universally mandated for KYC under US federal law. The FinCEN CIP rule (31 CFR 1020.220) requires identity verification but permits both documentary and non-documentary methods — biometrics are one compliant non-documentary approach. Biometric verification becomes effectively required where a financial institution's internal risk assessment determines that remote onboarding of high-risk customer segments demands it, or where a specific state regulator mandates a particular assurance level for digital onboarding.

Question 7

Does BIPA apply to banks and financial institutions?

Accepted Answer

BIPA Section 25(c) provides an exemption for financial institutions subject to GLBA (15 USC §6801 et seq.) and their affiliates and service providers that are themselves subject to GLBA. Traditional banks, credit unions, broker-dealers and other GLBA-covered entities generally fall within this exemption. However, fintech companies, independent identity verification vendors, and technology providers that are not subject to GLBA are not exempt and face full BIPA obligations — including the private right of action at $1,000–$5,000 per violation under 740 ILCS 14/20. Institutions should verify exemption status at the vendor level, not just the institutional level.

Question 8

What is liveness detection and why is it necessary?

Accepted Answer

Liveness detection verifies that the biometric sample comes from a physically present person, rather than a photograph, mask or deepfake. Without this layer, a facial verification system can be defeated by a printed photo or a recorded video. ISO/IEC 30107-3 Levels 1 and 2 are the market reference standards for presentation attack detection. NIST SP 800-76-2 references liveness requirements for PIV-compliant systems. For FinCEN CIP purposes, the absence of liveness detection in a remote digital onboarding flow creates a documented gap in the risk-based identity verification methodology.

Question 9

How should biometric templates be handled under applicable US law?

Accepted Answer

Under BIPA Section 15(e), biometric data must be stored, transmitted and protected using a reasonable standard of care at least as protective as the standards applied to other confidential and sensitive information. Templates must be destroyed when the initial purpose for collection has been satisfied or within three years of the individual's last interaction with the private entity, whichever comes first (BIPA Section 15(a)). For NY DFS-covered entities, biometric records are nonpublic information under 23 NYCRR 500.01(g), requiring encryption at rest and in transit and access controls. Because a compromised biometric template cannot be changed, template storage controls require a higher standard of care than those applied to standard personal data.

Question 10

Is there a federal biometric privacy law in the United States?

Accepted Answer

As of April 2026, there is no comprehensive federal biometric privacy statute in the United States. Legislative proposals including the American Data Privacy and Protection Act (ADPPA) have been introduced in Congress but have not been enacted. The regulatory landscape remains a patchwork of state laws — with Illinois BIPA as the most aggressive — supplemented by sector-specific federal requirements (BSA/FinCEN for financial services, FTC Section 5 for unfair and deceptive practices, and HIPAA where biometric data intersects with protected health information). Organisations operating across multiple states should maintain a state-by-state compliance matrix updated for new legislation, which is advancing rapidly.

Data

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