Credit files may provide identity

In the early stages of planning for new anti-money laundering legislation the federal government gave consideration to a proposal that Austrac would certify third party ID verification services or direct the establishment of a single source of data. These proposals were abandoned, much to the frustration of some industry participants.

One proposal that is still on the boil is to have consumer credit files opened up for ID checking. The Australian Law Reform Commission, which is looking at the rules governing the use of credit files as part of its review of the Privacy Act, has received a number of submissions calling for changes to legislation to allow credit files to be used for this purpose.

Rabobank head of financial services for Australia and New Zealand, Bryan Inch, said: "There are several parties offering electronic databases. We have been exploring options with Veda, UniSys and Salesforce (a CRM and business applications software company). Australia Post has a proposal that involves using a Post Office for presenting documents.

"We have not signed with anyone yet. It is a matter of what works best with our systems and what is going to work best for our customers.

"The issue is what success rate these providers can offer. That is uncertain. Databases require exact spellings, addresses change and so on. If we can only get a 50 per cent success rate we would have to do a lot of extra paper work."

BankWest is going through the same process. The bank is one of the strongest advocates for an extension of the use of credit files for ID checking. If such a system was approved BankWest could introduce an electronic verification system its parent HBOS uses in the UK.

Mark Mullington said ING Direct was close to an agreement with a service provider. "There is a lot of information out there. It is a matter of putting it into a secure format, making the system robust, getting it to operate in real time and having it properly formatted so it is useful for the bank.

"It is very challenging. There was no electronic verification infrastructure in place before AML/CTF came into force. We are all working to create that infrastructure now."

Alison Deitz, a partner at the law firm Deacons, said most financial institutions were struggling with electronic verification. She expects to see banks make full use of the 15 month implementation period from December 12.