The Treasury has issued important new guidance confirming that only certified digital verification services can be used to meet identity verification obligations under the Money Laundering Regulations 2017 (MLRs).
Under the guidance, regulated firms must use digital verification services (DVS) that are:
- Certified against the UK Digital Identity and Attributes Trust Framework (DIATF)
- Listed on the official GOV.UK register of digital identity providers
Services that do not meet both of these requirements cannot be relied upon to satisfy identity verification obligations under Regulation 28 of the MLRs.
As an Authorised Corporate Service Provider registered with a UK anti-money laundering supervisory body, we at Davenports Group operate within the UK’s AML regulatory framework and support regulated businesses with compliant identity verification and onboarding solutions aligned with these standards.
The Treasury has stressed that this guidance supplements but does not replace firms’ wider obligations under the MLRs.
A Major Step Forward for Digital AML Compliance
This is the first time the Treasury has formally confirmed that DIATF-certified digital identity services can fulfil identity verification requirements under the MLRs.
For regulated businesses, this removes a significant area of uncertainty. Firms can now use certified digital verification providers with confidence that identity checks meet the required regulatory threshold.
The guidance clarifies how the UK digital identity framework aligns with the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017.
What This Means for Regulated Firms
Under the MLRs, regulated entities include:
- Accountancy firms
- Law firms
- Banks and lenders
- Estate agents
- Art market participants
- High-value goods dealers
All listed must implement effective policies and procedures to prevent money laundering and terrorist financing.
A core element of this is customer due diligence (CDD), which includes verifying a client’s identity and understanding the purpose and intended nature of the business relationship.
Digital identity solutions allow firms to complete compliant identity verification digitally, enabling clients to securely confirm:
- Their name and address
- Date of birth
- Biometric identity (e.g. facial recognition checks)
This reduces reliance on manual document checks while maintaining appropriate anti-impersonation safeguards.
As a regulated Authorised Corporate Service Provider, we at Davenports Group understand the practical compliance pressures firms face and the importance of maintaining robust, defensible AML processes.
Treasury: Certified Services Are a “Reliable and Independent Source”
The Treasury guidance states:
“Digital identity services certified against the trust framework and listed on the DVS register are considered a reliable and independent source of information, offering an appropriate level of anti-impersonation assurance.”
This provides clear regulatory backing for firms using certified services as part of their customer due diligence processes.
The guidance also makes clear that digital verification services that are not certified and not listed on the DVS register cannot be considered suitable for identity verification under the MLRs.
For firms reviewing their onboarding and AML controls, this creates a clear compliance distinction between certified and non-certified providers.
Digital Identity Supports But Does Not Replace Full Due Diligence
While certified digital identity services satisfy the identity verification requirement under Regulation 28, firms must still:
- Assess the purpose and intended nature of the business relationship
- Conduct ongoing monitoring where appropriate and Maintain records in accordance with Regulation 40
- Regulated entities remain ultimately responsible for ensuring customer due diligence measures are applied appropriately.
Working with a provider that operates within the UK AML supervisory regime adds an additional layer of assurance, governance and regulatory understanding.
Industry Reaction
The clarification has been widely welcomed across the regulated sector, with commentators describing it as a significant step forward for digital AML adoption.
The updated position provides clarity for all sectors subject to the MLRs, giving firms greater certainty when modernising their client onboarding processes.
What Firms Should Do Now
With the Treasury’s position now clear, regulated businesses should:
- Review their current identity verification processes
- Confirm whether their digital verification provider is DIATF-certified
- Ensure the provider is listed on the GOV.UK DVS register
- Assess whether their onboarding partners operate within a recognised UK AML supervisory framework
As an Authorised Corporate Service Provider registered with a UK anti-money laundering body, we work within the same regulatory environment as many of the firms we support in helping ensure a compliant, secure and efficient onboarding processes.
