FinTech Alliance PH is backing proposals from the Philippine government and financial regulators to adopt the national ID system for account onboarding and identity verification, a move aimed at curbing cyber fraud across the financial sector.

"FinTech Alliance.PH is definitely supporting BSP (Bangko Sentral ng Pilipinas) and other government agencies, particularly the Information and Communications Technology and Cyber Crime Investigation Coordinating Center insofar as having to really push for the use of the PhilSys (Philippine Identification System) ID for account onboarding," FinTech Alliance PH Chairman Angelito M. Villanueva told reporters on Tuesday.

The BSP indicated in a draft memorandum issued last week that it intends to require banks and other BSP-supervised institutions (BSIs) to incorporate National ID Authentication Services (NIDAS) into their customer due diligence protocols. According to the central bank, leveraging NIDAS for client verification is expected to strengthen BSIs' know-your-customer procedures while advancing the broader adoption of the national identification system, which was established under Republic Act No. 11055 and has been rolling out registrations since 2021.

Mr. Villanueva also expressed support for the National Telecommunications Commission's proposal to designate the National ID as the sole acceptable identification document for subscriber identity module (SIM) registration.

"As an industry, we're supporting that because there are still many using fictitious IDs that can get prepaid SIMs. We've seen the exponential growth of cyber fraud in the country, and that is just one of so many things in terms of interventions on how to further prevent fraud in the banking space," he said.

Integrating the PhilSys ID is also expected to bolster enforcement of the Anti-Financial Account Scamming Act (AFASA), which took effect in July and grants the BSP expanded authority to investigate and pursue cases involving the use of bank and e-wallet accounts for fraudulent activities, including money muling — a scheme in which accounts are opened using real or stolen identities to funnel proceeds from scams.

"We know that the AFASA law has been in effect since July and of course, we're monitoring its progress and compliance by all the financial institutions and how we could further enhance the implementation because at the end of the day, it's also consumer protection," Mr. Villanueva said.

He noted that the government's promotion of digital IDs through PhilSys stands to benefit the banking industry by streamlining onboarding procedures, an advantage for a financial system that has seen rapid growth in digital payment adoption driven by mobile wallets and fintech platforms.

"I think we're one of the very few countries in the world, where we previously did not have a national ID system, but we have at least 22 acceptable IDs, including primary IDs and secondary IDs. If you are to look at the typical wallet of a Filipino, there are a lot of cards: membership cards, ID cards, but no cash. But now, the push is really going towards having a digital ID, and that will now be based on your PhilSys-issued national ID," he said.

A digital ID can be issued instantly, which would also accelerate the account-opening process at financial institutions. "Without you having to wait for the physical plastic ID, you can avail of the services even with your PhilSys QR code or your paper-based QR PhilSys ID," Mr. Villanueva explained.

"As an industry, especially for the nonbanks, the fintechs, the e-wallets, et cetera, we are all supportive of the idea because at the end of the day, we are united in terms of having to address the major concern pertaining to the proliferation of scams and fraudulent transactions, especially the rise in terms of mule accounts," he added. — A.M.C. Sy