Use of Digital ID in MLRs: The Long Overdue KYC Transformation

For years, businesses have wrestled with Know Your Customer (KYC) and Anti-Money Laundering (AML) checks that are slow, expensive, and frustrating for customers. Endless form filling, repeated document uploads, and manual reviews drive up costs and abandonment rates, while fraud risks remain high.

The UK Government has confirmed that it will publish guidance on the use of digital IDs to comply with the Money Laundering Regulations (MLRs) later this year. This move is set to provide long-awaited clarity in KYC and AML use cases. It will be the catalyst for simpler, faster, and more secure onboarding — reducing friction for customers and costs for businesses.

The building blocks for a modern KYC process are already in place

The expected guidance comes at the back of a series of key policy and regulatory updates:

• Data (Use and Access) Act – providing digital ID with a statutory footing, giving businesses confidence in its legal credibility.
• Office for Digital Identities and Attributes (OfDIA) – established to oversee and regulate Digital Verification Services (DVS), ensuring trust and accountability.
• Digital Identity and Attributes Trust Framework (DIATF) Gamma – introduces digital ID wallets, which will allow individuals to securely store and share verified credentials such as identity, age, and address.

Taken together, these foundations simplify how individuals and businesses interact, clearing the path for mainstream adoption of digital ID.

The missing piece: guidance on MLR use cases

Electronic sources of ID evidence are already permitted in the MLRs, but they don’t explicitly reference the UK’s new Data Act or the DVS providers it enables, and neither does the current guidance from industry groups such as JMLSG. In the absence of clear-cut guidance, while forward-thinking and innovative businesses have been willing to connect the dots and explore digital identity solutions, the majority, however, have continued relying on conventional forms of identity verification — even if that meant higher costs, slower onboarding, and greater friction for their customers.

The forthcoming guidance is designed to change that. It follows on from HM Treasury’s Consultation on Improving the Effectiveness of Money Laundering Regulation, to which OneID® also responded.

By clarifying how digital identity can be used in regulated checks, the guidance will remove a long-standing barrier to adoption and give businesses the confidence to embed digital ID at scale, knowing that their approach aligns with compliance requirements.

Prepare for the new era of KYC with OneID®

OneID®’s bank-based digital ID checks revolutionise KYC processes. It is document-free and can be completed in under 12 seconds — by enabling individuals to reuse their identity data, which has been thoroughly verified and securely stored by their bank — in a completely digital end-to-end journey.

What makes digital ID checks by OneID ground-breaking in KYC and AML use cases is that it connects to multiple data sources to prove ID to high UK standards, and checks fraud status, PEPs (Politically Exposed Persons) and Sanctions lists – all via a single secure API call. So, businesses get a complete picture of their customers in an instant, without making them scan multiple documents.

5 ways digital ID checks using OneID® can help you

1. Minimise the risk of deepfakes and AI-driven fraud by eliminating the need for document uploading or face scans
2. Meet identity assurance up to a High Level of Confidence for GPG45 profiles
3. Get the 2+2 evidence required for Customer Due Diligence in KYC and AML use cases by referencing multiple data sources in a single seamless journey.
4. Identify compromised identities or those linked to suspicious financial behaviour
5. Capture full KYC metadata on sources of evidence for record keeping

Digital ID in KYC: Why your business would love it

With clear rules in place, businesses, especially in financial services, can unlock tangible benefits when onboarding customers.

• Speed up onboarding – verify customers in seconds and cut abandonment rates.
• Differentiate on experience – deliver a seamless experience that stands out.
• Lower costs – reduce the cost incurred from manual reviews and paper-based processes.
• Drive Operational efficiency – streamline checks to free up teams to focus on higher-value tasks.
• Minimise the data you store – store only the data you need, and nothing more, with a document-free process that simplifies your GDPR compliance.  
• Accelerate digital transformation – deliver a completely digital journey that lines up with the modern digital experience you want to deliver.

2025, the year that transforms KYC and the UK’s digital ecosystem

As mentioned earlier, throughout 2025, there have been significant regulatory updates that lay the foundation for wider adoption of digital identity verification in the KYC process. With the Data (Use and Access) Act giving legal weight to digital identity, the DIATF Gamma version introducing identity wallets, and the forthcoming government guidance on MLR use cases, the digital identity ecosystem is moving rapidly from promise to practice.

At OneID®, we’ve been at the forefront of these developments — not only by delivering innovative digital identity verification solutions that simplify compliance and onboarding for businesses, but also by contributing our expertise to help shape a stronger, more secure digital ecosystem for everyone. 

Prepare to transform your KYC and CDD processes with the fastest and easiest digital ID checks. Get in touch with our team today to understand what it could mean for your business.  

About OneID®

OneID® is the only UK Identity Service that uses bank-verified data to create absolute certainty between a business and its customers in a fast, simple, secure and truly digital way.

Along with bank-verified data, we also offer businesses the flexibility to choose from trusted data sources, like mobile network operators, government identity documents, and our own digital identity wallet—depending on the business and compliance needs they have to meet.

OneID®’s real-time verification solutions balance digital ease with the strongest counter-fraud measures. It seamlessly blends into the digital habits of today’s customers, enabling businesses to verify 98% of UK adults with minimal friction and maximum confidence.

In addition to identity verification, OneID® simplifies age verification, Direct Debit setup and customer and employee onboarding. By streamlining these processes, OneID® partners with businesses to implement key regulations like the Online Safety Act, reduce operational costs, improve customer engagement, and drive growth.

OneID® is certified under the UK government's Digital Identity and Attributes Trust Framework (DIATF), FCA-regulated, and a B Corp business committed to making the digital world safer. Headquartered in the UK, we’ve brought together experts in Digital Identity, Payments, Banking, Technology, and Government to help businesses build trust and security at scale.