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No ID, No Money

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Marvin A. Tort

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According to NEDA Secretary Ernesto Pernia, as quoted in a newspaper report, about 14% of Filipinos have limited to no access to government as well as financial services for lack of proper identification or proper documentation. And with the President having enacted the law on establishing the Philippine Identification System (PhilSys), this is about to change.

With PhilSys, or the national ID system under Republic Act 11055 enacted in 2018, each and every Filipino — including newborns — will be “registered” with the government and then issued a “National ID” with a specific or unique PhilSys number. This number will be permanent and will be used in a person’s lifetime.

The planned national ID will state one’s full name, gender, date and place of birth, and address, and will be issued to both citizens and resident aliens. Other information on the ID are thumbprints, iris (eye) and face scans, and blood type. Marital status, mobile number, and email address will be optional information.

Registration, which starts with priority sectors this September, for about 110 million people, will run until 2022. Those registered will be given a permanent ID number, and will be issued national ID cards after information submitted are “authenticated.” The ID, which will be issued to Filipino citizens and resident aliens, can be used for public and private transactions.

Mass registration is reportedly planned for July 2020 to June 2022. Early registration will begin this September for “priority segments” such as cash transfer beneficiaries, or poor individuals receiving cash doleouts from the government. To be prioritized as well are people with disabilities (PWDs) and government workers in key areas, according to the Philippine Statistics Authority.

I believe this to be an interesting development, considering how technologies using Artificial Intelligence have brought us to the era of facial recognition and ease of identification, and the use of mathematical algorithms to guess behavior and outcome. Technology has obviously made a lot of everyday things easier, but it has also made us both more vulnerable and more conscious of security breaches.




Considering the sensitivity of personal information to be contained in the national ID, one can only hope that the system to be used will likewise be hack-proof. The possibility of data breach will be a major concern, including data manipulation or alteration, as well as identity theft. And one cannot discount the possibility of “fraudulent” creation of “fictitious” identities.

For sure, with the planned PhilSys ID, we are about to enter the era of “No ID, No Money.” In the case of cash transfer beneficiaries, for sure, it will come to a point that without a national ID, a beneficiary cannot receive money. The same may be required of PWDs and other sectoral groups receiving aid or assistance from the government. Even universal healthcare services may be tied in with the use of the national ID.

In the past, as long as one can present a government-issued ID, then this was considered proper identification. Soon, the same ID must contain biometric information as well, which can be verified at point of transaction through thumbprint and eye/facial scanners. In this line, I suppose local governments will also have access to the national ID system database, for “proper” identification of residents doing local transactions.

Just this week, the Bankers Association of the Philippines also announced that it would launch this year its digital banking ID registry that will pave the way for electronic know-your-customer (KYC) procedures and electronic data storage sharing and exchange among banks. The banking ID registry is expected to help in vetting banking transactions and in identifying clients.

In this line, perhaps mere presentation of a banking passbook will no longer be sufficient for banking transactions in the future. A national ID may be required as well, while banks will likewise have a database of biometric information of clients, to match with the national ID database in case there is need to verify a client’s “true” identity.

Even banks’ automated teller machines (ATMs) can be calibrated to require the entry of a PhilSys number in addition to a PIN, or possibly the swiping of a national ID’s magnetic strip (if any), or a thumbprint or retinal scan particularly for large withdrawals. This can make the process cumbersome, but less prone to fraudulent transactions. Banking and tax transactions can all require the entry or use of a PhilSys ID number.

And then there is the new initiative, as reported in media, to improve “financial inclusion” by using digital technology to bring into the fold of the “formal financial system” about 25 million Filipinos living or working abroad. The initiative aims to get more adults to use banks and online financial services, rather than informal “padala” systems.

Unbanked sectors, usually the poor or those whom Secretary Pernia had referred to as part of the 14% of Filipinos that lack the needed documentation for banking and government transactions, will be encouraged to open bank accounts or make use of “formal” platforms. By “inclusion,” of course, the initiative will also make these unbanked people known, with their identities revealed and their transactions monitored.

The initiative, called IGNITE, is reportedly targeting the “financial access-deficient segment” and aims to provide them basic or entry-level deposit accounts that have no maintaining balances and dormancy fees, and which they can use for financial transactions worth below P50,000. These transactions are seen to consist mainly of payments and remittances. IGNITE’s initiative is also in line with the Bangko Sentral ng Pilipinas target to bring 20% of all local payment transactions onto the digital space by 2020.

This initiative will also help identify all financial transactions that are subject to tax, and make it easier for withholding agents to deduct all taxes due the government. The same initiative, along with the banks’ digital ID registry system and the use of the national ID system in the future, will assist in tax administration and in fighting money laundering.

Couple this with the law to make mobile numbers “portable,” that allows a person to maintain his cellular number for life, and including that mobile number among the information contained in a national ID, then there is really no escape even for those doing financial transactions via mobile platforms.

Truly, it is becoming a digitally connected world. And anything that has a digital footprint can be tracked, monitored, and observed. Soon, even money — actual bills and coins — will be used less frequently since many big banking transactions are mostly done electronically nowadays. Legitimate money transfers are done electronically, even country to country, and rarely physically.

As I had previously noted, back in the day, one needed to physically go to the bank branch to open an account. In turn, one is issued a passbook, and only through that passbook can one transact with the bank. In this sense, your data cannot be hacked, and your money cannot be moved or “stolen” electronically. And, physical money was in the bank vault.

Nowadays, however, a bank doesn’t even need a physical branch to operate. Banking transactions can be done online. Retail payments are also done electronically. With new initiatives, more people will be brought into the “formal” financial system, a banking digital ID registry will be enforced, and a national ID system will soon be in place. Indeed, the era of “Big Brother” watching you and the digital footprints of your money has come.

 

Marvin Tort is a former managing editor of BusinessWorld, and a former chairman of the Philippines Press Council

matort@yahoo.com

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