The Legal Regulation of Digital Identity Verification Services in the Saudi Financial Sector

(An Analytical Study)

Abstract

This analytical study aims to explore the legal regulation of digital identity verification services and their impact on the financial sector in the Kingdom of Saudi Arabia. The study provides a detailed examination of digital identity, its fundamental components, and the technical mechanisms used for its verification, with a focus on the role of national platforms such as the National Single Sign-On (Nafath). It highlights the substantial benefits these services offer the financial sector, including enhancing operational efficiency, improving the customer experience, and supporting compliance with anti-money laundering and counter-terrorism financing requirements. Additionally, the study analyzes the existing legal and regulatory framework governing these services, focusing on policies and regulations issued by the Saudi Central Bank (SAMA), particularly the "Electronic Know Your Customer (E-KYC) Policy," and other relevant national legislation such as the Personal Data Protection Law, the Electronic Transactions Law, and the Anti-Cyber Crime Law.
The study addresses the legal risks and challenges associated with implementing digital identity verification services, including issues of legal liability arising from technical errors or security breaches, challenges in protecting the privacy of sensitive customer data, ensuring information security, and achieving a balance between facilitation and control. The study also reviews the challenges facing the current legal environment, such as the need for more specialized regulatory frameworks to keep pace with rapid developments in this field. The study concludes by presenting a future vision for developing an integrated and flexible legal framework that supports innovation in digital financial services while ensuring the highest levels of security, reliability, and protection of customer rights. It offers specific recommendations to enhance the legislative and regulatory environment, ensuring alignment between the strategic goals of Saudi Vision 2030 and the requirements of financial stability and digital security.