Australians will have to hand over their drivers licence to Facebook to use its new currency, as local regulators tell the social media giant they are "actively watching" the new platforms plans to sweep into the market as early as next year.
The Australian Securities and Investments Commission urged the $US540 billion company to "come and talk to us" after Facebook and a consortium of 26 companies announced plans to go after the global financial system through its own crypto currency, the Libra.
The Reserve Bank is also closely watching developments. The Libra's accompanying digital wallet, Calibra, is expected to clash with the RBA's $1 billion new payments platform designed to eliminate transfers through cumbersome BSBs and account numbers.
Facebook's platform could circumvent the platform by offering instant payments to more than 2.3 billion users world-wide on Messenger and WhatsApp. Calibra could also be used in bricks-and-mortar stores and by non-Facebook users as its own "pay-pass" style system after cash is transferred from conventional bank accounts.
Users would have to give the platform government-issued IDs, including drivers licences or passports "so people are who they say they are," according to Calibra's policy documents.
"Facebook and WhatsApp account information are also used when available to verify identity and prevent fraud," the policy states.
To comply with Australia's strict anti-money laundering legislation, the company could also be given access to electoral roll data to verify addresses if it is approved as a financial services provider by regulators.
Australia's financial intelligence unit, AUSTRAC, warned criminal groups will exploit technologies that can be used to launder funds and conceal illicit money from crimes such as drug trafficking.
"Businesses that exchange digital currencies need to consider their obligations under the Anti-Money Laundering/Counter Terrorism Financing program," a spokesman said.
Facebook has been under a tide of regulatory scrutiny both in Australia and overseas after repeated data breaches left millions of users exposed.
The chair of the US House Financial Services Committee Maxine Waters urged Facebook on Wednesday to halt progress on the platform until risks could be established.
"Facebook has data on billions of people and has repeatedly shown a disregard for the protection and careful use of this data," the congresswoman said.
The Office of the Australian information Commissioner said it would review the announcement and encouraged all organisations to build privacy by design into their businesses.
The Australian Securities and Investments Commission said consumers had to be appropriately protected.
"We're actively watching developments," a spokesman said. "We encourage new businesses to come and talk to us if they think they will be providing financial services to Australians."
Facebook maintains the payment system would remain entirely separate from its social media network, which would only be used as a vehicle to transfer cash.
CEO Mark Zuckerberg said the not-for-profit platform would be "decentralised" and run equally by each of its members. The payment ecosystem would allow the companies involved, including Visa and Mastercard, to target developing countries where Facebook is growing but internet payments are less common.
Ernst and Young fellow for trust and ethics Clare Payne said there was an inherent lack of trust in the way big tech brands manage our personal data, "so to seek our finances as well, could be seen as a big ask".
"There is much potential with blockchain and digital currencies, particularly to bring more people into the economy from emerging nations, however we must ensure that these people are protected and the systems in which they transact are trustworthy," she said.
The collaboration between Facebook and the other companies could also come under the scrutiny of the competition regulator. To join the association businesses have to stump up an initial $US10 million investment, have a $US1 billion market value and reach 20 million people a year.
Spotify, Uber and Vodafone are among those who have signed up. Facebook plans on expanding the association to more than 100 by the time it launches in 2020.
The Australian Competition and Consumer Commission said it was aware of the announcement and will "monitor developments to see if any other competition concerns arise".
- With Colin Kruger
- SMH/The Age