The Interledger Community 🌱: pourya

Trust-based Banking — ILF Grant Final Report

pourya — Fri, 28 Nov 2025 15:48:30 +0000

Project Update

Trust-Based Banking is a research initiative focused on exploring the technical and legal pathways for granting undocumented residents access to essential banking services. Currently, in the Netherlands, only individuals with a social service number (In Dutch: BSN) are permitted to open a bank account. In the initial phase as described in the progress report, we compared different identification systems, looking at models in cities like New York, Barcelona, and Zurich, and made a Dutch prototype Matrix¹. Key findings from this research showed that most people actually possess documents to prove their identity, and local NGOs and stakeholders in Amsterdam are willing to vouch for residency and long-term connections to the city. We also found that the Dutch AML law (Wwft) offers flexibility, stating that identity verification can use documents, data, or information from a "sufficiently reliable means of identification" not just passports, which opens up the path for an alternative Know Your Customer (KYC) solution than what already exists.

We assessed whether community-based vouching could provide access to financial services in compliance with Dutch Anti-Money Laundering (AML) and KYC regulations. Along the way, and in alignment with the Interledger Foundation team, we have shifted the focus of the project from access to banking to the path to registration. This shift happened because we determined that registration is the first crucial step towards access to banking and essential financial inclusion. We have looked at cases such as The Residence Scheme for Surinamese Former Dutch Nationals (In Dutch: Suriname regeling) where a temporary scheme successfully provided residence permits to those who had lost their Dutch nationality, requiring them to prove at least 10 years of residence in the Netherlands including unofficial evidence such as old medical letters, rent receipts, school records, or statements from landlords and community organisations to prove their long-term residence.

In our research we worked out a prototype based on a lived experience, called Rea’s Path to Trust-Based Financial Access. This prototype shows how an underdocumented resident, Rea, can potentially achieve access to basic financial services using alternative evidence such as community-based validation. Rea uses a points-based validation matrix to verify her identity and residency using existing documents and endorsements from local NGOs, which are reviewed through a standardized validation matrix at the custom KYC desk.

At last, we have prototyped a demonstrator². This demonstrator showcases an end-to-end trust architecture using verifiable credentials and community vouching. It consists of several sub-applications, including the HTR Desk for creating and managing client dossiers and calculating points, and the Here To Register (HTR) Wallet for clients to store and selectively share their verified credentials. This software is designed in such way that the underdocumented person retains full control over who sees their data. You can see the walkthrough³ of the demonstrator in the reference section.

Project Impact & Target Audience(s)

The core impact of this project is to examine and experiment alternative, trust-based routes for underdocumented migrants to access essential services like banking. This work aimed to inspire local authorities, municipalities, and NGOs with alternative methods for inclusion. The research documented international models, such as IDNYC, and explored community vouching systems operating in other European cities. We established a path for other researchers to expand on this research. We developed the Here to Register (HTR) software prototype, which acts as a modular, end-to-end demonstrator of a custom KYC system for underdocumented people. This demonstrator provides a framework for future implementation and for advocacy.

Progress on Objectives, Key Activities

The Residence Scheme for Surinamese Former Dutch Nationals (In Dutch: Suriname Regeling)

The Residence Scheme for Surinamese Former Dutch Nationals was created to offer a residence permit to people who were born as Dutch citizens in Suriname before its independence in 1975, but who lost their Dutch nationality at that moment. Many of them had lived in the Netherlands for years without papers and were unable to access basic rights. A key requirement was proving at least 10 years of residence in the Netherlands. Because many lived undocumented, they often had no official registrations. Instead, they had to collect alternative evidence: old medical letters, rent receipts, school records of their children, bank statements, or statements from landlords, employers, churches, or community organisations. These pieces together formed a picture of their long-term presence in the country. People had to physically register at the registration desk, which was specifically opened only for this group, during January- June 2025, by the Amsterdam based NGO ASKV. The caseworkers at this desk had to validate all these documents by hand and support the applicants to gather enough proof of identity and residency for qualification. For those who qualified, the scheme finally offered legal security, access to essential services, and recognition after decades of living in uncertainty.

Developing Rea’s Journey and the Custom KYC Framework

We have developed a lived experience called Rea’s Path to Trust-Based Financial Access. The Journey prototype⁴, demonstrates how an underdocumented resident, Rea, can achieve access to basic financial services through community-based validation instead of relying on state IDs. The scenario shows Rea using a points-based system, inspired by IDNYC, to verify her identity and residency. This process uses a combination of official documents and endorsements from local NGOs and public services, which are reviewed through a standardized validation matrix at the HTR Desk.

Validation of the Matrix and Trusted Partners

We reviewed the developed Matrix with five staff members from various NGOs who have experience with client intake procedures and documentation. The discussions focused solely on documents that demonstrate a connection to the city (residency), not identity. A key finding from these discussions was that it is very difficult to verify the authenticity of documents issued by other organisations without an official stamp or verification mechanism. Therefore, we returned to the drawing board and designed a new validation system centred on trusted partners in a local context. These trusted partners can issue a validation, checking information directly in their own registration systems, and then issue a QR code that, when scanned, reveals only essential data. When a person collects a set number of QR codes, their total score in the Matrix can be validated at the registration desk of the new foundation. This model ensures the underdocumented person retains full control over who sees their data.

Findings on Document Verification Technology (Sarah Habib's Research)

Researcher Sarah Habib conducted a study⁵ focusing on different identification software tools available for document verification, using anonymized case files. This study, summarized in the report AML/KYC Software Landscape, investigates how organisations can comply with European and Dutch AML/KYC regulations when registering undocumented individuals. The conclusion was that because traditional systems often reject refugees and undocumented people, an inclusive, hybrid approach is required, which combines technological precision with human judgment. The research found that Keesing Technologies (https://www.keesingtechnologies.com/) emerged as the most suitable primary provider. This is due to Keesing's experience handling documents held by undocumented people and its cooperation with Dutch authorities. However, the report also emphasizes that Keesing alone is insufficient, and other companies could assist with biometric verification (like Simprints and IDEMIA) or quick online verification (like Jumio and Veriff). The report also stressed that success depends on collaboration among legal experts, technical teams, and people who understand the undocumented community.

Here to Register demonstrator

We developed the Here to Register (HTR) software prototype², which serves as an end-to-end demonstrator of a custom KYC for underdocumented people. This demonstrator showcases an application using verifiable credentials, community vouching, and secure document validation, composed of four loosely coupled applications that communicate only over HTTP.

The core components developed include:

HTR Desk Application: This is the main application used by case workers for intake, dossier creation, and managing clients. It includes structured identity and residency evidence collection, automatic points calculation based on a configurable document matrix, and checklist-driven verification. The Desk handles the issuance of the Verifiable Credential (HTR Credential), which is signed deterministically using Ed25519 and JCS canonicalization.
NGO Community Vouching SPA: This standalone app simulates how NGOs can provide trusted attestations about individuals they know. It generates Community Vouching VCs signed with each NGO’s key and provides QR/link delivery for wallet import.
HTR Wallet (Client-side Demonstration Wallet): This lightweight, browser-based wallet allows clients to generate a DID, store their credentials (including the HTR credential and NGO vouching credentials), verify signatures, and selectively share credentials with the Desk or the Bank. The wallet illustrates the privacy-preserving approach where clients maintain custody of their data.
Mock Document Verification Service: This standalone service simulates automated passport/ID document verification, mimicking services like Keesing. It allows case workers to simulate checks for security features, MRZ validity, and RFID integrity.
Demo Bank (Bank Onboarding SPA): This minimal banking portal acts as a relying party, demonstrating how a service provider can integrate the system. It requests the HTR Credential via QR, verifies the incoming credential, pre-fills the onboarding form, and creates a mock bank account.

This graph depicts different modules of the prototype and how keys are issued and verified.

The repository structure shows that all applications are standalone. The code for the demonstrator, including documentation on how to set up the development environment, is available in the repository. You can find the code here².

Communications and Marketing

We gave a presentation to the sounding board/advisory group of Amsterdam on our findings.
We held meetings held NGOs across the Netherlands to present the project and to validate the Matrix.
We networked in Brussels with European Network Against Racism (ENAR) and PICUM, and discussions with other European NGOs to strengthen international advocacy.
We have exchanged knowledge with The Hague University of Applied Sciences and talked about the possibility to use HTR as a use case in their curriculum.
We held discussions with DURF (Department of University Relations and Fundraising in Vrije Universiteit Amsterdam) regarding future collaboration.

What’s Next?

The absence of access to a bank account might appear to be merely a practical problem, but in fact touches upon fundamental human rights. The next steps in our research therefore primarily focuses on Article 11 of the ICESCR, which obliges states to take measures to ensure that everyone has an adequate standard of living, including access to basic necessities (food, clothing, and housing). In a highly digitalized economy, financial access (including a payment account) could be seen as a prerequisite for providing for one’s own livelihood.

At the same time, existing Dutch and EU-implemented legislation on financial integrity, such as the Anti-Money Laundering and Counter-Terrorist Financing Act (Wwft), poses an obstacle: banks may not open an account without verifying a legally recognized identity document, something undocumented people often do not possess. This creates tension between international human rights obligations and national compliance with anti-money-laundering regulations.

The research therefore addresses four questions:

What obligations arise from Article 11 ICESCR with respect to access to basic services for undocumented people?
To what extent is access to a bank account a necessary link in ensuring an adequate standard of living in a digitalized society?
What obligations do banks have under Directive (EU) 2014/92 and Directive (EU) 2015/849?
How does the interplay between international human rights obligations, European financial regulation, and national implementation practices (including the Wwft) affect undocumented people in the Netherlands, and where do legal bottlenecks and potential solutions emerge?

In addition, further studies can examines the extent to which Dutch institutions have room to create solutions within the existing legal framework and to establish an independent administrative authority responsible for identity verification of undocumented people.

Furthermore, future attempts can collaborate with initiatives such as HealthEmove (https://healthemove.org/) to apply their learnings in areas such as customer journey in establishing HTR.

Community Support

The ILF ecosystem can help make visible the problem concerning people who lack access to banking in the Netherlands/Europe and promote further research on this topic as described in the future work section.

Relevant Links/Resources

Dutch prototype Matrix, https://gitlab.waag.org/code/tbb_htr/-/blob/main/docs/matrix-undocumented-hts.pdf ↩
Prototype code in Gitlab,https://gitlab.waag.org/code/tbb_htr ↩
Walkthrough Demonstrator, https://gitlab.waag.org/code/tbb_htr/-/blob/main/docs/walkthrough.md ↩
Rea's Path to Trust-based Financial Access,https://gitlab.waag.org/code/tbb_htr/-/blob/main/docs/matrix-undocumented-hts.pdf ↩
Habib AML KYC Software Landscape,https://gitlab.waag.org/code/tbb_htr/-/blob/main/docs/AML_KYC%20Software%20Landscape_Habib.pdf ↩

Trust-based Banking — ILF Grant Progress Report

pourya — Wed, 05 Feb 2025 14:18:58 +0000

Brief Project Description

The initiative also aims to adapt the IDNYC Matrix Identification System, successfully implemented in New York City, to the Dutch context. Additionally, the project seeks to develop a prototype wallet incorporating Interledger Protocol (ILP). A controlled pilot, in collaboration with the Municipality of Amsterdam, will be conducted to evaluate the system as part of the study.

Project Update

In the first part of our research projects, we have worked on the following activities:

Matrix identification system

We worked on comparison studies of different matrices used in different cities for registration of (undocumented) citizens. We looked at Barcelona, Lisbon, Zurich, New York and Dublin and their registration systems.

We translated the documents used in other cities to possible available documents in the Dutch context. From here we created a Dutch prototype. We made profiles of eight undocumented citizens in Amsterdam with a different background and checked the prototype matrix for their situation.

Key findings:

Most people have documents to prove their identity. Only a few individuals don't have official documents.
Stakeholders in the city of Amsterdam are willing to vouch for residency and (long term) connection to the city. NGO’s have in their own digital databases a lot of information about individual undocumented people and can trace back connections
In all cities municipal or local authorities were part of the registration process in a way. They play a huge part in validating documents. A good example of community vouching at the municipal level involves free transportation programs for children. To ensure exclusivity, municipalities collaborate with NGOs in the Netherlands to provide a dummy BSN for undocumented children, enabling them to access these services.

Table below shows our part of our proposed identification matrix:

No	Migrant Category	Types of Documents (Primary)	Secondary Documents
1	Rejected Asylum Seekers	Passports, judicial decisions (in Dutch: Beschikkingen), Biometrics	Leefgeld from municipality, Letter from COA or municipality, Hospital invoices, Medical records, Letters from NGOs
2	Overstayers or Irregular Migrants	Passports, Biometrics, Consular ID, Birth certificates (apostilled)	Rental agreements, Utility bills, Remittance receipts, Bank statements
3	Illegal Entrants	Passports, Birth certificates, National IDs, Expired residence permits	Utility bills, Hospital bills, Medical records, Shopping receipts
4	Victims of Human Trafficking	Passports	Utility bills, Hospital bills, Medical records, Shopping receipts
5a	Undocumented Children (Parents with Irregular Status)	Birth certificates, Passports	GGD records, Diplomas & school records, Education number, Medical records
5b	Undocumented Children (Parents in Asylum Procedures)	Birth certificates issued by the municipality
6	Stateless Individuals	None	GGD records, Diplomas & school records, Education number, Medical records

Regulatory obstacles and legal space

One of the most critical requirements for this project is compliance with Know Your Customer (KYC) regulations. However, undocumented individuals often lack the necessary documents to fulfill these legal obligations. Another concern is privacy as protecting the sensitive information of undocumented individuals is paramount. Like KYC, Anti-Money Laundering (AML) compliance is mandatory, but implementing an AML system from scratch presents significant complexities. On the other side, the Dutch law Wwft (or translated to: anti-money laundering and anti-terrorism financing act) requires institutions to establish and verify the identity of clients using reliable documents or sources. While it is often assumed that this can only be done with passports and ID cards, the law offers more flexibility. It's mentioned that

'Verification of identity must be carried out using documents, data, or information from a reliable and independent source. [...] For natural persons, these include, for example: a valid passport, a valid Dutch or other EU member state-issued identity card, a valid Dutch or other EU member state-issued driver’s license, travel documents for refugees and foreign nationals, foreign national documents, or a sufficiently reliable means of identification ' (Reference in Dutch).

For undocumented individuals, this flexibility is crucial as it enables them to use alternative, but reliable, means to prove their identity. Beyond the mentioned documents, alternative methods are also allowed as long as they are reliable and independent. This opens the door for innovative solutions, such as a KYC desk working with a matrix of alternative documents and statements, for instance, proof of residence or identity declarations.

Technical investigation

The account servicing backend is another critical component, responsible for managing user accounts for the wallet. Building such a system from scratch would require a considerable investment of time and resources. To address this, we have identified MifosX, an open-source core banking solution that meets all the requirements for a pilot project and offers much more. MifosX even includes reference implementations for wallet applications, making it a versatile option.

Other possibilities include adopting a white-labeled version of an existing account servicing solution or partnering with an established bank or wallet provider. If external partnerships are not feasible, MifosX remains the most logical choice for the pilot phase.

Establishing connectivity with payment networks and protocols is another significant challenge. Once the account servicing backend is operational, we must determine with whom we will execute transactions and which protocols will be employed. Ideally, the goal is to integrate with local, European, and international banking networks such as TARGET2, SEPA, and SWIFT, using standards like ISO20022. These are the networks used for regular transactions and payments in the Netherlands. However, gaining direct access to these networks requires extensive regulatory approval, which is unlikely to be achievable within the scope of the initial pilot.

As a solution, we propose using Interledger Protocol (ILP) payments. GateHub’s sandbox could serve as a bridge to traditional networks, and connectors like Rafiki, which integrates ILP, can facilitate this process. GateHub is currently the only node supporting euro payments for Interledger, making it a practical option. Additionally, since MifosX supports ISO20022, we have a clear path for further development once compliance with legal requirements is achieved.

Key findings:

Explored privacy-preserving technologies such as IRMA for identity verification.
Identified Tazama, an open-source transaction monitoring system, as a candidate for AML compliance.
Researched options for managing accounts, identifying MifosX as the most viable open-source banking solution.

Project Impact & Target Audience(s)

Through our research, we have gained valuable insights into the meaning and various forms of registration, as well as the latest digital technologies available for secure identification. Additionally, we explored different models of community vouching and assessed how they could be implemented in the Netherlands.

A key impact of our work has been initiating conversations with NGOs and other stakeholders like local municipalities and banks about the systemic exclusion of undocumented individuals—helping to break the taboo surrounding this issue.

Communications and Marketing

Shared updates about the project and key takeaways from the summit through our website and LinkedIn.
- https://waag.org/en/project/trust-based-banking/
- https://www.linkedin.com/posts/pouryaomidi_for-english-scroll-down-afgelopen-weekend-activity-7257360973882167296-zd6b?utm_source=share&utm_medium=member_desktop
- https://www.heretosupport.nl/portfolio-collections/projects/trust-based-banking
- Animation video about community vouching with stakeholders in the Netherlands, to be launched beginning of February.
Engaging with municipal departments and NGOs across the Netherlands to build awareness and support for this project.

What’s Next?

The main focus of the next phase of the project is to develop a custom KYC and validate our legal assumptions which can be served as a service for banking solutions within the ILP ecosystem and traditional banking. Developing a wallet application from the ground up is not a practical option. For the pilot, we propose either leveraging an existing application (potentially white-labeled) or building upon open-source solutions. MifosX provides a reference wallet application that could be customized to suit our needs. The focus will be on integrating the custom KYC system into the onboarding process of the Account Servicing Entity (ASE) or the wallet itself. In this phase, we focus on setting up our own Account Servicing Backend (ASB) and developing a wallet using the MifosX platform. This pilot serves a limited number of clients and prioritizes the development and validation of our custom KYC solution. Integrating this KYC process into the ASB and wallet is a key deliverable for this phase. Payments are executed through ILP using the GateHub sandbox, providing a controlled environment to test and refine the system.

Some important questions we need to validate are:

How do the requirements under the Dutch Anti-Money Laundering and Anti-Terrorist Financing Act (Wwft) align with GDPR’s principle of data minimization?
Does the bank have a legal basis to request and retain certain identity documents if a person’s immigration status is unclear?
Does GDPR (and Dutch implementing legislation) provide the same data protection rights to undocumented migrants as it does to Dutch citizens or legally resident foreigners?

Planning

February

Form a cross-departmental municipal team to examine the Matrix Identification Prototype.
Develop legal validation questions for tax law, privacy, KYC, and fraud detection.

March - April

Strengthen European partnerships with PICUM and ENAR for international advocacy.
Conduct co-creation sessions to refine the custom KYC framework.

April - June

Build and iterate the wallet prototype in an agile manner.

July - September

Launch pilot phase to validate the custom KYC solution with a bank and a focus group.
Develop a plan for the setting up a custom KYC Desk to offer identification verification system to financial institutions.