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GAO-01-129R 1 (2000-11-08)

handle is hein.gao/gaobaalne0001 and id is 1 raw text is: United States General Accounting Office Washington, DC 20548 November 8, 2000 The Honorable Alan Greenspan Chairman Board of Governors of the Federal Reserve System The Honorable John D. Hawke, Jr. Comptroller of the Currency Subject: Bank Regulators' Evaluation of Electronic Signature Systems This letter presents the results of our review, conducted as part of our research and development work, of actions taken by the Federal Reserve System (Federal Reserve) and the Office of the Comptroller of the Currency (OCC) in connection with the operations of Identrus, LLC, New York, NY (Identrus). Identrus is a global rulemaking and coordinating body for a network of financial institutions that will act as certification authorities and thereby provide services designed, in part, to verify or authenticate the identity of customers conducting financial and nonfinancial transactions over the Internet and other open electronic networks. To provide these services, Identrus and its network of participating financial institutions will utilize digital certificates and digital signatures in an electronic authentication system based on public key cryptography. The use of electronic signature systems-which include digital signatures-in the financial services industry will likely increase in the future as a result of the implementation of the Electronic Signatures in Global and National Commerce (E-SIGN) Act.2 Since the act promotes the legal validity of electronic signatures, a financial institution may begin to use electronic signatures as evidence of on-line transactions, such as the acceptance of the terms of a credit agreement by the customer. Further, consumers may begin to use electronic signatures to complete on-line transactions, such as opening bank accounts, obtaining credit, or establishing an insurance policy or brokerage account. 1 See Federal Reserve Board Order of November 10, 1999, approving the application of Bayerische Hypo-und Vereinsbank AG, Munich, Germany; Deutsche Bank AG, Frankfurt, Germany; and Stichting Prioriteit ABN AMRO Holding, Stic hting Administratiekanto o r ABN AMRO Holding, ABN AMRO Holding N.V., and ABN AMRO Bank, N.V., all of Amsterdam, The Netherlands, each to retain up to 12.5 percent of the voting interests of Identrus, LLC, New York, NY, and to engage in acting as a certification authority in connection with financial and nonfinancial transactions and other related activities. See also Office of the Comptroller of the Currency Conditional Approval #339 letter dated November 16, 1999, to Bank of America and Citibank, NA, approving their application for Identrus to provide a system infrastructure within which the participants will provide certification authority services and concluding that the proposed activities of Identrus, LLC, are part of or incidental to the business of banking. 2 See P.L. 106-229, which was enacted on June 30, 2000. GAO-01-129R Electronic Signature Systems Page 1

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