European businesses face digital identity crunch as eIDAS 2.0 and AMLR deadlines loom

LONDON, England — European businesses are preparing for a complex transition in digital identity as two major regulatory changes move toward implementation: eIDAS 2.0, which establishes EU Digital Identity Wallets, and the Anti-Money Laundering Regulation, known as AMLR.

The shift matters beyond Europe. Canadian fintechs, online marketplaces, financial firms and software providers serving European customers may soon need to verify identity, authenticate users and meet anti-money laundering rules across multiple European jurisdictions using both new digital wallets and existing national electronic IDs.

Companies face years of parallel identity systems

The European Digital Identity Regulation entered into force on May 20, 2024. The European Commission says EU member states will be required to offer at least one EU Digital Identity Wallet to citizens, residents and businesses by 2026. The wallet is intended to let users identify themselves to public and private online services across Europe and store or share digital documents such as credentials, tickets and signatures.

At the same time, the EU’s AMLR is moving toward direct application across member states. Regulation (EU) 2024/1624 is designed to create harmonized anti-money laundering and counter-terrorist financing rules, with obligations scheduled to take effect in 2027.
For companies, the challenge is that the new wallet system will not replace existing identity tools overnight. Banks, fintechs, insurance firms, gaming platforms, mobility companies and other regulated businesses may need to keep supporting established national IDs, bank IDs, biometric checks and other verification methods while adding EUDI Wallet capability.

Signicat launches hub to bridge old and new systems

Digital identity company Signicat says it has launched its eID and Wallet Hub to help businesses manage that transition. The company describes the platform as a single connection point for verifying users through both EU Digital Identity Wallets and established national electronic IDs, as well as other identity verification tools. Signicat says the hub already processes more than 500 million transactions a year.

“For the next three years, digital identity in Europe will be organized chaos,” said Allard Keuter, Signicat’s head of authentication and wallets.

Keuter said companies will face a difficult middle period in which they must accept a new wallet many customers may not yet have, while continuing to support trusted national and banking ID systems already used every day.

“We designed the hub because trying to manage that fragmentation internally would be a technical and financial burden for most companies,” Keuter said.

Why the wallet transition is complicated

Signicat says its hub gives businesses access to 35 European electronic ID schemes and is built for the European wallet rollout beginning in 2026. The company says the platform is designed to let businesses support both existing eIDs and new wallets without separate country-by-country integrations.

The transition is complicated because Europe’s identity landscape is already fragmented. Some countries rely heavily on bank-issued IDs, while others use government electronic IDs or national digital systems. The new EUDI Wallet framework is meant to create EU-wide interoperability, but adoption will depend on member-state rollout, user trust and business readiness.

Keuter said the wallet’s real strength is that it gives users more control over their own data.

“The real power of the wallet is putting users in control of their data,” he said. “Our hub is built for that reality.”

According to Signicat, the platform can request data either directly from a user’s wallet or from connected eIDs and data sources, allowing companies to keep serving customers while wallet adoption grows.

Fraud prevention and compliance at the centre of the issue

For regulated industries, digital identity is not just a convenience feature. It is tied to know-your-customer checks, fraud prevention, payments, onboarding, access control and anti-money laundering compliance.

Signicat says its eID and Wallet Hub is designed to support AMLR, know-your-customer obligations, eIDAS 2.0 and GDPR compliance. The company’s product materials also point to use cases in banking, insurance, health care, gaming, mobility and secure payments.
The timing is important. Europe’s Digital Decade targets include broad adoption of digital identity by 2030, and Eurostat notes that the EU’s digital public-service goals include 80 per cent of citizens using an eID solution by that year.

Canadian companies should watch the European rollout

For Canadian businesses, the immediate effect will depend on whether they operate in Europe, serve EU customers, process payments, provide regulated financial services, or support digital onboarding for European clients.

A Thunder Bay-based software firm serving EU customers, for example, may not be directly regulated in the same way as a European bank. But if it provides identity, payments, insurance, fintech, marketplace or mobility services into the EU, its partners and customers may expect systems that can support the new wallet environment.

The lesson for Canadian firms is straightforward: digital identity is becoming infrastructure. As Europe moves toward wallet-based verification and harmonized AML rules, companies that sell into that market will need flexible identity systems that can handle privacy, fraud risk and compliance across borders.