Government agencies will be able to share personal identity information with banks and other financial institutions under legislation introduced to Parliament today.

The Department of Internal Affairs has developed an electronic data validation service to combat identity fraud.

Internal Affairs Minister Nathan Guy said it would be extended to banks and other institutions on a ''strictly need to know basis.''

Private sector agencies will be able to enter customer information into a website which will confirm if it is consistent with other personal details held by the Government.

It includes details on citizenship, passports and information from births, deaths and marriages registers.

Opening up the service would allow financial institutions to comply with laws on the financing of terrorism and money laundering, Mr Guy said.

"This service will help ensure compliance with the Anti-Money Laundering and Countering Financing of Terrorism Act 2009, which requires banks and other financial institutions to undertake more comprehensive 'know your customer' checks.''

In April Mr Guy said the Government was mindful of privacy concerns and the records would not include sensitive information such as income, travel details or criminal records.

The service will be monitored by Privacy Commissioner Marie Shroff.

"Any agency using this tool must have the consent of customers - it is up to individuals whether or not to give permission. The tool only confirms whether the information provided by customers is accurate and does not give out any additional information about the person,'' he said today.

"The Data Validation Service will be available only to organisations which meet strict security, privacy and integrity criteria. The Government has also agreed that the Privacy Commissioner will monitor this service."

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