LONDON, July 31 (Reuters) - A German data watchdog has been investigating OpenAI CEO Sam Altman's Worldcoin project since late last year due to concerns over its large-scale processing of sensitive biometric data, the regulator's president told Reuters.

Worldcoin, which launched last week, requires users to give their iris scans in exchange for a digital ID and, in some countries, free cryptocurrency as part of plans to create a new "identity and financial network".

The Bavarian State Office for Data Protection Supervision started investigating Worldcoin in November 2022 because of concerns that the project seeks to process "sensitive data at a very large scale" using new technology, Michael Will, the state regulator's president, told Reuters in emailed comments on Friday.

Will said the Bavarian state regulator is the lead authority investigating Worldcoin under the European Union's data protection rules because Tools For Humanity, the company behind Worldcoin, has a German subsidiary there.

"These technologies are at first sight neither established nor well analysed for the specific core purpose of the processing in the field of transferring financial information," Will said.

This leads to a number of risks, including whether users have given explicit consent to their highly-sensitive biometric data being processed on the basis of "sufficient and clear" information, Will said.

Worldcoin did not immediately respond to a request for comment. Its website describes its network as "privacy-preserving" and says personal data is stored in encrypted form.

The Worldcoin Foundation, a Cayman Islands-based entity, told Reuters via email last week that it complies with the European Union's rules and will continue to cooperate with governing bodies' requests for information about its privacy and data protection practices.

Since the project's launch, people have been getting their faces scanned by a shiny spherical "orb" in sign-up sites around the world including in France, Germany and Spain. Worldcoin says 2.1 million have signed up, mostly during a trial period over the last two years.

Privacy campaigners have long raised concerns about the wide-scale collection and storage of biometric data, which could increase surveillance or target certain demographic groups.

Several European supervisory authorities see Worldcoin as a matter of interest and requested information, Will added.

France's privacy watchdog told Reuters on Friday that the legality of Worldcoin's data collection "seems questionable".

Britain's data regulator has also said it will make enquiries into the project.

Reporting by Elizabeth Howcroft, Editing by Louise Heavens

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