Id/Passport verification service
It is wiser to create a gov-funded ID/passport verification service shared with businesses. A business representative would type/scan a physical ID into a gov-portal, and get shown the person's photo, and some kind of confirmation. The alternative is hopeless, because the majority of businesses are not sophisticated enough to keep personal details secure in their own systems. And will never be. So they should not be allowed to, except a few key identifiers, which could be as simple as an email address.
Each ID verification access should be logged, and all businesses must register with the service to keep operations. So some bad guys could not bulk-verify personal information, as some kind of quotas and throttling should be set-up for each business with appropriate handling fees, depending on operation scale. Also, data owners (actual persons), could get an SMS/email alert on each ID verification.
Ideally such verification should be for the whole EU, and other large blocks who trust each other. Keeping/saving detailed personal data by businesses should be forbidden, unless a person comes from a non-block country, unable to verify otherwise.
Since access logs would be saved for each business, this could help verify persons even if their ID got changed or temporarily lost.