On June 30th, Bank Negara Malaysia (BNM) issued a policy document on electronic Know Your Customer (e-KYC) aimed at accelerating and streamlining industry players’ adoption of e-KYC technology and digital onboarding practices.

According to a statement by the Central Bank of Malaysia, widespread adoption of e-KYC technology is in line with BNM’s efforts to facilitate greater digital offerings of financial services. In particular, it adds:

“This is expected to pave the way for greater innovation in the financial sector, including end-to-end offering of digital financial services for customers.”

As reported by Regulation Asia, under the new rules – which came into effect on the day of the release – approval from the Central Bank is required before financial institutions can implement e-KYC. “This will require firms to submit information on the products on offer, the features and process flow of the e-KYC solution, and an assessment of its effectiveness and risks, where firms should be able to demonstrate their ability to comply with BNM’s technology risk management and outsourcing guidelines”.

The policy documents also state that:

e-KYC solutions may utilise artificial intelligence, machine learning or other forms of predictive algorithms to ensure accurate identification and verification. This may result in automation of the decision-making process for customer identification and verification, thus reducing the need for human intervention.

The Central Bank pointed out that digital onboarding might improve customer convenience as well as increase competition in the financial sector over the long term, as it lowers costs for both users and providers.

You can read the full policy document here.

For more updates on KYC, AML and regulatory compliance from around the world, make sure to follow Know Your Customer on LinkedIn and Twitter.  You can also subscribe to our newsletter here.