In an official statement released on April 1st, 2020, the president of the FATF (Financial Action Task Force) reassured the public that “the members of the FATF, both domestically and multilaterally, are applying every available resource to combat the COVID-19 pandemic”. With this objective in mind, the FATF “encourages the fullest use of responsible digital customer onboarding and delivery of digital financial services in light of social distancing measures” during the current COVID-19 pandemic. More specifically:
In line with the FATF Standards, the FATF encourages the use of technology, including Fintech, Regtech and Suptech to the fullest extent possible.
The rationale for the revised measures lies in the need to minimise in-person banking and face-to-face provision of services during these difficult times:
With people around the world facing confinement or strict social distancing measures, in-person banking and access to other financial services is difficult, and unnecessarily exposes people to the risk of infection. Use of digital/contactless payments and digital onboarding reduce the risk of spreading the virus. As such, the use of financial technology (Fintech) provides significant opportunities to manage some of the issues presented by COVID-19.
The statement also references the FATF’s Guidance on Digital ID, issued at the beginning of March 2020, “which highlights the benefits of trustworthy digital identity for improving the security, privacy and convenience of identifying people remotely for both onboarding and conducting transactions while also mitigating ML/TF risks”. The FATF encourages member countries to explore the use of secure digital identity for financial transactions while managing money laundering risks during this crisis.
Before the FATF published its official advice, a number of local regulators had already begun issuing revised guidance on remote customer identification. For instance, in New Zealand the regulator has announced that reporting entities can accept scanned copies of documents instead of originals and perform electronic verification to avoid face-to-face contacts with customers. Similarly, SEBI (Securities and Exchange Board of India) is now allowing FPIs (foreign portfolio investors) to provide scanned versions of the required documents upon registration, while the Central Bank of the Philippines has temporarily lifted the requirement for the presentation of a valid ID card during client onboarding (however this only applies if the amount of daily transactions does not exceed P50,000.00).
The FATF’s role is to set global standards for combating money laundering and financing of terrorism. As a result of their recent guidance, we expect even more financial regulators to encourage widespread adoption of digital client onboarding solutions among their regulated entities.
If your company is looking for a powerful, cost-effective and easy-to-implement digital onboarding solution, Know Your Customer might be the right partner for you. Our team has helped financial institutions across 11 industries and 18 jurisdictions fully and quickly digitise their KYC & KYB process. To gain a better understanding of how we can enable you to onboard your customers remotely while ensuring on-going regulatory compliance, please contact us here.
Last updated on May 9th, 2023 at 08:56 pm