The central bank of Bangladesh issued a circular on Wednesday pertaining to e-KYC (know your customer) applied to the country's financial institutions.
The Bangladesh Bank (BB) released an e-KYC guideline containing a set of instructions for the bank and non-bank financial institutions to enable them to conduct customer due diligence in a digital manner.
The e-KYC is a combination of paperless customer onboarding, promptly identifying and verifying customer identity, maintaining KYC profile in a digital form and determining customer risk grading through digital means.
This digital means can leverage saving of time and provide ease both for the clients and service providers, according to the guideline which is available on the Bangladesh Bank website.
The guideline says the digital means is a faster KYC process of verifying a customer's identity document or bio-metric data.
It says additionally e-KYC can save institutional cost as well as foster growth of customer base compared to the traditional growth.
This will be based on national ID cards and the biometric data stored against each NID card.
The e-KYC shall only be applicable to a natural person who has a valid NID document.
Natural person without NID and a legal entity or arrangement has to follow the KYC norms as prescribed by the Bangladesh Financial Intelligence Unit (BFIU) from time to time.
The guideline is applicable to the bank, non-bank financial institutions, insurance companies, capital market intermediaries and other companies licensed by the BB. People at the central bank said that it would help establish good governance within the financial industry and enhance the growth of financial inclusion.
"It will protect financial sector from abuse of criminal activities," he said.
The concept of KYC within the financial sector and designated non-financial business and professions started only few decades back.
It has got momentum when FATF (financial actions task force) came forward with a set of recommendations for prevention of money laundering and terror financing.
The deadline for implementing the e-KYC is December 2020.
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