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Banks providing eKYC services can only operate after they are approved by the Ministry of Public Security?

Trường Lăng

July 5, 2022

News

Banks providing eKYC services can only operate after they are approved by the Ministry of Public Security?

Trường Lăng

July 5, 2022

According to the new regulation draft, all institutions providing electronic Know Your Customer (eKYC) services must be required to be approved by the Ministry of Public Security to operate. eKYC activities of all banks and institutions today may be considered as illegal.

At the critical meeting on the content of the Draft Decree stipulating on electronic identification and authentication, Mr. Nguyen Thanh Long, Chairman of the Legal Club, Vietnam Banking Association (VNBA) said that the current regulation that it is not practical if all institutions providing electronic Know Your Customer (eKYC) services must be authorized by the Ministry of Public Security to operate.

Mr. Long said that the current eKYC activities of all banks and institutions may be considered to be inconsistent with the law as prescribed.

He said it is necessary to clearly define the scope of “Electronic Know Your Customer service” which is understood in this Decree as only “Electronic Know Your Customer service using national resident data” to avoid misunderstandings with other electronic Know Your Customer (eKYC) services in the market. 

This electronic identification regulation is not eKYC, which credit institutions are still implementing.

said Mr. Long, “If credit institutions can combine eKYC with the authentication method specified in the Draft Decree, the effect will be better. However, this does not mean that this Decree governs eKYC activities. On the other hand, if there is any content in the Draft that may cause confusion that the opening of online accounts must comply with the Decree, it should be checked and reviewed”.

In addition, another matter that is also mentioned is the authentication of the subject’s electronic identity, the authentication of the subject’s information through the intermediary institutions.

There of, the draft stipulates that credit institutions, entities providing telecommunications and mobile services, entities providing token services for electronic identification, notarial practice organizations, and bailiffs and other organizations assigned to perform public services of verifying electronic identity subjects, verifying information of electronic identity subjects through organizations providing Electronic Know Your Customer Services.

After consulting, the majority of credit institutions, Fintech companies, payment intermediaries, etc. propose to be connected directly instead of intermediary.

At the meeting, a bank representative proposes to be permitted to connect data with the national population database to identify customers. Banks said that it is impossible to predict how many intermediary institutions provide Electronic Know Your Customer Services approved by the Ministry of Public Security. However, if there are less these institutions, the ability of credit institutions to meet the relatively high capital needs is limited.

“Therefore, e-identification data need to be connected and exploited by credit institutions in their operations in order to verify, authenticate customers for the purpose of money laundering and fraud prevention in banking and financial activities.

For the national database, the Ministry of Public Security should consider opening API for parties’ free proofing. Currently, a number of countries in the region are also allowing free calls to the database, it is provided that the caller needs to register. This helps to expand banking services and financial services in general,” said Mr. Long.

Many banks have implemented eKYC solutions and obtained the outstanding results. VPBank, HDBank, TPBank,… are the first banks that have deployed and attracted a large number of new registered accounts. This solution provides customers with time saving and better experience, this solution is bringing high efficiency to banks, helping banks reduce manpower and costs.

Source: Vietnambiz

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