BNM to finalise electronic process for remittances

by DASHVEENJIT KAUR / Pic by ISMAIL CHE RUS

Bank Negara Malaysia (BNM) is expected to finalise the standards for the electronic Know-Your-Customer (e-KYC) process for remittance transactions by October this year.

Assistant governor Jessica Chew Cheng Lian (picture) said with the implementation of e-KYC, the existing requirement for face-to-face verification for registering new customers would be removed for companies that receive approval to conduct e-KYC.

“BNM will be issuing regulations for conducting e-KYC processes on remittance transactions after receiving comments from industry players,” Chew said while delivering her keynote address at the opening of the Third Money Services Business Asia Pacific Conference 2017 in Kuala Lumpur yesterday.

KYC is defined as the process of a business, or a financial institution verifying the identity of its clients, while e-KYC is the electronic and paperless method of doing this, without any data entry or customers filling in forms.

Earlier this year, BNM governor Datuk Seri Muhammad Ibrahim said industry-wide implementation of e-KYC would take place by 2018.

Chew said regulatory changes to facilitate innovation remained extremely important to the central bank and it continued to provide an environment that encourages innovation in the financial industry, including in the money services business (MSB) sector.

“The regulatory sandbox which we introduced last year — itself an innovation in regulatory approaches — has helped us by containing external risks that can come with innovation, while allowing the opportunity for great new ideas to unfold and take root,” she added.

Chew said there have been significant reforms being undertaken in the Malaysian MSB industry.

“We have seen a period in which regulatory, compliance and professional standards were substantially strengthened across the industry and structural change that also introduced greater competition in the industry.

“MSB companies have risen to these challenges with strategies embracing the increased use of technology, a focus on productivity, and in some cases, strategic changes in business models to deliver greater value for investment,” she said.

Chew said the MSB industry will continue to be shaped by two important influences, a strong political and economic focus on the role of the industry in advancing financial inclusion and development.

“The second is certainly going to be the changing nature of competition, powered by technology,” she said.

Malaysian Association of Money Services Business president Ramasamy Veeran said BNM’s initiative on e-KYC would help the MSB industry to grow faster.

“It will also make the registration process easier, and see more competition between the non-bank industry players, such as MSB and the banks.”

He said the technology has been used in developed countries including the US, the UK and Australia.

“It is a high time for Malaysia to start working on this now. I believe every industry player, including banking and insurance personnel, are looking forward to the implementation of the initiative,” he added.