Kuala Lumpur, Malaysia: Bank Negara is set to introduce new regulations for electronic know-your-customer (e-KYC) features that will ease money transfers, allowing more innovation in the financial world.
This industry-wide implementation for remittance services within the country will be operational by 2018 according to the central bank, enabling an industry-wide implementation of e-KYC for remittance transactions in the country.
At present, a KYC process that requires physical presence is used by business and financial institutions to verify its customers in money transactions to prevent money laundering and terrorist-funding activities. With these new regulations and through the use of e-KYC, the need for the current face-to-face approach can be eliminated without compromising on security.
The rules proposed regulatory parameters for the conduct of e-KYC processes for remittance transactions is expected to be finalised by October 2017, with the requirements for face-to-face verifications being completely removed for companies that have e-KYC approval. The central bank also hopes to implement e-KYC for the onboarding of customers by 2018.
It is expected that the remittance industry will continue to grow with the introduction of the new regulations. Currently, worker remittances has more than doubled to US$420bil between 2007 and June 2017, while costs of money remittance has also fallen. The current global average for remittance is 7% in 2016, which has seen a more than 3% drop compared to over a decade ago. The World Bank aims to reduce costs to 5%, while in Malaysia, the average remittance cost has been below 3% in 2016.