The FSDC has laid out four key recommendations for creating a digital identity and e-KYC based infrastructure for Hong Kong.
The Financial Services Development Council (FSDC) has released a research report entitled the “Building the Technological and Regulatory Infrastructure of a 21st Century International Financial Centre: Digital ID and KYC Utilities for Financial Inclusion, Integrity and Competitiveness.
Its report sets out key recommendations regarding digital identity and “know your customer” (KYC) utilities for Hong Kong. It seeks to present the main features of an essential strategy to develop the necessary technological and regulatory infrastructure for digital identification and electronic-KYC in Hong Kong according to the FSDC.
FSDC’s report recommends an urgent revision of the current regulatory environment to facilitate non-face-to-face account opening. It also suggests that the forthcoming electronic identity system should consider elements necessary to support its use in digital and non-face-to-face customer identification.
The advisory board also wants Hong Kong to establish a KYC utility (KYCU) to address due diligence requirements applicable to individual and legal entity customers. It suggests that this should be done with the Government’s support and the provision of system to check trusted data available via the KYCU, while the customers are the data owner.
Its final recommendation is to establish a KYCU working group to address the different issues and challenges in the spectrum.
Laura M Cha, the Chairman of the FSDC, said: “The application of technology for facilitating the provision of financial services is gaining traction globally. During the development of FinTech infrastructure to enhance the KYC process, Hong Kong also needs urgent regulatory fixes to improve customers’ account opening experience and, more importantly, to maintain the city’s financial competitiveness.”
The Hong Kong Special Administrative Region Government established the FSDC in 2013 to promote the further development of Hong Kong’s financial services industry and to map out the strategic direction for development. The FSDC set up five committees, namely the Policy Research Committee, the Mainland Opportunities Committee, the New Business Committee, the Market Development Committee and the Human Capital Committee, as the five streams of its work.
Last year, a report from RegTech Analyst found that nearly half of all RegTech companies address AML or KYC regulation. An analysis of the capital invested in RegTech companies according to the area of regulation addressed by their solutions revealed which pieces of legislation were be causing the most problems within financial institutions and are thereby deemed to offer the most attractive opportunities for investors. From 2012 to December 2017, 23.1% of all RegTech investments, which amounts to $878m, was attributed to investments in KYC solutions.
Copyright © 2018 RegTech Analyst
Copyright © 2018 RegTech Analyst
