Austria’s Financial Market Authority Amends Know Your Customer Rules, Embracing Digital Onboarding
In a significant move towards digitalization, Austria’s financial market authority has amended its know your customer (KYC) rules, allowing fully automated biometric procedures for identity verification under the country’s anti-money laundering (AML) regulations. The new rules aim to streamline onboarding processes and reduce costs for financial service providers.
Background
The Austrian Financial Market Authority (FMA) approved video-based identification for onboarding new customers in 2017, marking a significant step towards digitalization. However, the latest amendments take this process further by allowing fully automated biometric procedures for online identity verification.
Who is Affected?
The amended regulations apply to financial service providers, credit institutions, and cryptocurrency service providers that fall under Austrian AML and KYC requirements issued by the FMA.
Key Changes
The new rules describe several key terms:
- Official photo identification document: a document containing optical security features comparable to those used in government-issued ID cards.
- Liveness check: a process to verify the actual presence of a potential customer during the online identification process.
- Processor: a third-party service provider that conducts online identification processes on behalf of financial service providers.
How it Works
Financial service providers can use AI-powered solutions to check biometric data and submitted documents, providing immediate results. The process does not require employee involvement during the onboarding procedure, unlike traditional video verification methods.
Staying Compliant
To onboard customers online through biometrics in line with the FMA’s online identification regulation, financial service providers must:
- Use appropriate technical and security measures to protect the integrity and security of their verification procedures.
- Check for presence by recording a video of the whole presence check process.
- Record-keeping: keep recordings made for online identification purposes and records of the presence check process.
Challenges Ahead
There are concerns about requiring electronically-signed ID documents with NFC chips, as many non-Austrian ID cards lack this feature. The FMA has provided a transitional period until December 31, 2022, to address these issues.
Conclusion
The latest amendments mark a significant shift towards digital onboarding in Austria, offering financial service providers an opportunity to choose automated biometric identification for online customer onboarding. While compliance challenges remain, the new rules aim to streamline processes and reduce costs.