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KYC Requirements for Financial Institutions in Austria: A Step Towards Digitalization

Despite being situated in one of Europe’s largest financial centers, Austrian businesses have traditionally relied on in-person identification methods. However, recent amendments to the Austrian Financial Market Authority (FMA) regulations are paving the way for digital alternatives.

A Shift Towards Digitalization

The FMA has introduced new guidelines for biometric identification, allowing financial institutions to use automated processes for online customer onboarding. This shift towards digitalization offers a more convenient and efficient experience for customers while also reducing operational costs for businesses.

Implementing Biometric Identification

To implement biometric identification, financial institutions must adhere to strict security standards. The process involves several key steps, including:

  • Notification of customers regarding the processing of biometric data
  • Obtaining their consent
  • Ensuring that the verification procedure corresponds to the technological “state of the art”

Method Options for Biometric Identification

Financial institutions can choose between two methods:

  • Operator-assisted video verification: This method requires employee involvement during the onboarding process.
  • Entirely automated biometric identification: This method does not necessitate an employee’s involvement and only requires NFC-enabled IDs and devices.

Ensuring Compliance with FMA Regulations

To ensure compliance with the FMA regulations, financial institutions must take appropriate technical and security measures to protect the integrity and security of their verification procedures. This includes:

  • Regular monitoring measures to recognize and mitigate risks without delay

Transitional Period

The amendments also introduce a transitional period until December 31, 2022, which may see clarifications regarding the use of NFC technology or ID cards without electronic signatures.

Conclusion

In conclusion, the latest FMA regulations have opened up new possibilities for financial institutions in Austria. By implementing automated biometric identification, businesses can improve customer experience and reduce operational costs while staying compliant with regulatory requirements.