Title: Bhutan’s Financial Institutions Embrace KYC Processes: A Step Forward in Combating Money Laundering and Terrorist Financing
In the global financial landscape, the importance of Know Your Customer (KYC) processes has gained significant attention due to increasing concerns around money laundering and terrorist financing. Bhutan’s financial sector is no exception to this trend.
What is KYC?
- Mandatory process to identify and verify a client’s identity when opening an account and periodically
- Prevents illicit activities such as money laundering, terrorism financing, and corruption schemes
- Consists of identity card verification, document verification, biometric verification, and face verification
- Mandatory for financial institutions, with severe penalties for non-compliance
Why is KYC important?
Financial institutions implement KYC procedures to:
- Ensure clients’ identities are real
- Evaluate potential risks
- Prevent illegal activities such as money laundering, terrorism financing, and corruption schemes
eKYC: An Electronic Method of Identity and Address Verification
- India’s Electronic Know Your Customer (eKYC) process uses digital identities and facial recognition technology for online identity verification
- Popular due to India’s 99.9% adult population having a digital identity
- Streamlined customer onboarding and online verification make eKYC appealing
The Future of Financial Institutions
- Increasing reliance on digital channels amidst COVID-19 pandemic
- 64% primary checking account openings in the US were done online in Q2 2020
- Post-pandemic, digital onboarding gains momentum
- Financial institutions must adapt to customer preferences by implementing digital KYC measures such as video KYC and facial recognition
Conclusion
- KYC and eKYC processes are integral to the fight against financial crimes
- Ensure transparency and trust in financial transactions
- Continually evolving technology and stricter regulations require financial institutions in Bhutan and globally to implement effective KYC measures to comply with international standards and protect reputation and bottom line.