IFC inks deal with BFIU to develop eKYC in financial sector

International Finance Corporation inked a deal with Bangladesh Financial Intelligence Unit to develop eKYC infrastructure for fast-tracking financial inclusion.

BFIU is an independent government agency responsible for investigating money laundering, suspicious transactions, and cash transaction reports.  It is now the central agency for ensuring KYC/ eKYC compliances.

The deal was signed on Sunday.

To create a secure digital banking environment and to accelerate financial inclusion, the agreement also aims at implementing and scaling up an Electronic Know Your Customer (KYC) project in Bangladesh, where only half the adult population has access to a formal financial system, according to a press release.

Under the agreement, IFC and BFIU will work together to develop and adapt eKYC infrastructure, which is a foundational regulatory arrangement for conducting customer due diligence during new client on boarding process for collecting and verifying customer data electronically during opening of new accounts at banks, non-bank financial institutions, mobile financial service providers, insurance companies, and capital market intermediaries, reads the release.

Once in place, the eKYC infrastructure will not only cut time and cost of clients on boarding, but it will help reach more customers digitally, thus, reducing the number of unbanked people, particularly the underserved such as small business owners and women entrepreneurs.

The project will contribute to the financial inclusion agenda of the government of Bangladesh as well as IFC’s target of including an additional 30 million unbanked adults in the country by 2030.

An efficient digital on boarding infrastructure is one of the major building blocks for fast-tracking financial inclusion in Bangladesh. Under the current KYC protocol for opening new accounts, customers need to present their national identity cards in person and financial institutions must authenticate and keep a record manually photocopying and printing the NID.

The process is time-consuming, costly, and inconvenient for both clients and FIs. Moreover, in-person account opening has become more difficult amid the Covid-19 pandemic and the development of eKYC will help in social distancing.

Addressing the deal signing ceremony, IFC’s regional manager advisory services for Financial Institutions Group in Asia and Pacific Qamar Saleem said, “Promoting financial inclusion is one of the priorities for IFC’s work in Bangladesh. The implementation of eKYC infrastructure will offer seamless experience for end users and support the financial sector to reach out to last mile customers in Bangladesh, significantly increasing access to financial services.”

Executive director and deputy head of BFIU Md. Masud Biswas said, “Financial sector especially financial institutions are experiencing a drastic process of digitalisation. This digital transformation enables easy access of customers, even from a remote location, into the financial services.”

“This may pose some underlying risk of money laundering, terrorism financing and related criminal activities by abusing financial institutions and its services and to minimise such risk of financial sector e-KYC can be one of the most optimal solutions,” he observed.