Accelerating the transition to a digital system for KYC procedures
Accelerating the transition to a digital system for KYC procedures
- Several proposals were made by Business Mauritius in the context of pre-budget consultations. Among them is the establishment of the E-KYC. To what extent does Mauritius have the resources to make this project viable?
E-KYC first came to light in 2019, when the Bank of Mauritius (BoM) issued an expression of interest for this national project. Since then, progress has been made and a National Authentication Framework has been put in place. For instance, Maupass now offers seamless access to a number of Government services. However, E-KYC is yet to be rolled out to the financial services sector, where the impact will be huge, with utmost benefit to the public at large. Mauritius has the necessary resources to make it happen and I understand that the implementation is scheduled to start very soon. Moreover, the size of the country and the digital impetus within the banking industry should largely facilitate the implementation of E-KYC.
- How will the implementation of the E-KYC benefit Mauritius?
Banks have an obligation to verify their customers before transacting with them. While the verification process might be straightforward for an individual looking to open a bank account, this is not necessarily the case for companies with diverse structures. In such cases, the amount of paperwork and certified copies can be quite daunting. Furthermore, banks also have a duty to refresh the KYC documents of their customers, on a frequency that matches their respective risk appetite. The flow of documents between the customer and his bank is therefore a never-ending story and one can only imagine how difficult the situation can be for customers who bank with several banks.
E-KYC simplifies and addresses all of these KYC issues with just a few clicks. Banks will have access to a platform where their customers have already been duly verified and relevant authenticated documents are readily available. Hence, the onboarding of customers and new account opening will be much faster and seamless. Similarly, clients may forego the submission of fresh copies of their KYC documents to the banks as part of their normal client review cycle.
- Digital KYC must be carefully maintained to reduce the risk of breaches/frauds. It can also be costly to implement initially, making integration difficult for those looking to reduce costs. How can this issue be addressed?
Banks have independently jumped into the digitization race as per their own strategy, budget and risk appetite. However, there are many commonalities in the digitization process and banks could have worked together on certain aspects, like digital onboarding, to benefit from economies of scale. Some degree of digitization could also be achieved by the Government and the private sector, for example through the setting up of a digital identity for all.
- Business Mauritius has also recommended the full implementation of digital signatures. However, the risk of unauthorized signing is a major issue. How can organizations ensure that all their signatories are properly authorized?
Identity theft and cybersecurity remain key risks in this digital era. Digital signatures, have to be encrypted with a proper authentication process to counter frauds. We should also not confuse digital signatures with electronic signatures, which became prevalent post-covid and are not necessarily secure as they do not contain the ‘electronic fingerprint’ that validates the person identity, like digital signatures do.
- It was mentioned that Mauritius could deploy AI and blockchain in the administrative systems and regulatory space. What are your views?
Fortunately, or unfortunately, we no longer have a choice when it comes to the adoption of new technologies, such as Artificial Intelligence and blockchain. While they simplify our current struggles, they bring along new challenges that must be managed.
