Coronavirus raises demand for digital KYC, FATF urges responsible remote onboarding
Online education, dating companies, gaming and crypto exchanges have registered an increased demand for digital KYC since the coronavirus outbreak started, writes IBS Intelligence. Onboarding providers are launching new implementations at a rapid rate, and an international standards body is encouraging the expanded use of digital identity and responsible remote onboarding to meet the demand without enabling money laundering or terrorism financing.
Intergovernmental organization Financial Action Task Force (FATF) has published guidelines on how to prevent illicit financing during COVID-19. The FATF is not only encouraging governments to partner with financial institutions and explore digital identity, but is pushing for the implementation of FATF standards, digital customer onboarding and delivery of digital financial services to abide by social distancing requirements.
Digital contactless payments and digital onboarding benefits for security, privacy and remote identification convenience are highlighted in Guidance on Digital ID. Financial fraud and exploitation scams linked to coronavirus have spiked in the past months, raising ML risks, the organization says. The FATF is working with the Committee on Payment and Market Infrastructures and the World Bank to release coordinated policy responses which include anti-money laundering/counter-financing of terrorism (AML/CFT) measures.
Digital onboarding providers in India such as Idfy, videokyc.com, Veri5Digital, Signzy, inVOID, and Syntizen report growth from education and gaming, with educational institutions implementing video KYC for digital verification to prevent fraud.
New Delhi-based inVOID, for example, reports a 20 to 30-times spike in customer verification inquiries over the last weeks. In the BFSI segment, companies that had delayed video KYC now have to implement digital onboarding because physical interaction is no longer possible. As a result, inVOID has been processing between 200 and 500 video KYCs on a daily basis.
According to Kunwar Raj, Founder, and CEO of inVOID, the shared mobility segment will be negatively affected by the current situation of working from home, as there has been no demand for video KYC incoming from this sector for driver onboarding.
“What demonetization did to the digital payments sector, COVID-19 will do that to other products. It has and will expedite the digital onboarding of customers and clients as businesses are likely to opt for contactless interactions even post COVID-19 to ensure safety,” Ankit Ratan, founder and CEO of Signzy told IBS Intelligence.
Ratan believes companies are digitizing their customer onboarding processes to prevent the spread of coronavirus and cut costs due to a recession.
To prevent physical interaction during lockdown, the Internet and Mobile Association of India (IAMAI) is asking the government to authorize customer digital onboarding for all regulated non-banking financial services, as the number of digital payments has increased since social isolation has been enforced.
The FATF, meanwhile, is calling for international prioritization of key ML risks, especially those fraud related, and TF risks related to coronavirus. The organization warns that some criminals might try to exploit vulnerabilities in national AML/CFT systems, which is why financial institutions should immediately report any suspicious activity.