The Abu Dhabi Global Market (ADGM), the international financial center in the capital of the UAE, has completed the first phase of its blockchain know your customer (KYC) utility project.
The blockchain e-KYC project, launched in March 2018, was conducted by the Financial Services Regulatory Authority (FSRA) of ADGM in collaboration with a consortium of the UAE’s major financial institutions, including Abu Dhabi Commercial Bank, Abu Dhabi Islamic Bank, Al Ansari Exchange, Al Fardan Exchange, First Abu Dhabi Bank, and UAE Exchange. The objective of the project was to develop a proof-of-concept (PoC) to test operational and technological models of the e-KYC utility.
While developing and testing the PoC, the FSRA worked with consortium members to build applicable processes and regulations pertaining to KYC individual retail clients into the prototype, with the aim of offering the industry a common set of robust KYC standards.
The PoC reportedly allowed consortium members to share and validate simulated KYC documentations and data updates about the client in a secure environment, supported by blockchain technology. The trial also found that individual clients can be empowered to decide how their personal data can be shared in the utility, enabling conformance with data protection requirements.
“Data quality and compliance standards can be assured with respect to applicable KYC requirements,” ADGM said. “Clear guidelines and pre-requisites will have to be identified for any member that qualifies as a contributor of KYC records or information to the utility. An ownership structure of the KYC utility that assures safe custody of customer information and operates on a non-profit mandate will foster trust across stakeholder group.”
Richard Teng, CEO of the FSRA, said that by harnessing the power of technologies such as blockchain, the e-KYC project has demonstrated tangible benefits that may be offered by an e-KYC utility for financial institutions in the UAE.
“In addition to enhancing KYC checks across the industry, the utility can achieve significant cost efficiencies and financial inclusion driven by unified KYC standards,” Teng said. “The use of digital platforms to share information, transact and test solutions forms a core part of ADGM’s FinTech strategy. We look forward to delivering further meaningful results through the ADGM Digital Sandbox initiative, where we will facilitate FinTech-institutional partnerships and host consortium projects such as the e-KYC project.”
The FSRA is now planning to commence on a new phase to facilitate small and medium enterprises’ access to banking services and is seeking feedback and interests from the industry to participate in the project.
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