In this Jamaica Observer file photo, March 8, 2022, Minister of Finance, Dr Nigel Clarke, addresses the House of Representatives.
KINGSTON, Jamaica — Jamaicans will be able to transfer their accounts from one financial institution to another over the next two years as part of a plan to develop a centralized Electronic Know Your Customer (eKYC) public utility system led by the Bank of Jamaica (BOJ).
Finance Minister Nigel Clarke said in a statement to the House of Commons on Tuesday that the scheme would achieve several objectives.
“Empowering account holders will increase competition within the banking sector and deliver key national digitalisation and financial inclusion goals, while modernising regulatory oversight,” he outlined.
“This simplification will also enhance compliance with anti-money laundering (AML) and counter-terrorism financing (CFT) laws and regulations across the financial sector. It will also benefit commercial banks, significantly reducing the operational and administrative costs associated with managing compliance,” Clark added.
The Minister of Finance said the measure is aimed at addressing and alleviating long-standing pain points for financial services consumers in Jamaica. He said the initiative has the potential to revolutionize the banking industry, giving more power and benefits to financial consumers.
“The aim is to use technology to streamline and simplify the process of opening a bank account and ensure that all Jamaicans who wish to open an account can switch their account to the bank that offers the best services and products. To realise this vision, we need to develop and implement an Electronic Know Your Customer (eKYC) Registry in Jamaica,” Clarke explained.
In such a system, customer information needed for various banking transactions is stored digitally in a database that is kept securely and confidentially by a central, trusted authority. When a customer transacts with a financial institution, the institution has instant access to the customer’s information, can verify the customer’s identity, and complete the transaction in minutes rather than days or weeks.
Clarke stressed that eKYC is more efficient than the current time-consuming system, in which individuals looking to open a bank account must submit a variety of documents in a process that can take days or even weeks.
He said eKYC will enable a faster, smoother, simpler and hassle-free experience for customers. Clark further noted that by working with deposit-taking institutions to leverage KYC information currently dispersed across public institutions, the BOJ will take advantage of opportunities presented by the 2019 amendments to the Proceeds of Crime Act. These amendments will make it easier to share KYC information between banks.
“As a result, the eKYC Utility will streamline and expedite the process of identifying, verifying and maintaining customer identities in the financial services sector. This will significantly improve customer experience and AML/CFT compliance at both the organizational and national levels,” the finance minister said. He also said this will enable the Bank of Japan to achieve its inflation target.
“This initiative will enable customers to easily transfer their accounts between banks, promote competition in the banking sector and enhance the effectiveness of monetary policy,” he said.
Benefits for customers include faster account opening with simplified procedures, better service, better interest rates, ease of switching banks for better financial products, and improved security. This process also enhances security measures for customer data, ensuring sensitive information is stored securely and only accessible to authorized parties.
Clark said this protects customer privacy and reduces the risks associated with identity theft and fraud.
Benefits for financial institutions include reducing manual KYC process costs, speeding up customer onboarding, quicker access to verified KYC data from a centralized registry, reducing compliance risks, and supporting consistent and accurate customer due diligence processes.
Benefits for regulators include increased oversight, improved monitoring and analysis of AML/CFT risk types, standardized compliance, consistent KYC processes across financial institutions, alignment with FATF recommendations, and enhanced efforts against money laundering and terrorist financing, thereby improving the integrity of the financial system.
Clark said the Bank of Japan will continue to hold broad consultations with the financial industry.
Support for research and framework development is provided by the World Bank.
