Successful UAE Blockchain Trial Demonstrates ‘Radically Simplified’ KYC

UAE blockchain trial KYC know your customer

A blockchain-powered application on trial in the United Arab Emirates has been hailed a success, with participants saying it “radically simplified” the KYC process.

Abu Dhabi Global Market announced this week that it had concluded trials of the application, in conjunction with KPMG and the Financial Services Regulatory Authority, the country’s financial regulator.

The app provides organizations with a single platform for customer ID and verification, with the data collected then able to be transferred to other entities as required. The app replaces the need for individual customers to complete KYC processes with multiple institutions.

Early feedback from the testing has been overwhelmingly positive, with some respondents saying the existing “cumbersome, repetitive and cost-intensive” KYC process is “radically simplified” by the blockchain app.

Crucially, the app is compliant with EU GDPR regulations around privacy, as well as being interoperable with other blockchain systems, providing an immutable audit trail throughout the process.

KYC, or know-your-customer, is a regulatory requirement under anti-money laundering provisions requiring regulated institutions to verify the identity of their customers. A uniform requirement for financial services and other regulated businesses, replacing multiple KYC processes with a single KYC application could be a significant efficiency gain for organizations in these sectors.

Richard Teng, CEO of the FSRA unit at Abu Dhabi Global Market, said the application could achieve significant cost efficiencies for financial institutions, as well as improving standards for KYC processes.

“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.”

The project was announced back in February, the result of a collaboration between a number of different banks in Abu Dhabi, working alongside the regulator and others to develop the platform.

Several other regulators and banks around the world are known to be engaged in similar developments that leverage the properties of blockchain technology for more efficient KYC processing, including Deutsche Bank and BNP Paribas.